LEVEL ONE CORNERSTONES OF SUPPLY CHAIN MANAGEMENT

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1 LEVEL ONE CORNERSTONES OF SUPPLY CHAIN MANAGEMENT STUDY GUIDE

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3 Table of Contents SCPro Level One: Cornerstones of Supply Chain Management...2 Exam Overview...3 Sample Exam Questions...4 Learning Block 1: Supply Chain Concepts Description and Learning Objectives...7 Learning Block 2: Demand Planning Description and Learning Objectives...8 Learning Block 3: Procurement and Supply Management Description and Learning Objectives...10 Learning Block 4: Manufacturing and Service Operations Description and Learning Objectives...11 Learning Block 5: Transportation Description and Learning Objectives...12 Learning Block 6: Inventory Management Description and Learning Objectives...13 Learning Block 7: Warehouse Management Description and Learning Objectives...14 Learning Block 8: Order Fulfillment and Customer Relationships Description and Learning Objectives...15 Practice Exam...16 Practice Exam Answer Key...27 Help at a Glance

4 SCPro Level One: Cornerstones of Supply Chain Management Congratulations on your decision to pursue the SCPro Level One CSCMP Certification. This Study Guide is being provided to help you prepare for your certification exam. In this document, you will find: Exam Overview Learning Block Descriptions and Learning Objectives Practice Exam Help at a Glance 2

5 Exam Overview The exam is a closed-book, four-hour (240 minutes) timed exam in a computer-based format. The exam consists of 184 multiple-choice test questions that have four options for answers and only one best answer. Of the 184 questions, 160 will be scored and 24 will not be scored. These 24 pretest questions are randomly presented throughout the exam and are comparable to scored questions. Candidates should attempt to answer all 184 questions. You will be tested on the following content areas called Learning Blocks: 1. Supply Chain Concepts 2. Demand Planning 3. Procurement and Supply Management 4. Manufacturing and Service Operations 5. Transportation 6. Inventory Management 7. Warehousing 8. Order Fulfillment and Customer Relationships In each content area (Learning Block), there will be questions on the following topics: 1. Concepts 2. Processes 3. Strategies 4. Technology 5. Global 6. Assessment Additional information regarding the testing policies and procedures can be found in the Level One Guidelines. Plan Ahead for Your SCPro Certification Exam CSCMP encourages you to develop a plan to prepare for your exam. Based on the comprehensive content in the eight Learning Blocks, and feedback from our certification participants, we recommend that you allow between six and eight weeks of preparation time before you take your scheduled test. 3

6 Sample Exam Questions Cognitive Level of Test Questions For the CSCMP certification test, all of the questions are in the form of multiple-choice with four answer options. Only one of the four answer options is correct for each question. For each of the eight Learning Blocks within the CSCMP certification test, the questions are written at three different cognitive levels: Level One Knowledge, Level Two Application, and Level Three Synthesis. Following is a general description and example test question for each cognitive level. (A 40-question practice exam is included in this Study Guide beginning on page 17) Cognitive Level One - Knowledge Test questions at Cognitive Level One Knowledge requires examinees to recognize and recall specific facts or information in order to answer the test question correctly. Example Test Question: How are the effects of an 85% learning rate best described? A. As production doubles, the direct labor required to produce a unit should decrease an average of 15%. B. As production doubles, the direct labor required to produce a unit should decrease an average of 85%. C. As purchase quantities double, the purchase price should decrease an average of 15%. D. As purchase quantities double, the purchase price should decrease an average of 85%. Correct Answer: A 4

7 Cognitive Level Two - Application Test questions written at Cognitive Level Two Application require examinees to analyze information, identify which elements are relevant, and determine an approach or solution. Example Test Question: An exporter ships sunglasses with a retail value of $ per unit from Singapore to the United States. The sunglasses are shipped 24 units per case, and there are 50 cases per delivery. The case dimensions are 18 inches x 12 inches x 18 inches. What international intermodal transportation is most appropriate for this shipment? A. Air and railroad B. Air and truck C. Water and railroad D. Water and truck Correct Answer: B 5

