Logistics & Supply Chain Management short only questions

Which statements regarding Business Processes are true, and which are false?

 

1. A main process can be divided into sub-processes.: True
2. Strategic business processes are also called management processes.: False
3. A business process can be divided into main processes.: True
4. All companies have the same business processes.: False

Performance measure help to point out what is working. There are four areas of the supply chain to focus on.

1. Planning. Identify planning by review
   1. Stock turnover. = Ratio total sells vs. Actual stock at a point in time
   2. Planned versus actual production= tells me if I meet goals.
2. Operations goal is that customer receive orders on time
   1. Order lead time = time from when customer submits order to the moment order arrives
3. Delivery of products and services
   1. Order fulfillment = orders delivered with the right quantity, right quality and on time on the first try. (ask customer if order fulfillment is high = you are doing great if not you should work on your processes)
   2. On-time delivery
4. Post-delivery performance
   1. Returns
      1. Wron product delivered
      2. Late delivery
      3. Defect delivery
   2. Invoice accuracy

That they be only looked at individually. You need to check all the key figures cause they are depending on each other. To get an accurate reflection of your performance you have to multiply all the KPIs out. E.g.

You got:

• Order entry accuracy: 98%
• Inventory availability: 80 %
• Warehouse DIFOT service level:90%
• Carrier delivers IFOT:98%
• Customer accepts order: 95%
• Accurate invoice paid: 98%

Multiply that the probability of getting an order right the first time is only 64%

Show the KPI on all the screen for all employees visible. Employees were able to focus on that KPI and increase it by 200% over the next year just by seeing the number going up or down and them wanting to improve it.

A cash cycle is the amount of time it takes of one unit of currentcy spent by your business today to turn into cash again and come back hopefully with more profit.

Purchases made without the correct approval from any old vendor is calle maverick-spending.

Rule of thumb: if you do maverick-spending you'd on average will pay 20% more for whatever you purchase. Most commonly does Maverick-spending occurs most often with indirect purchases like printer paper, pens, toilet paper, keyboards etc. short stuff that can not be tied to any particular project.

Best ways to prevent maverick-spending from happening is to implement processes that seamslessly tie requestors and approvers together and store them all in one place

Beer game simulates a supply chain where unknown amount of orders go in with the retailer and orders neet to be made to distributer, warehouser and manufacturer. It clearly shows the effect a spice in customer demand can have on the manufacturing side.

The controller is the management level and the controlled system is the order-to-payment-S of the supply chain management.

They have an impact of procurement and logistics activities on the balance sheet and income statement.

• Cost changes with new suppliers
• Total cost of ownership. Sum of operational procurement costs
• Total landed cost. All costs up to the customer (incl. Taxes)

• Capital tied up
• Gross and net inventory
• Freight costs and material prices
• Indirect impact = cost of sales, operating costs, tooling costs, personnel costs.

• KPI= Key performance indicators, highlty strategic, long-term character.
  • Strategic level e.g. order fulfillment time
• BPI = business performance indicators, tactical key figures
  • Tactial level e.g. replenishment time, storage time, packaging time, delivery time
• PPI = process performance indicator, operational key figures
  • Operational level e.g purchase requisition time, material disposition time, goods receipt time, incoming goods inspection time

KPIs show where is the company relative to ist competition and benchmarking explains how an oranization managed to capture a good practive. Benchmarking as a navigation system to improve KPIs

1. Performance and costs KPIs
2. Strategic (effectiveness, long-term) and operational (efficiency & viability) KPIs
3. Performance liquidity and value-baded KPIs
4. Absolute and relative

Two dimensions of KPI typology in the supply chain
1. increase in value, reduction of opportunity costs

• Input (purchasing)
• Throughput (storage, picking, production)
• Output (distribution)
• Payment (finance)

2. types of KPIsk

• Generic KPIs
• KPIs for productivity and profitability evaluation
• Quality and service KPIs

1. Generic KPI
   • Input (purchasing)
     • Purchased parts
   • Throughput (storage, picking, production)
     • Packaging units
   • Output (distribution)
     • deliveries
   • Payment (finance)
     • Working capital
     • Cash-to-cash-cycle

