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SCH4801 EXAM PACK 2023
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SCH4801EXAM
PACK 2023
QUESTIONS WITH
ANSWERS
,SUPPLY CHAIN MANAGEMENT
SCH4801
LONG QUESTIONS AND ANSWERS
SECTION 1 - INTRODUCTION: CONCEPTS AND DEMARCATION
LEARNING UNIT 1
SUPPLY CHAIN MANAGEMENT (SCM): CONCEPTS AND DEMARCATION
EXPLAIN THE CONCEPT OF SUPPLY CHAIN MANAGEMENT
Supply Chain Management (SCM) is a set of inter- and intra-company processes that
produces and delivers goods and service to customers. SCM can be seen as the strategic
management of all the traditional business functions that are involved in any supply chain
flow, upstream or downstream, across any aspect of the supply chain.
EXPLAIN THE BASIC PHILOSOPHIES ON WHICH THE SUPPLY CHAIN CONCEPT IS
FOUNDED
SCM is a management philosophy aimed at integrating all the linkages in the supply chain
into a seamless unit. The goals of managing the supply chain ought to reflect two levels of
interest. Firstly, there are the goals of the individual firms linked into the supply chain. The
first group of goals could be to balance customers’ demands with the need for making profit
and attaining growth objectives.
The characteristic of this philosophy is that the overall philosophy is indicated as a “vantage
point management philosophy”. Vantage point simply means that the supply chain should
be managed from an overall perspective, a holistic approach or a systems paradigm where
one entity is ultimately responsible for ensuring that all the goals of the SCM are attained. It
means the ability to view the entire supply chain processes at a glance.
DISCUSS THE EVOLUTIONARY PROCESS THAT CULMINATED IN MODERN SUPPLY
CHAIN MANAGEMENT
The SCM field has rapidly evolved. Previously, SCM focussed on internal integration but now
focuses on suppliers, customers and information integration to reach optimal level of
performance.
Poirier and Francis suggest an evolutionary model consisting of five consecutive phases or
levels aimed at adopting an SCM philosophy in logical steps, which are linked to the internal
,The second (internal) phase (phase II) in the evolutionary process of the supply chain that
organisations go through is internal integration. In this phase, an “end-to-end” planning
framework is established which represents the first holistic view of the concept of an
integrated supply chain. It also establishes the vision for supply chain integration. In reality,
a long-term business plan is developed to transform the organisation ultimately into a
supply chain-oriented firm. The support of top management for the internal integration of
supply chain activities and functional areas is vitally important during this phase, because
the full integration of functional areas will require substantial process redesign.
The development of suitable technology to support supply chain management is crucially
important for this phase. Although technology development is not limited to information
systems, it is a pivotal factor for future expansion of the supply chain concept to the
external environment, upstream and downstream. Compatibility of information systems
between the firm and its suppliers and customers is a priority and it is not uncommon for
information interchange with the supply market in particular to be established.
In the third (and first external) phase (phase III), organisations look externally to develop
partner collaboration. Moving externally with the supply chain concept requires very
exceptional leadership in the firm. It must be realised that for functional managers to think
of managing beyond the boundaries of the own organisation requires a completely new
paradigm. Firstly, the change from managing from the perspective of functional optimisation
and maximising profit to one that is entirely focused on customer value creation is a major
step.
During this phase, inter-organisation information flow is expanded and information
technology extended to include electronic commerce. The establishment of a supply chain-
wide database with access to all members is also a priority.
The fourth (also external) phase (phase IV) is reaching the full potential of the integrated
supply chain. The supply chain stakeholders work to create value chain collaboration,
among other things, improved supply chain transparency and visibility. During this phase
multifunctional and cross-organisational teams manage almost all processes and activities in
the integrated supply chain. The demand chain will be solidly integrated with the supply
chain in value networks.
Phase V, the final phase, is close to phase IV and consists of supply chain stakeholders
achieving full network connectivity. The value network of suppliers and customers that was
established in phase III is now extended to form a virtual organisation of supply chain
linkages, and to form it into a virtual information network. The organisation will in all
probability also move into the global market with the supply chain and in turn become part
of many global supply chains of other vantage point organisations.
, EXPLAIN THE CREATION OF VALUE IN SCM
The theory of supply chain management holds that, for the eventual product or service to
be commercially advantageous to the organisations involved in its creation and provision,
value must be added to a process faster than cost.
The objective of every supply chain should be to maximise the overall value generated. The
value a supply chain generates is the difference between what the value of the final product
is to the customer and the cost that the supply chain incurs in filling the customer’s need.
Value in the supply chain is regarded as supply chain surplus.
Customers’ perception of value is determined by the entire offering not just the products
and services, but also the many intangibles that are associated with delivering customer
value. Value is also clearly based on perceptions and intangible elements, which also
emphasises the importance of the relationship-building element that is so core to the
concept of SCM.
EXPLAIN THE MANAGEMENT TASK IN SCM
SCM is often described as the planning, organising, implementing and control of the flow
and transformation of goods and services, including the essential information flows from the
raw material stage to the end user. A different perspective of the management of the supply
chain may therefore be obtained by analysing each of the traditional elements of
management.
Planning for the supply chain
Strategic planning for supply chain management is directly linked to the overall
business strategy of the firm and is therefore directly involved in and supportive of the
overall objectives of the firm. It should therefore be emphasised that supply chain
strategies should always be focused on the two overarching objectives of the firm, that
is, optimising shareholder value and creating customer value.
Processes involved in the supply chain is another major element. Supply management
is process management and therefore planning will also cross functional and
organisational boundaries. Process planning therefore also involves identifying and
including only those partners who have internal processes that are highly efficient and
compatible with the overall supply chain processes.
Planning the intricate relationships typical of the supply chain is a delicate task since
the aspirations and limitations of many participants in the chain must be taken into
consideration. Relationship planning is closely linked to the human element in the supply
chain.
Planning the resources available in the supply chain is perhaps the most difficult of the
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