8 Cognitive Level Three - Synthesis Test questions written at Cognitive Level Three Synthesis require examinees to synthesize knowledge and information, to judge the value of the knowledge and information, and to form a new approach or solution. Example Test Question: A small manufacturer makes specialty medical care products in a single factory. It ships directly from the factory to end consumers utilizing a common carrier. Last year, production costs were $500,000 and transportation costs were $250,000. If the manufacturer changes its business model to hold products in regional warehouses, production costs would decrease by 15%, common carrier costs would decrease by 60%, adding shipments from the factory to regional warehouses would cost $50,000, and the regional warehouse facilities would cost $75,000 on an annual basis. If total costs are the only factor in the decision, which business model should the manufacturer utilize and why? A. The existing factory to end consumers model because the factory to regional warehouses model would increase total costs by $100,000 annually B. The existing factory to end consumers model because the factory to regional warehouses model would increase total costs by $175,000 annually C. The new factory to regional warehouses model because it would decrease total costs by $100,000 annually D. The new factory to regional warehouses model because it would decrease total costs by $175,000 annually Correct Answer: C 6

9 Learning Block 1: Supply Chain Concepts Description and Learning Objectives Abstract Interest in supply chain management, both in the private and public sectors, has grown rapidly over the last two decades. Leading organizations now recognize the positive outcomes enhanced competitive strategy, increased market share, and greater shareholder value that can be achieved through effective supply chain management. These organizations are taking steps to achieve a competitive advantage through supply chain management, and they need skilled individuals who can design, execute, and manage their supply chains. For these individuals, skill development begins with having a solid foundation of knowledge in supply chain management concepts and principles. Description The goal of this learning block is to assess certification candidates knowledge of the essential components of a supply chain and the fundamental concepts and principles of supply chain management. The content provides insight into the key roles that supply chain management plays in improving customer service, reducing operating costs, and improving financial performance for organizations small or large, national or global. In addition, supply chain management processes, strategies, tools, and technologies are introduced. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of supply chain management and its essential role in an organization 2. Identify the key elements and processes of a supply chain and how they interact 3. Identify principles and strategies for establishing efficient, effective, and sustainable supply chains 4. Explain the critical roles of technology in supply chain planning, visibility, and execution 5. Define the requirements and challenges of moving products across global supply chains 6. Discuss how to assess the performance of supply chains using standard metrics and frameworks 7

10 Learning Block 2: Demand Planning Description and Learning Objectives Abstract This learning block focuses on sales and operations planning, demand planning, and demand forecasting. Sales and operations planning (S&OP) is a decision-making process to balance supply and demand by integrating demand and sales forecasts with operational plans from suppliers, production, and logistics. The goal of the S&OP process is to integrate demand forecasts with capacity forecasts so that the supply chain operations are integrated with the marketing and sales functions. Demand planning is a key step in the sales and operations planning process. The demand plan specifies what should be sold and when given the organization s supply capabilities and constraints. The goal of demand planning is to estimate orders for products and services over some future time period using information such as historical sales data, information about planned promotions, and market intelligence. Demand forecasting is a key step in the demand planning process. The goal of demand forecasting is to accurately estimate future, expected orders. Accurately estimating demand is difficult, and there are a variety of forecasting methods that can be used. These methods are typically either a qualitative or a quantitative approach. However, some organizations use a combination of the two approaches. Description The goal of this learning block is to assess candidates knowledge of the essential S&OP, demand planning, and demand forecasting processes in the supply chain. For S&OP, the content focuses on the critical inputs to the S&OP process, including the demand plan and the capacity plan, which is a projection of future supply capabilities. The S&OP process produces three critical plans the operational plan, the demand plan, and the financial plan. The demand and capacity plans are reconciled through the financial plan that evaluates resource costs against performance projections. For demand planning, the content focuses on the systems, models, and approaches organizations use to better understand the demand for their products and services, and how they use this information to integrate supply and production to satisfy the expected level of demand. For demand forecasting, the content focuses on the different approaches to demand forecasting and the role of the demand forecast in managing the supply chain. 8

