Module 1 - Book 1 of 2 2012 APICS CSCP Exam Content Manual (ECM) Course Overview Section A: Supply Chain Management Concepts. Section B: Supply Chain Alignment with Business Strategy Section C: Supply Chain Design and Improvement Considerations Section D: Inventory ManagementI-A: Supply chain nsnagentent concepts Preparing for the Certification Exam Studying the APICS CSCP Learning System combined with on-the-job knowledge. professional experience, and other APICS learning tools, such as the PICS Dictionary. is the most effective way to prepare for the APICS CSCP certification examination. The APICS CSCP Learning System is intended to cover the body vf knowledge tested by the APICS CSCP certification examination; however, the APICS CSCP Learning System does not “teach the test.” The Learning System Focuses on sequiring knowledye, whereas the exam tests the candidate's ability to upply that knowledge in accordance with accepted industry standards Content on the exam is based on real-world scenarios and requires candidates to apply the concepts in the APICS CSCP Learning System, While both the APICS CSCP Learning System and the APICS CSCP certifieation examination are based on the APICS CSCP Exam Content Manual (which is available for free downloud at wsew LearuCSCP.com » Resource Center » Certification Exam Resources). they ate developed independently of ene another. To preserve exam integrity, specifie exam questions and th breadth are not shared with the APICS CSCP Learning System developers Intellectual Property and Copyright Notice All printed materials in the APICS CSCP Learning System and all material and information in the companion online component are owned by APICS and protected by United States eopyright faw as well as international treatics and protocols. ineluding the Beene Convention, The APICS CSCP Learning System and the companion Aecess Code for the CSCP online component are for your personal educational use only nd may not be copied, reproduced. reprinted, modified, displayed, published, transmitted (electronically or otherwise}, transferred, sold. distributed, leased, licensed, adapted, uploaded, downloaded, or reformatted. In addition to bein CSCP materials in violation of copyright laws will fimit the program's uselulness. 4 ficant resources to create quality professional development opportunities for ity membership. Please do not violate APICS* intellectual property rights or copyright laws, APICS Dictionary, 13" Edition Reference Definitions contained within the APICS CSCP Learning Sy with the APICS Dictionary 13¢h edition, You may purchase the complete dictionary from the APICS bookstore. Module I—Book I Checklist: Fundamentals of Supply Chain Management Section Start Date Completion Date Section Quiz Score* EB: Supply chain alignment with business strategy t 1-Ce Supply chain ID: Inventory management *Look for this test on the Web al wCourse Overview and Module 1: Fundamentals of Supply Chain Management Book 1 Module 1, Book 1 Contents 2012 APICS CSCP EXAM CONTENT MANUAL (ECM) COURSE OVERVIEW. cacao mination -ECM-1 MODULE 1: FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT Introduction ane reac I Section A: Supply Chain Management Concepts ......unusnnnnninnennnnnnneneesl I's a World of Global, Complex, Interdependent Supply Chains. sal3 Basie Supply Chain . 1s ‘The SCOR® Model: Linking Processes, Metres, Best Practice, and Technologies ...--o1.0000 1-13, Vertical versus Horizontal Integration 1s Supply Chain Management Objectives... se seo 1-24 Supply Chain Management Benefits ...0.nnnmonne pad : ssn AB Accounting and Financial Statement Basics 1.52 Section B: Supply Chain Alignment with Business Strategy ....... ever 1468 Business Strategy and Competitive Advantages : 1-70 Organizational and Suppiy Chain Strategy, Prioritization, Capabilities, and Alignment. 1-74 Resolving Misaligament or Gaps... sens 1-106 Section C: Supply Chain Design and Improvement Considerations. Lis Understanding the Marketplace... stn 1s Supply Chain Design Considerations... See eee eee IeU8 Continuous Improvement 1-124 Section D: Inventory Management Seer ee tere eee 1148 The Need for Inventory 1-148 Aggregate and Item Inventory Management one eee LISI Flow of Material enon 1-153 Functions of InventOry wr.cnnisnnnnnnnnnnnnnnnnnn sone FASS Inventory Related Cost Categories nnn eee iisy Effecis of Inventory on the Financial Statements 1-159 © 2012 aPICs Version 3.0, 2012 Edition Alright reserved @ cwasiminensawengearerModule 1, Book 2 Contents Section E: Logistics Fundamentals Lint Role af Logistics in Supply Chain Management Witt Logistics Service Providers. 