1. KPIs for productivity and profitability evaluation
   • Input (purchasing)
     • Acceptance time
     • Receipt costs
     • Daily shipments
   • Throughput (storage, picking, production)
     • Inventory changes
     • Storage costs
     • Incoming orders
   • Output (distribution)
     • Shipping cost
     • Order processing
   • Payment (finance)
     • Billing rate
     • Material intensity

1. Quality and service KPIs
   • Input (purchasing)
     • Service level, return delay
   • Throughput (storage, picking, production)
     • Excess and obsoletes
     • Storage losses
     • defects
   • Output (distribution)
     • Same as input
   • Payment (finance)
     • Sc disputes
     • Cost-change-back
     • Inventory reserve

Cash to cash cycle: The cash to cash cycle is the time period between when a business pays cash to its suppliers for inventory and receives cash from its customers. The concept is used to determine the amount of cash needed to fund ongoing operations, and is a key factor in estimating financing requirements.

working capital: Working Capital cycle (WCC) refers to the time taken by an organization to convert its net current assets and current liabilities into cash. ... Therefore, a business tries to shorten the working capital cycles to improve the short-term liquidity condition and increase their business efficiency. Working capital % = (current assets(<1 year) * 100)/current liabilities

Bullwhip effect describes the effect something small has in one point and with delay there is a much bigger effect on a different end.

reasons for that effect to come in place are lack of demand transparency, distortion of information and frequent adjustments of the stock level.

Which statements regarding Key Performance and Cost Indicators are true, and which are false?

1. Cost KPIs focus on compliance with time and quality requirements.: False
2. Performance indicators focus on compliance with quantitative requirements.: False
3. Cost KPIs focus on compliance with quantitative specifications.: True
4. Performance indicators focus on compliance with time and quality requirements.: True

Which statements regarding the Typology of KPIs according to Werner (2017) are true, and which are false?

1. The typology of KPIs classifies KPIs according to the value added: "Input," "Throughput," "Output," and "Payment.": True
2. All KPIs in the typology of KPIs are relevant for all industries.: False
3. The typology of KPIs only differentiates between "Input" and "Output.": False
4. The typology of KPIs classifies KPIs in the time dimension: "Past," "Present," and "Future.": False

Which statements regarding Strategic and Operational KPIs are true, and which are false?

1. Strategic indicators (KPIs) only measure efficiency.: False
2. Operative Key Performance Indicators (KPIs) primarily measure effectiveness.: False
3. Strategic indicators (KPIs) measure long-term effects.: True
4. Network KPIs can be strategic or operational.: True

Which statements regarding Cost Tracking in the Supply Chain are true, and which are false?

1. Cost tracking can be used, for example, to calculate the return on investment (ROI) of the supply chain.: False
2. For cost tracking, forms are also used that are based upon Excel spreadsheets, for example.: True
3. With Cost Tracking, cost changes due to new suppliers (for example raw materials, semi-finished and finished products) can be analyzed.: True
4. Cost Tracking can be used, for example, to determine the "Total Cost of Ownership" of procurement.: True

Which statements regarding the "Bullwhip Effect" are true, and which are false?

1. The bullwhip effect can be reduced by networked information systems (which offer improved data exchange).: True
2. A bullwhip effect describes a logistical whiplash: Inventories gradually swing down the steps of a logistics chain.: False
3. The bullwhip effect describes the rise and fall of inventories along the value chain, triggered by the demand behavior of customers.: True
4. Possible reasons for the emergence of a logistic whiplash are, for example, incorrect sales forecasts or erratic ordering behavior of customers.: True

Which statements regarding Controlling of Inventories are true, and which are false?

1. Inventories have a direct impact on the balance shee;, for example, through changes in quantity.: True
2. Inventories have an indirect impact on the income statement; for example, through calculated interest.: False
3. Inventories have a direct impact on the income statement; for example, through calculated interest.: False
4. Inventories have a direct impact on the income statement; for example, through inventory carrying (warehousing) costs.: False

Which statements regarding KPIs are true, and which are false?