11 Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of S&OP, demand planning, and demand forecasting and their essential roles in an organization 2. Identify the key elements and processes in S&OP, demand planning, and demand forecasting and how they interact 3. Identify principles and strategies for establishing efficient and effective S&OP, demand planning, and demand forecasting 4. Explain the critical role of technology in managing S&OP, demand planning, and demand forecasting processes 5. Define the requirements and challenges of operating S&OP, demand planning, and demand forecasting processes on a global basis 6. Discuss how to assess the performance of S&OP, demand planning, and demand forecasting processes using standard metrics and frameworks 9

12 Learning Block 3: Procurement and Supply Management Description and Learning Objectives Abstract Strong relationships with trading partners can be developed through successful supplier relationship management programs and supply management processes that integrate the procurement function with other internal functions and external supply chain partners. These relationships can be the key to increasing the efficiency and effectiveness of several supply chain business processes. The purchase of materials, work-in-process, finished goods, and services by the procurement function is a critical business process within all supply chain operations. The procurement processes can provide organizations with a sustainable competitive advantage through lower costs, higher quality, and better service for both internal and external customers. Description The goal of this learning block is to assess certification candidates knowledge of the management of supply processes and operations in the supply chain. The content focuses on the importance and leadership role of procurement within organizations, the basic steps and key success factors in the evaluation, selection and maintenance of supplier relationships, and the need for the procurement function to integrate with internal business functions and external supply chain partners in sourcing materials and services. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of supply management and its essential role in supply chain operations 2. Identify the key elements and processes in managing supply operations and how they interact 3. Identify principles and strategies for establishing efficient, effective, and sustainable supply management operations 4. Explain the critical role of technology in managing supply operations and material flows 5. Define the requirements and challenges of sourcing materials and services on a global basis 6. Discuss how to assess the performance of supply management operations using standard metrics and frameworks 10

13 Learning Block 4: Manufacturing and Service Operations Description and Learning Objectives Abstract To be successful in manufacturing and service operations, managers should possess both technical and behavioral skills. They should apply these skills to achieve improved transformational processes and outputs in operations management contexts throughout the supply chain. This includes manufacturing, warehousing, and all related business service processes, such as inventory management and customer service. Description The goal of this learning block is to assess candidates knowledge of the essential management of manufacturing and service operations in the supply chain. The content focuses on planning, organizing, controlling, directing, motivating and coordinating all the activities that are used to produce goods and services. Manufacturing and service operations decisions include: Long-term strategic decisions on issues such as facility location, capacity determination, and service delivery network Mid-term tactical decisions on issues such as determination of inventory levels and service-level labor requirements Short-term operational decisions about issues such as operational scheduling and job assignments Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of manufacturing and service operations and its essential role in meeting customer expectations 2. Identify the key elements and processes in manufacturing and service operations and how they interact 3. Identify principles and strategies for establishing efficient, effective, and sustainable manufacturing and service operations 4. Explain the critical role of technology in managing manufacturing and service operations 5. Define the requirements and challenges of manufacturing and service operations on a global basis 6. Discuss how to assess the performance of manufacturing and service operations using standard metrics and frameworks 11

14 Learning Block 5: Transportation Description and Learning Objectives Abstract Transportation involves the physical movement of people and goods between origin and destination points. From a business standpoint, transportation links geographically separated partners and facilities in an organization s supply chain customers, suppliers, channel members, plants, warehouses, and retail outlets. Whether by truck, train, plane, ship, pipeline, or fiber optic wire, transportation facilitates the creation of time and place utility in the supply chain. Description The goal of this learning block is to assess certification candidates knowledge of the management of transportation processes and operations in the supply chain. The content focuses on the key principles, strategies, and decisions required for the cost-efficient, effective flow of goods between sellers and buyers. Transportation is a high cost, high impact supply chain activity. The proper management of transportation processes and issues is critical to the fulfillment of customer demand and the ultimate success of a supply chain. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of transportation management and its essential role in demand fulfillment 2. Identify the key elements and processes in managing transportation operations and how they interact 3. Identify principles and strategies for establishing efficient, effective, and sustainable transportation operations 4. Explain the critical role of technology in managing transportation operations and product flows 5. Define the requirements and challenges of planning and moving goods between countries 6. Discuss how to assess the performance of transportation operations using standard metrics and frameworks 12

