Chapter 13 - Supply Chain Process Integration

True / False

1. The ultimate goal in supply chain management is to create value for the services and products provided to end
customers, which, in turn, will benefit the firms in the supply chain network.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-1

2. An important initial step in the supply chain integration model is for a firm to identify the primary trading partners so
the firm can concentrate its time and resources on managing the important process links with these companies.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-1

3. It is important for all supply chain members to first understand the important characteristics upon which the supply
chain end product is competing. Once this is understood, the supply chain members should all be using strategies
consistent with those competitive characteristics when delivering their product and/or service.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-1

4. Lack of knowledge, uncertainty, and lack of trust between people and organizations are some primary obstacles
preventing organizations from sharing information with supply-chain partners, as well as among coworkers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic

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Chapter 13 - Supply Chain Process Integration
NOTES: 13-2

5. Benefits of internal process integration include greater flexibility to respond to market changes and better utilization of
resources.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-2

6. The development of functional silos within an organization is considered a key component to achieving successful
supply chain process integration.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-2

7. The phrases "customer relationship management" and "customer service management" are interchangeable supply
chain terms.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

8. The order fulfillment process relies on forecasting and techniques used to smooth demand variabilities when disparities
exist between demand and supply.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3
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Chapter 13 - Supply Chain Process Integration

9. Forward buying is when companies purchase very small amounts of inventory.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

10. Passive RFID Tags are less expensive than active RFID tags, which have been used for healthcare and military
applications.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-4

11. RFID tags, which stands for Radio Frequency Identification tag, is a technology that will be used to gain real-time
inventory information about the geographic location of a product in an effort to insure that shelves are full and that supply
chains are issuing replenishment orders in a timely fashion.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-4

12. RFID technology seeks to minimize supply chain visibility.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-4

13. Training of supply chain partner employees is also known as collaborative education, and can result in more
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Chapter 13 - Supply Chain Process Integration
successful supply chains and higher partner returns.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-4

14. According to the textbook, there are four key supply chain business processes: Purchasing, Manufacturing,
Distribution, and Returns.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-5

15. Manufacturing flow management is the key process that helps balance customer demand and the firm's output
capabilities.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

16. One of the key supply chain business processes is supplier relationship management, which seeks to forecast demand
and coordinate purchasing and distribution in an effort to balance customer demand with the firm's manufacturing
capacity.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

17. Knowledge management solutions connect buyers and suppliers via the internet to aid in the integration of supply
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Chapter 13 - Supply Chain Process Integration
chains.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

18. When demand exceeds a supplier's finished goods available, a supplier may allocate product in proportion to what
buyers ordered. This rationing often results in shortage gaming by the suppliers customers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-6

19. Two methods for managing supply chain risk include utilizing a supply chain IT system and identifying backup
suppliers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-7

20. The most basic security system should include procedures and policies for securing facilities, personnel, computer
systems, and freight shipments.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-7

Multiple Choice

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Chapter 13 - Supply Chain Process Integration
21. Which of the following is NOT true about firms which integrate their process activities?
a. Value is created for the services and products provided to end customers
b. Activity maps are used to track which resources have been jointly managed
c. Information is shared and resources coordinated to jointly manage a process or processes
d. Benefits are provided to the firms in the supply chain network
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-1

22. Which of the following is important for external process integration to be successful?
a. Successful internal process integration
b. Compatible information systems
c. Both A & B
d. None of these
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-1

23. The coordination and sharing of information and resources to jointly manage a process is referred to as:
a. Rationing
b. Process Integration
c. Gaming
d. EDLP
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-1

24. Failing to see the big picture and acting only in regard to single firm in the supply chain can be referred to as:
a. Silo mentality
b. Balking
c. Biased decision making
d. Stockpiling
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
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Chapter 13 - Supply Chain Process Integration
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-2

25. Which of the following is an obstacle to successful process integration?

a. Passive integration
b. Collaborative inventory management
c. Lack of supply chain visibility
d. Cloud-based supply chain management
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-2