1. KPIs (KPIs) generally have the function of providing fast and meaningful information about business management issues.: True
2. Supply chain metrics now target not only your own organization, but the entire value chain.: True
3. Key Figures provide a representation of quantitatively ascertainable facts in concentrated form.: True
4. Viewed in isolation and internally, KPIs have a high informative value. In external comparison they lose importance.: False

Which statements regarding Cost Tracking in the Supply Chain are true, and which are false?

1. Cost Tracking is often integrated into a reporting system.: True
2. Cost Tracking in the supply chain can apply to freight costs or inventory.: True
3. For cost tracking, a forecast is first created before the actual values are derived from it.: False
4. Cost Tracking in the supply chain can apply to material prices.: True

Which statements regarding Relative KPIs are true, and which are false?

1. A relative ratio is, for example, the sales per employee and period.: True
2. A relative ratio is, for example, the absolute market share in %.: False
3. An indexed number is, for example, the absolute market share in %.: False
4. A classification ratio is, for example, the absolute market share in %.: True

Which statements regarding KPIs are true, and which are false?

1. A KPI describes the "where": KPI as indication of location.: True
2. A KPI shows where a company stands; it shows the path to a best practice situation.: False
3. A KPI shows where a company stands, but it does not show the path to a best practice situation.: True
4. A benchmark describes the "How": Benchmark as a "navigation system" to improve the KPIs.: True

Which statements regarding Controlling of Freight Costs and Material Prices are true, and which are false?

1. Freight Costs and Material Prices are reported as part of inventory.: False
2. Freight Costs and Material Prices have a 100% impact on the income statement.: True
3. Freight Costs and Material Prices have a 100% impact on inventory.: False
4. Freight Costs and Material Prices are either shown separately or as part of the manufacturing costs.: True

Which statements regarding the "Bullwhip-Effect" are true, and which are false?

1. The bullwhip effect describes the rise and fall of inventories along the value chain, triggered by the demand behavior of customers.: True
2. The bullwhip effect describes the rise and fall of inventories along the value chain, triggered by the behavior of suppliers.: False
3. One key to solving the bullwhip effect is the communication of sales data and customer behavior across the entire value chain.: True
4. The bullwhip effect describes the phenomenon of compensating for demand uncertainty by increasing stock levels.: True

Which statements regarding Controlling the Supply Chain are true, and which are false?

1. Controlling focuses on inventories, as these primarily affect the income statement.: False
2. Controlling checks the balance sheet and income statement.: False
3. Controlling includes the effects of inventories, freight costs and material prices on the balance sheet and income statement.: True
4. Controlling focuses on freight costs and material prices, as these have a direct impact on the balance sheet.: False

Which statements regarding the Controlling of Freight Costs and Material Prices are true, and which are false?

1. An increase in freight costs and material prices has a 100% impact on EBIT.: True
2. A reduction in freight costs and material prices has a positive impact on the balance sheet.: False
3. Freight costs and material prices have no impact on EBIT.: False
4. A reduction in freight costs and material prices has a 100% impact on EBIT.: True

Which statements regarding Controlling of Inventories are true, and which are false?

1. Through value adjustments, net inventories become gross inventories.: False
2. A value adjustment of inventories has an impact on the balance sheet.: True
3. A value adjustment of inventories has an impact on the income statement.: True
4. In financial analyses a distinction must be made between gross and net inventories.: True

Which statements regarding the Key Figure "Working Capital" are true, and which are false?

1. "Working Capital" is a key figure for measuring liquidity.: True
2. The higher the working capital, the more secure the future liquidity.: True
3. Inventories and receivables as part of current assets have no direct impact on working capital.: False
4. The lower the working capital, the more secure the cash flow.: False

Which statements regarding the Cash-to-Cash-Cycle are true, and which are false?

1. A strategy for the shortest possible cash-to-cash cycle is: pay suppliers for goods and services quickly and allow customers long payment periods.: False
2. The key figure should be as small as possible, in extreme cases it is even negative.: True
3. A strategy for the shortest possible cash-to-cash cycle is to delay paying suppliers for goods and services and require customers to quickly pay.: True
4. The key figure measures the time span between outgoing payments (suppliers) and incoming payments (customers).: True