3PLs and 4PLs. Last Reverse Logistics. Liss Section F: Market Segmentation Reasons to Mentify and Understand Market Seements, Ways tu Seginent Markets. Understanding the Wants and Needs of Each rem Section G: Demand Planning Forecastin Demand, Dumand Ma Finkages Among the Elements, Demand Management Functional Responsibitities and Imerlaves Section H: Customer Relationship Management (CRM) Concepts Need tor ORM Seope of CRM Elements of CRM. Benelits of CRM Implementing CRM ced for and Uses of Customer Information in CRM Section |: Supply Management Concepts L2sp Total Cost of Ownership 1290 Outsourcing and Offshoring : 1284 Make-verstrssBuy Analysis 1209 Range of Buye Supplier Relationships 1303, Developing Supply Plans 1-306 Supplicr Relationship Management (SRM 1-309 Inierrelationship bets cen CRM and SRM 313 Bibliography 323 Cumulative Course Index Laas © 2012 apices Version 3.0, 2012 Edition All ights reserved —APICS Certified Supply Chain Professional™ (CSCP) Learning System This product is based on the APICS CSCP Exam Content Manual (ECM) developed by APICS. Although the text is hased on the body of knowledge tested by the APICS CSCP exam, program developers do not have access to the exam questions. Therefore, reading the text does not guarantee a passing score, ‘The references in this manual have been selected solely on the basis of their educational value to the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials that may be offered or recommended by the authors or publishers of books and publications listed in this module. Every effort has been made to ensure that all information is current and correct. However, laws and regulations are constantly chan; publisher and authors are not offering legal or professional services, ‘Therefore, this product is distributed with the understanding that the Acknowledgments We would like to thank the following dedicated subject matter experts who shared their time, experience, and insights during the initial development and subsequent updates of the CSCP Learning System: Greg P. Allgair Julie Fenson, CPIM, CSCP Maryanne Ross, CFPIM, CIRM, Curtis Brewer, CFPIM, CIRM, CSCP Honey Johnson, CFPIM, CIRM, cSCP Jashobrata Bose, CSCP CPM. CSCP Kimber Ruoff. CPIM, CIRM, Al Bukey, CFPIM, CIRM, CSCP_ Rajesh Kamat, CSCP- CSCP, C.P.M. Luc Chalet, Ph.D, CEPIM,CSCP Prakash Kanagalekar, PIM, CSCP_ Ignacio Séncher-Chiappe Prashant Choudhary, CSCP Jack Kerr, CPIM, CSCP, CP.M Carolyn Sly, CPIM, CSCP, CPM, David N. Dadich, CSCP, LSS Jose Lara Pam Somers, CPIM, CIRM, CSCP Blackbelt Mike Loughman, CSCP Chad Strieklin Prasanta K. Dash, CSCP, PMP Giuseppe Lovecehio, CFPIM,CSCP Shashank Tilak, CPIM, CSCP Sudripto De, CSCP Richard Merit, CFPIM, CSCP. Huanjau (Arthur) Tseng, CFPIM, Arnaud Deshais, CPIM, CIRM, CPM. scp i SCP, CPM, CPSM_ ‘Thiagu Mathan, CSCP- Dave Turbide, CFPIM, CIRM Alan Downs, CPIM, CSCP- Steven J, Miller, CSCP. Sudeep Valmiki, CSCP Ralph G, Fariello, CFPIM, CIRM, Alan L. Milliken, CFPIM, CIRM, Rosemary Van Treeck, CPIM, esc csc ‘CIRM, CSCP J aura E. Gram, CSCP Peter W. Murray, CIRM. Wout Verwoerd, CFPIM, CIRM, Janice M. Gullo, CPIM, CSCP. Mike Okrent, Ph.D., CIRM, CSCP - ra ; okurke, Ph.D. CFPIM, ‘Amit Kumar Gupta, BE, CSCP Kasthuri Rengan Ponnambalam, tet PhD . CIRM, CSCP, CPM Joni Holeman, CEPIM, CIRM, CSCP escp aga Whiauslcrl CHa Fie P_ Jack, PD, CFPIM, CScP Gitar Chand Pradhan, CPIM, he Whites CPIM, CIRM. Rajesh Kumar Jagadeeswaran, CPIM, oo vive wikkerCScr: ser David Rivers, CFPIM, CIRM, CSCP es Blair Williams Jonah, CEPIM, Dave Jankowski, CPPIM, CSCP oe © 2012 aries Version 3.0, 2012 Fition All eights reserved ® rtd 1M postPICS The Association for Operations Management® APICS CSCP Exam Content Manual This manual is in effect from January 1, 2012, through December 2012. Visit apics.org/CSCP for APICS CSCP Exam Content Manual Errata. ‘The references in this manual have been selected solely on the basis of their educational value to the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials that may be offered or recommended by the authors or publishers of books and publications listed in this manual © 2012 APICS The Association for Operations Management 8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 USA (773) 867-1777 (800) 444-2742 Fax: (773) 639-3001 No portion of this document may be reproduced under any circumstances. CSCP is a registered trademark of APICS. Stock #09031-2012Table of Contents Letter to Candidates nnn ECM4 Introduction... -ECM-2 ‘About the APICS CSCP Examination LEOM2 ‘Question Format -ECM-2 Taking the Test ~_ ECM-3 Interpreting Test Scores... ECM-3 ‘Suggested Study Materials. EcM-3 ‘Additional Resources for APICS CSCP Candidates, ECM-4 APICS CSCP Learning System EOM-4 APICS CSCP Instructor-Led Review Course ECM-5 APICS Educational Programs. Ecms APICS Certified in Production and inventory Management (CPIM) Basics of Supsly Chain Management (BSCM) Review Course and Examination. ECMS APICS CSCP Certification Maintenance Continuing Professional Development ..n..nsmnenn ECMS ‘The Importance of Certification Maintenance... peace