26. The primary enabler of the internal integration of key supply chain processes is a firm's:
a. CRM program
b. ERP system
c. Data warehouse
d. Legacy system
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-3

27. Building, maintaining and strengthening beneficial relationships with suppliers and customers is accomplished
through the use of:
a. Data warehouses
b. Legacy systems
c. External process integration
d. Order batching
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

28. Which of the following is a vital element in developing a strong supply chain through the practice of process
integration?
a. Developing and implementing a strong information technology system that allows for fast and easy
information exchanges between supply chain partners
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Chapter 13 - Supply Chain Process Integration
b. Partner collaborations on methods to improve processes within the supply chain
c. Partnerships, which value information sharing and partner collaborations
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

29. Mapping the network of primary trading partners is something that should be done in which stage of the supply chain
integration model:
a. Review and establish supply chain strategies
b. Identify critical supply chain trading partners
c. Align supply chain strategies with key supply chain process objectives
d. Assess and improve internal integration of key supply chain processes
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-3

30. Decisions regarding the types of parts purchased, suppliers used and the manufacturing process employed, should be
decided in which phase of the supply chain integration model:
a. Review and establish supply chain strategies
b. Identify critical supply chain trading partners
c. Align supply chain strategies with key supply chain process objectives
d. Assess and improve internal integration of key supply chain processes
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

31. Which of the following identifies the key customers, determines their needs, and then develops products and/or
services to meet those needs?
a. Customer Service Management
b. Product Development and Commercialization
c. Customer Relationship Management
d. Demand Management
ANSWER: c
POINTS: 1

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Chapter 13 - Supply Chain Process Integration
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-3

32. Supply relationship management personnel routinely communicate with:

a. Production personnel to obtain feedback on supplier and purchased item performance
b. Marketing personnel for customer feedback
c. Suppliers for new product development and performance feedback
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-4

33. Which of the following tends to reduce safety stocks among supply chain members, generating even less variability in
supply chain orders?
a. Forward Integration
b. Internal quality standards
c. Information visibility
d. All of these
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-4

34. The phase of the supply chain integration model concerned with identifying the important processes linking each of
the supply chain partners is:
a. Review and establish supply chain strategies
b. Identify critical supply chain trading partners
c. Align supply chain strategies with key supply chain process objectives
d. Assess and improve internal integration of key supply chain processes
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

35. Which of the key supply chain business processes refers to meeting customer requirements by synchronizing the firm's
marketing, production and distribution plans:
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Chapter 13 - Supply Chain Process Integration
a. Customer relationship management process
b. Customer demand organization process
c. Order fulfillment process
d. Supply chain synchronization process
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

36. A customer approaches you with a question regarding her order status and shipping date; the information you provide
is an example of which of the eight key supply chain business processes:
a. Supply management process
b. Demand management process
c. Order management process
d. Customer service management process
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-5

37. According to the text, all of the following are considered key supply chain business processes EXCEPT:
a. Knowledge management process
b. Manufacturing flow management process
c. Supplier relationship management process
d. Returns management process
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-5

38. Which of the following is NOT one of the eight key supply chain business processes?
a. Product Development and Commercialization
b. Customer Relationship Management
c. Order Fulfillment
d. Strategic Management
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
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Chapter 13 - Supply Chain Process Integration
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-5

39. Customer feedback mechanisms are developed as part of which supply chain business process:
a. Customer relationship management process
b. Knowledge management process
c. Customer service management process
d. Product development and commercialization process
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-5

40. Which of the following is a contributor to the bullwhip effect?

a. Smaller Order Sizes
b. Rationing
c. EDLP
d. VMI
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-6

41. Due to supply rationing, a buyer is being allotted 90% of her total orders. As a result, the buyer inflates her subsequent
orders in an attempt to meet her real needs for demand. This strategy is known as:
a. Stockpiling
b. Bullwhip ordering
c. Order fulfillment
d. Shortage gaming
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-6