15 Learning Block 6: Inventory Management Description and Learning Objectives Abstract Inventory management is focused on determining how much inventory to carry across the supply chain, where to carry it, and how much safety stock is required to meet the organization s cost and customer service objectives. The management of inventories will depend upon the value of the product, the cost to carry the product in inventory, the variability of demand and lead time, the cost of stocking out of the product, the number of locations where inventory is held, and the importance of the product to customers. Description The goal of this learning block is to assess candidates knowledge of the essential management of inventory in the supply chain. The content focuses on the different approaches to managing supply chain inventories and the variables that drive the level of inventories to be held. This includes the fundamental need for inventory, how the product s value affects inventory decisions, the various approaches for determining inventory levels, how the number of inventory locations affects the level of inventory, and new approaches to reducing inventory including postponement, vendor-managed inventories, crossdocking, and quick response systems. The trade-offs between inventory and transportation costs are a critical element in managing inventory effectively, including understanding how carrying costs can affect inventory decisions. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of inventory management and its essential role in meeting customer demand 2. Identify the key elements and processes in inventory management and how they interact 3. Identify principles and strategies for establishing efficient and effective flows of inventory across the supply chain 4. Explain the critical role of technology in planning and managing inventory 5. Define the requirements and challenges of inventory management on a global basis 6. Discuss how to assess the performance of inventory management using standard metrics and frameworks 13

16 Learning Block 7: Warehouse Management Description and Learning Objectives Abstract Warehousing is a critical logistics function that manages the storage and handling of materials, work-inprocess, and finished goods within supply chains. The warehousing function provides economic benefits, such as transaction efficiencies and the consolidation and breaking bulk of inventories. It also plays a critical role in meeting customer requirements for the timely delivery of goods and services. This is accomplished through value-added services and fulfillment processes, while at the same time efficiently managing inventory costs. Description This goal of this learning block is to assess certification candidates knowledge of the management of warehouse processes and operations in the supply chain. The content focuses on the different types of warehousing options, basic warehousing storage and handling operations, strategic planning issues, and the effects of warehousing design and service decisions on total logistics costs and customer service. Proper management of these distribution activities is vital to the fulfillment of customer demand and the ultimate success of a supply chain. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of warehousing management and its essential role in demand fulfillment 2. Identify the key elements and processes in managing warehousing operations and how they interact 3. Identify principles and strategies for planning and managing warehouse operations 4. Identify principles and strategies for designing materials handling operations within a warehousing facility 5. Explain the critical role of technology in managing warehouse operations and product flows 6. Discuss how to assess the performance of warehousing operations using standard metrics and frameworks 14

17 Learning Block 8: Order Fulfillment and Customer Relationships Description and Learning Objectives Abstract Order fulfillment is the complete process from point-of-sale inquiry to delivery of a product to the customer to returns processing. In the broadest terms, it refers to the way organizations respond to customer orders. Order fulfillment is a crucial process since it is the last link in the supply chain. It may be the only direct contact some organizations have with their end customers, and it can make or break an organization s reputation with its customers. Customer service is a series of activities designed to enhance the level of customer satisfaction. Satisfaction is based on the feeling that a product or service has met or exceeded the customer s expectations before, during, and after a purchase. Description The goal of this learning block is to assess candidates knowledge of the essential management of order fulfillment and customer service processes in customer relationship management. The content focuses on planning, organizing, controlling, and coordinating the order fulfillment and customer service operations activities from the initial customer inquiry all the way through post sales service. Learning Objectives After completing the content in this learning block, certification candidates should be able to: 1. Describe the basic concepts of order fulfillment and customer service and their essential roles in customer relationship management 2. Identify the key elements and processes in order fulfillment and customer service and how they interact 3. Identify principles and strategies for establishing efficient, effective, and sustainable order fulfillment and customer service operations 4. Explain the critical role of technology in order fulfillment and customer relationship management 5. Discuss how to assess the performance of order fulfillment and customer service operations using standard metrics and frameworks 15