oot CM APICS Code of Ethics... ECM-6 APICS Certified Supply Chain Professional (CSCP) ECMT Scope of the Subject Matter ECM-7 APICS CSCP Contert.. ECM-7 Content Outline came : : : ECM8 Key Terminology ECM-14 Supplemental Glossary. -ECM-17 Bibliography ....nnnenennmsennnennnnnnn sere aneetesereaatt nnn ECMAB ‘Sample Questions. ECM-18 Answers to Sample Questions... ECM.20 SP Exam Content Manual iLetter to Candidates Dear Candidate: ‘On behalf of all the members of APICS The ‘Association for Operations Management and the Cerfied Supply Chain Professional (CSCP) Examination Committee, | want to congratulate you for your interest in the APICS CSCP certification program. APICS is the global leader and premier source of the body of knowledge in operations management, including production. inventory, supply chain, purchasing, and logistics. Since 1957, individuals and companies have relied on APICS for its superior taining, internationally recognized certifications, comprehensive resources, and worldwide network of accomplished industry professionals. ‘The APICS CSCP program is primarily intended for professionals in supply chain management and operations management and is designed to test the candidate's knowledge and application of the supply chain management body of knowledge. ‘The successful candidate will be able to recognize and analyze specific supply chain situations and opportunities and select the appropriate approaches, tools, techniques, and technologies. The candidate will be able to define the actions necessary to implement selected solutions. This includes an understanding of, and the ability to, manage the ‘alignment of supply chain processes and capabilites with strategic business goals ‘+ organizational roles and infrastructures in the supply chain ‘+ material, information, and financial flows ‘+ intra- and interorganizational relationships ‘+ selection and use of technologies to enable effective process management. The APICS CSCP program will help you advance your career while giving you validated foundational knowiedge to assist in improving your company’s competitive position and profitability. The program takes a broad view of the field, extending beyond internal operations to ‘encompass all the steps throughout the supply cchain—from the supplier, through the company, to the end consumer and the reverse flow of products and materials for the purpose of ‘managing returns, refurbishing, or recycling. The program provides you with the knowledge to effectively manage the integration of these activities to maximize a companys value chain, The subject matter is organized into three content areas. Fundamentals of Supply Chain Management (scm) This section provides the foundation for the exam by addressing the concepts and strategies used. for effective supply chain management. It includes an overview of supply chain management. ‘managing the supply chain, and improving the ‘supply chai Strategy, Design, and Compliance This section addresses considerations in the design of a supply chain, the processes that support the organization's strategy, improvement of the sustainability of the organization and its trading partners, and compliance with applicable regulations and voluntary standards, Implementation and Operations This section covers managing and batancing supply and demand through measuring, analyzing, and improving supply chain processes, This APICS CSCP Exam Content Manual is intended to provide you with an overview of the program, an outline ofits body of knowledge, key terminology, and references. The outline is divided into three diagnostic areas, and the relative emphasis of each of the areas is indicated by a percentage figure. A sample of 10 illustrative ‘questions is also provided. The APICS CSCP Exam Content Manual should not be the only reference you use to prepare for the CSCP exam however, it should be the first. We wish you success in your pursuit of the CSCP designation, hy Lhe Roly White, CFPIM, CIRM, CSCP CSCP Examination Committee Chair CSCP Exam Content Manusl = ECMIntroduction This exam content manual provides guidance for individuals preparing for the certification examination, The objective of this manual is to outline the APICS CSCP tested body of knowledge, ‘The main section of this manual begins with a statement of the scope of the subject matter, followed by a descriptive outline of the content. Key terminology and a bibliography of references are provided. The section concludes with sample questions similar to those that appear on the examination and the correct answers for the sample questions, with brief explanations of why they are correct. ‘The recommended procedure for mastering the subject matter is to * review the content outline, scope of the material * study each topic, using the suggested references. dofines the ‘At the end of each major