42. Price fluctuations that are the result of special product promotions, quantity discounts, and other special pricing
discounts by suppliers result in:
a. Shortage Gaming
b. Quantity Batching
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Chapter 13 - Supply Chain Process Integration
c. Buy-Back Gaming
d. Forward Buying
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 13-6

43. According to the text, one of the biggest problems facing global supply chains is:
a. Cargo theft
b. Currency devaluation
c. Communication
d. Cyber intrusion
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-7

44. Which of the following would be considered a Supply Chain Risk Management activity?
a. Increasing safety stock
b. Diversify the supply base
c. Utilize a supply chain IT system
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 13-7

45. The following supply chain security activities, creating a director of security position, hiring personnel with military
and/or government experience, and performing a formal security risk assessment, would be classified as:
a. Basic Initiatives
b. Reactive Initiatives
c. Proactive Initiatives
d. Advanced Initiatives
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
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Chapter 13 - Supply Chain Process Integration
NOTES: 13-7

Subjective Short Answer

46. List and describe THREE obstacles to process integration along the supply chain.
ANSWER:
a. Silo Mentality - the inability to see the supply chain from a big picture perspective.
Single departments act alone without regard for the firm, or partner firms within the
supply chain.
b. Lack of supply chain visibility - the inability to easily share or retrieve trading partner
information in real-time as desired by the supply chain participants.
c. Lack of trust - Supply chain partners may be unwilling to work together or share
information due to the fear that their partners will either take advantage of them, share
the information with competitors, or use the information unethically.
d. Lack of knowledge - Lack of skills in working with the process and information system.
Also, a lack of knowledge regarding the benefits of supply chain management among
both management and the other employees. This lack of knowledge and/or skill is
problematic when either the firm or its partners suffer from it.

The following activities, which cause the bullwhip effect, can also be considered obstacles to supply
chain integration:
e. Demand Forecast Updating - Using varying customer orders to create an updated
forecasts, production schedules, and purchased requirements
f. Order Batching - Ordering in large amounts in order to decrease order and transportation
costs
g. Price fluctuations - Price incentives may cause erratic buying patterns when buyers
attempt to stock up on inventory in order to take advantage of low costs, even though
demand remains low/constant
h. Rationing and Shortage Gaming - shorting buyer orders when demand exceeds supply.
This may cause buyers to over-inflate order sizes in an attempt to meet their demand
during these times of short supply.
POINTS: 5
DIFFICULTY: Moderate
KEYWORDS: Bloom’s: Comprehension
OTHER: Communication
NOTES: 13-2

47. What is RFID technology and how will it aid in management of the supply chain?
ANSWER: RFID stands for radio-frequency identification. In the near future, RFID is expected to be able to access
real-time inventory information and allow companies to immediately replenish inventories when they
are running low. This type of technology will allow supply chain managers to track inventory
throughout the supply chain, collect information concerning demand, aid in keeping store shelves filled
with product, and potentially decrease theft.
POINTS: 5
DIFFICULTY: Moderate
KEYWORDS: Bloom’s: Comprehension
OTHER: Communication
NOTES: 13-4

48. List FIVE of the eight supply chain business processes.

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Chapter 13 - Supply Chain Process Integration
ANSWER: a. Customer relationship management
b. Customer service management
c. Demand management
d. Order fulfillment
e. Manufacturing flow management
f. Supplier relationship management
g. Product development and commercialization
h. Returns management

POINTS: 5
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Communication
NOTES: 13-5

49. List and explain TWO of the causes of the bullwhip.

ANSWER:
Demand Forecast Updating - Using varying customer orders to create an updated forecasts,
production schedules, and purchased requirements
Order Batching - Ordering in large amounts in order to decrease order and transportation costs
Price fluctuations - Price incentives may cause erratic buying patterns when buyers attempt to stock
up on inventory in order to take advantage of low costs, even though demand remains low/constant
Rationing and Shortage Gaming - shorting buyer orders when demand exceeds supply. This may
cause buyers to over-inflate order sizes in an attempt to meet their demand during these times of
short supply.
POINTS: 5
DIFFICULTY: Moderate
KEYWORDS: Bloom’s: Comprehension
OTHER: Communication
NOTES: 13-6