18 Practice Exam Following is a 40-question practice exam. Taking this exam provides an opportunity to familiarize yourself with the structure of the exam and the types of questions that may be used. Results of the practice exam do not indicate exam results, and should be used only for practice purposes. The practice exam answer key can be found on page What is a common root cause of the bullwhip effect? A. Accurate demand forecasts but inaccurate supply forecasts B. Lack of downstream demand information C. Minimal levels of participants involved in the supply chain D. Sales promotions that have been clearly communicated 2. While many warehouses and distribution centers currently operate with fewer order selection employees than in the past, those employees typically cannot be totally eliminated. In which type of situation is this statement most often true? A. When customers order products in pallet-sized loads B. When the number of product returns from customers is high C. When the number of small-quantity orders received daily is high D. When the variety of stock keeping units in an average order is relatively low 3. Which three manufacturing drivers are projected to be the most important in the 21 st century? A. Fuel prices, government regulations, and wage rates B. Government regulations, security, and taxation C. Market demographics, supply chain challenges, and taxation D. Natural disasters, security, and supply chain challenges 4. What is the primary reason to source goods and services globally? A. Copy the buying patterns of key competitors who are sourcing globally B. Establish a marketing presence in a foreign market C. Gain access to emerging product and process technologies D. Obtain prices that are lower than local market prices 16

19 5. Which type of cost is specific to global sourcing versus domestic sourcing? A. Port terminal and handling fees B. Purchase price C. Tooling cost D. Transportation costs from supplier 6. A building materials retailer is considering cross-docking four products in its distribution center. Based on the demand and store and annual inventory turnover data provided, which product is the most likely choice for cross-docking? Product Weekly Demand (units) # of Stores Stocking Inventory Turnover Flower pot x Hammer x Paint (cans) 1,300-1, x Screwdriver 300-1, x A. Flower pot B. Hammer C. Paint D. Screwdriver 17

20 7. A category sourcing team has developed a scorecard system for evaluating the overall performance of four suppliers (Supplier A, B, C, and D). The scorecard weights are out of 100 total points. The supplier performance rating uses a five-point scale (1 for worst to 5 for best). Based on the scorecard weightings and the actual performance ratings provided, which supplier has the best overall performance? Supplier Criteria Weight A B C D Quality systems Financial condition Cost structure Delivery performance Environmental capability A. Supplier A B. Supplier B C. Supplier C D. Supplier D 8. What term best describes an effort to coordinate inventory deployment across an entire organization? A. Advanced planning and scheduling B. Enterprise resource planning C. Sales and operations planning D. Warehousing 18

21 9. Based on a survey of its current and past customers, an e-retailer determined that stockouts of a specific video game system was an expensive problem. For the stockouts, 60% resulted in backorders, 25% resulted in lost sales, and 15% resulted in lost customers. The total transportation and handling costs for each backorder averaged $ An average customer spends around $10,000 with the e-retailer over his or her purchasing lifetime, while an average sale is $160. How much should the e-retailer invest in periodic inventory for the video game system in order to avoid future stockouts? A. $1,570 B. $1,650 C. $10,000 D. $10, Based on the order data provided, what is the item fill rate? Category Total Orders received 5,000 Units ordered 40,000 Lines ordered 12,000 Units delivered 37,800 Lines delivered complete 11,200 Orders delivered complete 4,600 A. 92.0% B. 93.3% C. 94.5% D. 97.5% 11. What is a key disadvantage of enterprise resource planning systems? A. Benefits primarily multi-national organizations B. Integrates production and capacity only C. Lacks flexibility D. Replaces legacy software systems 19

22 12. Within the sales and operations planning process, what is one of the primary factors that can be adjusted to better align demand with existing supply? A. Inventory B. Marketing C. Production capacity D. Transportation 13. Which two modes of transportation are least affected by rising fuel prices? A. Air and truck B. Air and water C. Pipeline and railroad D. Pipeline and truck 14. An industrial electronics company implemented a sales and operations planning system with a supply collaborator software application. When the company interacts with the outsource partners who perform contract manufacturing, what functionality does the supply collaborator provide? A. Ability to conduct what-if scenario analysis in real time and make last-minute adjustments B. Greater understanding of the manufacturing capabilities and output quality for each contract manufacturer C. Measurement of balanced scorecard key performance indicators D. Visibility to each contract manufacturer s metrics, such as plant utilization and production capacity 15. A long-distance moving company is not achieving key performance targets for its transportation operations. The factors driving the poor performance are 1) routing guide compliance is inconsistent, 2) optimal load tendering is less than 50%, 3) ability to track in-transit loads is limited, and 4) appointment scheduling is a manual process. Which type of tools in a transportation management system would help the moving company address the four factors? A. Analytical tools B. Event management tools C. Execution tools D. Planning tools 20

