When designing a supply network, which of the following stages should be completed first?
The correct sequence for designing a supply network is:
Determine strategic objectives
Confirm the network scope
Analyse potential risks
Determine the approach for managing material and information flow
Track material and information flow
Since network scope defines the boundaries, scale, and overall structure of the network, it must be confirmed first. (LO 1.1, See p.3)
XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?
While organisations generally try to fulfil customer demand, there are times when they strategically choose not to. A common reason is maintaining a premium image---limiting supply can increase desirability and justify a higher price. For example, luxury brands often limit product availability. (See p.169)
Company A manufactures wheels for Company B, which manufactures cars. Traditionally, Company A would complete the wheels and conduct quality assessments before sending them to Company B, which would then begin assembling cars. However, a new CEO at Company B has introduced a technology system that enables simultaneous production, meaning Company B starts manufacturing cars at the same time Company A begins producing wheels.
What is this new system known as?
Start to start means two different organisations at different levels of the supply chain begin their work simultaneously rather than sequentially. This is the opposite of a start to finish system, where the next process starts only when the previous one is completed. (See LO 1.2, p.19)
Andrea is the Chief Financial Officer at Big Corporation and is completing a Variance Analysis. She has reviewed the production costs of creating item B, and this month's costs show a variance to budget of -200. What does this mean?
A negative variance to budget means that the company spent 200 less than expected, which is a positive outcome. While it may seem counterintuitive, a negative variance in this context indicates cost savings rather than overspending. Option D is incorrect because the organisation has saved 200, not gained it. (See p.198)
Which of the following are benefits of optimising the supply chain? Select ALL that apply.
Optimising the supply chain brings benefits such as increased flexibility, higher profit margins, better demand forecasting, and waste reduction.
Use of AI and technology (D) is incorrect because it is a method to achieve supply chain optimisation, not a benefit itself.
(LO 1.1, See p.3)
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