50.
The textbook states that "the bullwhip effect can be a pervasive and expensive problem along the supply chain." Answer
the following questions in relation to the bullwhip effect:
a. Briefly describe the bullwhip effect.
b. List 2 key activities that cause the bullwhip effect. How do they exacerbate the problems associated with
the bullwhip effect?
c. How can process integration help prevent/minimize the bullwhip effect?
d. List 2 other key activities that can act as deterrents against the bullwhip effect. How do they minimize
and/or eliminate the problems associated with the bullwhip effect?
ANSWER:
a. Briefly describe the bullwhip effect.
The bullwhip effect is characterized by the amplified forecasts in order sizes that become
prevalent as you move farther down the supply chain. The amplifications and subsequent
demand variations cause problems with capacity planning, inventory control, and
workforce production scheduling. Some of the end results may be product shortages
which may upset customers, or high inventories which increase total supply chain costs.

b. List 2 key activities that cause the bullwhip effect. How do they exacerbate the problems

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Chapter 13 - Supply Chain Process Integration
associated with the bullwhip effect?
1. Demand Forecast Updating - Using varying customer orders to create updated
forecasts, production schedules, and purchase requirements. These fluctuating
forecasts, increasing leadtimes, and growing safety stocks contribute to the
bullwhip effect.
2. Order Batching - Ordering in large amounts in order to decrease order and
transportation costs. This type of ordering amplifies demand variability, which
in turn contributes to the bullwhip effect.
3. Price Fluctuations - Price incentives may cause erratic buying patterns when
buyers attempt to stock up on inventory in order to take advantage of low
costs, even though demand remains low/constant. This type of ordering
amplifies demand variability, which in turn contributes to the bullwhip effect.
4. Rationing and Shortage Gaming - shorting buyer orders when demand exceeds
supply. This may cause buyers to over-inflate order sizes in an attempt to meet
their demand during these times of short supply. This obviously inflates
demand, contributes to demand variability, which in turn contributes to the
bullwhip effect.

c. How can process integration help prevent/minimize the bullwhip effect?

Many of the problems which cause the bullwhip effect are related to poor communication
between the supply chain partners, the manufacturing firm, and the customers.
Developing a supply chain with close relationships between suppliers and buyers,
equipped with effective and efficient communication systems allow supply chain partners
the ability to plan more accurately for the actual demands of the system. It is also
important for the supply chain partners to continually develop these relationships and
strive for continuous improvement.

d. List 2 other key activities that can act as deterrents against the bullwhip effect. How do
they minimize and/or eliminate the problems associated with the bullwhip effect?
1. Vendor Managed Inventory Systems - VMI systems empower suppliers to
manage inventories for their customers based on information supplied directly
to the supplier via the customer's system. This not only allows for increased
visibility, it also allows for suppliers to act at a time closer to the actual
moment of need.
2. Increasing Information Visibility - Developing information systems which
allow organizations and their supply chain members to more accurately assess
the needs of the system/customers will allow for more effective planning and
in turn provide a more efficient use of resources.
3. Decreasing Order Sizes - smaller order sizes help supply chain members more
accurately track changes in demand. Such orders will be more frequent, and
allows forecasts to be more accurate.
4. Maintaining a policy of Everyday Low Prices - this helps to minimize or
eliminate price fluctuations which may cause irregular buying patterns, or
create an enlarged sense of demand variability.
5. Reducing the length of the supply chain can reduce the bullwhip effect by
reducing the number of occasions when forecasts are calculated.
6. Reducing lead times from order to delivery will allow organizations to order in
a just-in-time manner, and allows for more small order quantities.
7. Attempting to limit shortage gaming by allocating product for sale to buyers
based on demand histories.
POINTS: 10
DIFFICULTY: Difficult