23 16. The supply chain for a domestic fresh fruit grower has specific requirements. The length of time and temperature during transit must be monitored and controlled, and there must be visibility across the supply chain. In addition to the fruit grower and the domestic retailers, which other groups have a vested interest in the success and safety of this supply chain? A. Competitors and consumers B. Competitors and storage facilities C. Consumers and government regulators D. Storage facilities and water carriers 17. Four cross-dock facilities utilize different resources to unload inbound and load outbound shipments. Based on the data provided for each distribution center, which one is most likely to have the highest hourly throughput? Distribution Center Average Unload/ Load Time (minutes per order) Number of Dock Employees Forklift or Manual Pallets A 14:33 4 Manual Yes B 17:00 4 Forklift No C 19:26 7 Manual No D 16:21 9 Forklift Yes A. Distribution Center A B. Distribution Center B C. Distribution Center C D. Distribution Center D 18. As the total number of warehouses in a distribution network increases, at what rate does the inventory carrying costs increase in comparison? A. Decreasing B. Exponential C. Increasing D. Linear 21

24 19. In general, what areas do governmental agencies most often regulate in the transportation industry? A. Economic and safety regulation B. Environmental and safety regulation C. Environmental and service quality regulation D. Safety and service quality regulation 20. What term is best described as the process of combining purchasing requirements across operating units in order to capitalize on suppliers fixed cost allocations and improvements in suppliers productivity? A. Leveraging B. Specifying C. Spot buying D. Strategizing 21. What is a distinguishing characteristic of organizations that have fully adopted a customer relationship management philosophy? A. Call centers are running and available 24/7 to accept customer calls B. Sales representatives frequently call on key customers and potential new customers C. Software is used to track and monitor customers changing preferences D. The business culture reflects an attitude that the customers wishes have priority 22. If a product only has 12 periods of sales history, why would mean absolute percent error (MAPE) be used as a measure of forecast accuracy rather than mean absolute? A. MAPE calculations do not require time-series forecasting, which is required for MAD B. MAPE calculations have less data collection requirements than MAD C. MAPE results are less likely to have calculation errors, which frequently occur in MAD results D. MAPE results are typically viewed as more easy to interpret than MAD results 23. Which logistics technology is most concerned with data capture? A. Barcoding B. Electronic data interchange C. Internet linkages D. Radio frequency transmission 22

25 24. Which factor will typically have the largest effect on an economic order quantity formulation relative to its incremental change in value? A. Order costs B. Order cycle C. Transportation costs D. Unit costs 25. What term best describes a costing methodology that is frequently used to develop estimates of customer profitability? A. Absorption-based costing B. Activity-based costing C. Allocation-based costing D. Area-based costing 26. How can an organization best assess whether it has reached its end-users in an effective and efficient manner? A. Adopt channel-spanning performance measures B. Establish a pay-for-performance reward system C. Implement functional performance scorecards D. Optimize internal financial metrics 27. Which type of order picking practice most often leads to less idle time for employees and equipment? A. Clearly identifying all pick locations with labels B. Maintaining adequate inventory levels in pick slots C. Storing similar inventory items close together D. Utilizing conveyors to move items between the pick and ship areas 28. What term best describes the phenomena that as production volumes increase with additions of capacity, the unit cost to produce a product decreases to an optimal level? A. Diseconomies of scale B. Economies of scale C. Learning curve D. Utility curve 23