section is a list of the references that apply to the topics in that section, The first number indicates the sequence number for the reference in the Bibliography section, and the numbers in parentheses indicate the chapter(s) within that reference, Candidates should understand the definitions of the key terms and the application of the outlined tools and techniques. Sufficient references are given that provide different approaches to the material covered in each diagnostic area and different styles of presenting the information, Reading available periodical material, such as APICS magazine, will help you maintain an awareness of changes in the state of the art. ECM-2 2012 APICS The Association for Ope: About the APICS CSCP Examination ‘The APICS CSCP exam consists of 175 multiple- choice questions. There is a four-hour time limit for the exam, For more information about testing and registration policies and procedures, call APICS Customer Service at 1-800-444-2742 (United States and Canada), or +1-773-867-1777 and order a current APICS CSCP Certification Builtin or visit the APICS website at apics.orgicertification/CSCP/CSCPexam.htm. Candidates who plan to test in North America should order stock #09056, and candidates testing outside North America should order stock #09057. Candidates may also order the bulletins at apics.org/escp or via the APICS Bookstore at apics.orgibookstore. Question Format Several question formats are used in the APICS CSCP examination although not all are included in this manuals sample questions (pages 18-19). A review ofall the formats is recommended to ensure maximum preparedness. For each question, only one of the four choices represents the correct answer. Examples 1 and 2 are samples of an incomplete statement of a question, followed by four Suggested completions or answers. In Example 4, you are to choose the one option—A, B, C, or D— that completes the statement correctly. In Example 2, you are to choose the option that best, answers the question. Example 1: The 80-20 rule is an application of: (A) Statistical process control (8) Defect measurement (C) Root cause analysis (0) Pareto analysis (The correct answer is D.) Example 2: Which ofthe following is used as a key performance indicator (KP!) to measure variabilly of demand through the supply chain? (A) Bullwhip effect (8) Fill rate (C) Inventory tums (0) Internal feiture (The correct answer is A.) 3 ManagementExample 3is different, All the choices given are correct EXCEPT one. You are to choose the option that does not correctly complete the. statement. Example 3: All of the following are examples of voice of the customer EXCEPT: (A) collecting point-of-safe (POS) data (©) customer panel groups (C) recording customers’ problems with recent purchases (D) surveying customers online (The correct answer is A.) Examples 4 and ask for a judgment or evaluation of the MOST or LEAST appropriate choice. The judgment is not one person's opinion; itis the accepted choice according to the APICS body of knowiedge. Example 4 asks for the MOST appropriate choice, Example 5 calls for the LEAST appropriate choice Example 4: The MOST significant advantage of strategic sourcing is: (A) finding suppliers who can provide materials at lowest cost (8) using technology to select low-cost, high- quality sources of materials (C) developing long-term supplier relationships (D) having a process for recurring transactions with single suppliers (The correct answer is C.) Example 5: Which of the following factors has had the LEAST impact on the growth of customer relationship management? {A) increased customer expectations (8) reduced commodity prices. (C) increased ease in comparison shopping (0) reduced cost of gaining new customers (The correct answer is C.) Taking the Test Before starting your exam, read all the directions carefully. Be sure you understand them before you begin to read and answer any questions. Read oach question carefully and thoroughly ‘Take care to avoid assuming information not given or “second guessing” the question. Do not jook for hidden tricks or exceptional circumstances. Every effort has been made to avoid misleading wording and to provide sufficient information for each question. Choose the best answer from the choices given. Ifa question includes stimulus material, such as a table, graph, or situation, be sure to study it before you answer the question. Interpreting Test Scores Scoring is based on your correct responses. There is no penalty for incorrect answers. lis to your benefit to make a choice, even if you are not Certain of the correct answer. A blank answer will have the same resutt as an incorrect answer. ‘The APICS CSCP scaled score range is 200-350. ‘The minimum passing score is 300. You will receive your final exam score along with diagnostic information on your performance. Suggested