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Chapter 13 - Supply Chain Process Integration
KEYWORDS: Bloom’s: Comprehension
OTHER: Communication
NOTES: 13-6

Essay

51. List and describe FIVE of the eight key supply chain business processes.
ANSWER:
a. Customer Relationship Management - A process which seeks to identify and segment
customers so that new products and services will meet their ever-changing needs. Also, it
allows organizations to measure customer profitability and target very small customer
segments such that they will be able to market to the small customer segments in more
meaningful ways.

b. Customer Service Management - This process seeks to aid the customer by providing
them information about order status, shipping dates, product availability, and other
common customer service needs. Also, this process seeks to find new ways to service
customers in the future.

c. Demand Management - This process attempts to balance customer demand with the
organization's capacity. This is done through demand forecasting and coordination of
production, purchasing, and distribution.

d. Order Fulfillment - Meeting customer requirements by synchronizing the firm's

marketing, production, and distribution plans.

f. Manufacturing Flow Management - A process which attempts to satisfy customer

demand by determining the required levels of flexibility and velocity from the
manufacturing process.

g. Supplier Relationship Management - This process seeks to develop relationships with

key suppliers. Modern supply chains say this is an important step in operating efficiently,
and ultimately meeting the needs of the customer.

h. Product Development and Commercialization - Ineffective and efficient product

development. Looking to suppliers and customers for information that will allow good
products to get to market quickly.

i. Returns Management - The management of material usage, product recalls, packaging

requirements, and returned product. This process is responsible for both managing those
things in the present as well as trying to achieve related organizational effectiveness and
efficiency in the future.
POINTS: 10
DIFFICULTY: Difficult
KEYWORDS: Bloom’s: Comprehension
OTHER: Communication
NOTES: 13-5

52. The textbook lists the following activities as Supply Chain Risk Management activities:
a. Increasing safety stock and forward buying
b. Identify backup suppliers and logistics services
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Chapter 13 - Supply Chain Process Integration
c. Diversify the supply base
d. Utilize a supply chain IT system
e. Develop a formal risk management program

For each also provide the downside of utilizing that particular strategy.
ANSWER: a. Increasing safety stock and forward buying
Whatever the disruption, late shipments, damaged or destroyed goods, stolen goods, etc.
additional inventory will help in buying time until the disruption can be addressed.
Downside: Cost of purchasing and holding inventory

b. Identify backup suppliers and logistics services

If your suppliers are disrupted or if your shipments are disrupted, having an alternative
source of supplies and delivery can help eliminate the possible negative effects or at least
decrease the disruption.
Downside: Cost of researching and negotiating an agreement. Also, your present
suppliers may feel slighted.

c. Diversify the supply base

Having multiple suppliers allows a company to manage risk since it is less likely that all
suppliers will experience disruptions at the same time.
Downside: Having multiple suppliers requires more effort when attempting to develop
close supplier relationships. A truly globally diverse supply base will also introduce
different types of risk associated with global purchasing and logistics.

d. Utilize a supply chain IT system

A good supply chain IT system increases supply chain visibility, which in turn allows
companies to see problems early, or possibly even before they occur. This provides the
company time for a quick response.
Downside: The cost to purchase, implement, and train employees on a new IT system can
be high. Also, the compatibility both internally and externally may be an issue.

e. Develop a formal risk management program

Anticipating, assessing, and planning responses for supply chain risks allows companies
to be prepared for common disruptions, but they also help in dealing with unanticipated
disruptions. This will hopefully help the company minimize risk exposure, alert
employees what to watch for, and also provide a plan of action.
Downside: The time, effort, and cost to develop a comprehensive risk management
program can be a seem like an intimidating commitment.
POINTS: 10
DIFFICULTY: Difficult
KEYWORDS: Bloom’s: Application
OTHER: Communication
NOTES: 13-7

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