26 29. An office products company is trying to optimize the balance of supply and demand over the coming six-month period. Which element of the sales and operations plan would best guide the efforts of its production and procurement functions during this optimization process? A. Capacity plan B. Demand plan C. Operational plan D. Sales plan 30. A national baked goods company implemented sales and operations planning as a means to increase its financial performance. How would it best demonstrate an effective? A. Decrease the price of perishable items in order to drive sales before items go stale B. Employ a seasonal workforce to make products during holiday seasons C. Increase inventories of eggs and milk when the demand for wedding cakes will increase D. Use the same types of flour and sugar in all of its pastry products 31. Four executives from different industries have a different set of strategies for supply chain collaboration. Based on their strategies, which one of the four executives would most likely build the strongest collaborative relationships across the supply chain? A. Executive A whose strategies include limit information access, use gain sharing, and optimize per unit purchase prices B. Executive B whose strategies include share all available information, use punitive contracts, and optimize product landed cost C. Executive C whose strategies include trust partners with relevant data, build flexible contracts, and optimize total cost of ownership D. Executive D whose strategies include share historical data, contract with multiple suppliers, and optimize inbound delivery costs 32. In the three Vs (volume, value, velocity) model of inventory management, which key performance metric would best measure the velocity objective? A. Material throughput rates B. Period-by-period unit value changes C. Total dollars D. Total units 24

27 33. How can transportation managers best contribute strategically to their organizations supply chain capabilities? A. Adopt higher performance standards for transportation services B. Align the goals of the transportation function with the goals of primary customers C. Purchase transportation services based on lowest possible transactional cost D. Simultaneously meet elevated service requirements and achieve lower costs 34. Which type of tools in transportation management systems go beyond the basic capabilities of route optimization and carrier connectivity to also provide benchmarking and post-shipment performance evaluation capabilities? A. Analytical tools B. Event management tools C. Execution tools D. Planning tools 35. What is a primary challenge that frequently occurs when adopting a centralization strategy for a global supply chain? A. Economies of scale can be difficult to achieve across the supply chain B. Misalignment of information technology is likely to occur C. Monitoring of partner performance can be difficult to coordinate D. Standardized practices may not fit particular markets or regions 36. A multi-national conglomerate has operations and pays government taxes in four countries: Korea, Mexico, Poland, and United States. Based on the pretax profits and tax rates provided, in which country will it have the highest after tax profit? Country Pre-Tax Profit Tax Rate Korea $15, % Mexico $12, % Poland $14, % United States $17, % A. Korea B. Mexico C. Poland D. United States 25

28 37. Which type of software provides oversight during the last phase of the sourcing process? A. Contract management software B. Negotiation software C. Price forecasting software D. Total cost reporting software 38. What is the most commonly cited reason when the staffing and employment costs for a warehouse are higher than they should be? A. Demand variations cause worker scheduling problems, which results in paying for too much overtime or idle time B. Many warehouse facilities run three daily shifts, and night shift workers are often inefficient due to getting less sleep C. Qualified warehouse workers can get higher-paying jobs outside the distribution industry, which drives up salaries D. Total personnel costs, which includes salary, insurance, benefits and vacations, are relatively high in the distribution industry 39. When a supply chain information system is correctly configured, what primary capability does it provide? A. Ability to achieve error-free outsourcing and lean manufacturing B. Ability to develop supply chain strategies in isolation C. Ability to eliminate demand variation and delivery errors D. Ability to manage risk and pursue global optimization 40. What term is best described as the matrix that categorizes processes into structures based on output volume and variety? A. Operations-process matrix B. Product-process matrix C. Quality-process matrix D. Service-process matrix 26

29 Practice Exam Answer Key Practice Exam Answer Key Question Answer Question Answer 1 B 21 D 2 C 22 D 3 C 23 A 4 D 24 B 5 A 25 B 6 D 26 A 7 A 27 B 8 C 28 B 9 A 29 A 10 C 30 A 11 C 31 C 12 B 32 A 13 C 33 D 14 B 34 A 15 C 35 D 16 C 36 C 17 A 37 A 18 A 38 A 19 B 39 D 20 A 40 B Help at a Glance To learn more about SCPro, or find answers to frequently asked questions (FAQs), visit cscmpcertification.org. Or, scpro@cscmp.org or call

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