Study Materials This manual contains a Bibliography section that lists references. A candidate may discover that the material covered in the chapters of one reference duplicates material covered in another reference. Both sources are included as references to allow candidates some discretion in selecting test preparation materials that they find accessible and understandable. In deciding if a single reference is sufficient, candidates should assess their own level of knowledge against both the descriptive examination specifications and the Getailed topic ist contained in the content outline If there are any areas of weakness, the candidate should consult another reference as part of the test preparation process. itis not practical to list all texts that contain excellent material. The serious student of supply chain management who wishes to stay current with the state of the act will take advantage of publications such as those listed in the ‘comprehensive APICS Educational Resourcos Brochure (stock #01041), featuring APICS reference materials. To receive the brochure, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777, ‘or via the APICS Bookstore at apics.orgibookstore. ‘The content outline provided in this document should be considered a primary resource for exam preparation. It provides an overview of the major topics included in the exam, as well as a list of the concepts that are relevant to that topic. stent MaThe APICS Dictionary, 13th edition, is an essential publication that applies to the exam content manual and exams. Within the profession, terminology varies among industries, companies, and the academic community. The examination ses standard terminology as defined in the APICS Dictionary and the Supplemental Glossary section in this manual. Recognizing the terms and understanding their definitions are essential In studying for the APICS CSCP certification exam, candidates may discover muttiple terms used fo denote the same technique, An example ofthis is fateral integration versus horizontal integration. APICS has attempted to provide ‘consistency with preferred terminology. However, synonyms are often used by authors in the various references used to compile the body of knowledge. Candidates are encouraged to be familar with all terms and concepts listed within each outline and key terminology section, using the APICS Dictionary as the primary guide for definitions. The Supplemental Glossary, included in this manual, provides needed additional information identified by the exam committee. Additional Resources for APICS CSCP Candidates APICS offers a number of resources to help individuals prepare for the APICS CSCP examination, {In addition to the cited references, it may be helpful for you to pursue chapter-sponsored courses, college courses, APICS workshops, seif- study courses, or courses offered by APICS' network of Authorized Education Providers (AEPs) as a means of leaming the body of knowiedge that is tested in the certification program. A wide variety of courses and materials is available. As with any other investment of time. and money, you should research various courses before investing in one. For courses in North ‘America, visit the Chapter Locator on the APICS website at apics.org or call APICS Customer Service al 1-800-444-2742 (United States and Canada) or +1-773-867-1777 to obtain contact information for your local chapter. For courses outside North America, visit apics.org/international to locate the nearest AEP. APICS CSCP Learning System ‘The APICS CSCP Learning Systemis a comprehensive professional development and certification preparation program, This self- directed program combines print material and coniine interactive tools. This system is also offered in instructor-led formats. The APICS CSCP Leaming System does not “teach the test’ and in many areas reviews concepts but does not teach concepts. The APICS CSCP Learning System provides a thorough review of the subject matter, but should not be used without the most current APICS CSCP Exam Content Manual as a means to direct the candidate's study, There wil likely be some content in the APICS CSCP Learning ‘System not covered by the exam; conversely, there will ikely be some content in the exam not covered by the learning system. Thus, the use of the current exam content manual to assist candidates with thoir studies is essential For more information, visit the APICS website at apics.org or call APICS Customer Service at 1- 800-444-2742 (United States and Canada) or +1- 773-867-1777 and request a complimentary ECM-4 ©2012 APICS The Association for Operations ManagementAPICS Educational Resources Brochure (stock #01041), APICS CSCP Instructor-Led Review Courses ‘The instructor-led format combines the APICS CSCP Leaming System print and online ‘components with the leadership of a qualified instructor; peer collaboration: company networking: and a structured, set schedule to keop participants on track. APICS provides an on- line ist of APICS Qualified Instructors for your review at apics.orglescpprepare. APICS Educational Programs APICS offers a variety of educational programs and the APICS International Conference & Expo. Fora list of APICS learning opportunities and information on course availabilty, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777. APICS Certified in Production and Inventory Management (CPIM) Basics of Supply Chain Management (BSCM) Review Course and Examination The APICS CPIM Basics of Supply Chain Management module introduces terminology, approaches, and techniques for managing the intemal supply chain in a manufacturing organization. For that reason, the references and the review course may be valuable resources for APICS CSCP candidates who are not familiar with the production and inventory management environment. Additionally, individuals inexperienced in taking certification examinations using the multiple-choice format of items typically find it beneficial to take the BSCM examination. APICS CSCP Certification Maintenance Continuing Professional Development The Importance of Certification Maintenance The growing number of individuals choosing to pursue professional development through APICS' Corified Supply Chain Professional (CSCP) program indicates a strong awareness that continuing education and skills development are essential to meeting the information and technological challenges in today's rapidly ‘evolving workplace and global marketplace. Professional development opens doors to individual career opportunities and organizational success, Although APICS CSCP certification and APICS. CSCP certification maintenance are voluntary programs, they equally demonstrate one’s commitment to achieving the highest level of professional development and standards of excellence. ‘The APICS CSCP Certification Maintenance program upholds both the objectives of the APICS, CSCP program and APICS' vision to promote lifelong learning. This flexible program recognizes that individuals are at various levels in their careers, come from many industries, have different educational needs and career goals, and have varying degrees of access to continuing education. Thus, requirements for maintaining certification can be met through multiple sources and a variety of professional development activities intended to help prepare for the challenges ahead and maintain a professional edge by * preserving the currency of hard-earned certification credentials expanding your knowledge of the latest industry practices = expanding your knowledge of the latest industry practices reinforcing skills ‘© exploring new technology solutions © reinforcing skills cScP Exam nt Manu: ECM.s‘+ improving job performance ‘+ demonstrating commitment to excellence ‘+ _ increasing competitive advantage. To promote professional growth and lifelong leaming, APICS CSCP designees must complete the APICS Certification Maintenance program ‘every five years, Complete details on how to maintain your APICS CSCP designation will be mailed fo candidates upon successful completion of the certification requirements. Visit the APICS website at apics.org or call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777. APICS Code of Ethics When you start an examination, you willbe asked to pledge to abide by the APICS Code of Ethics. Once certified, you pledge to continue your education to increase your contribution to the supply chain profession. After achieving the APICS CSCP certification, you pledge also to share your knowledge with others by participating in APICS research and educational activites at local, district, national, and international levels. APICS Code of Ethics: * To maintain and improve sound business practices and foster high standards of professional conduct. + Tohold in professional confidence any information gained of the business of a fellow ‘member's company and to refrain from using such information in an unethical manner. ‘+ To seek success without taking unfair advantage or using questionable acts that ‘would compromise one’s self-respect. + Toneither engage in nor sanction any exploitation of one’s membership, company, or profession, + To encourage, and cooperate in, the interchange of knowledge and techniques for the mutual benefit of the profession. ‘+ To be careful with one’s criticisms and liberal with one’s praise; to build and not to destroy. ‘+ Whenever a doubt arises as to the right or ethics of one’s position or action, to resolve such doubt according to generally accepted standards of truth, fair dealing, and good taste. ‘+ Tomaintain high personal standards of moral responsibilty, character, and business integnity. ‘+ Touphold the high ideals of the association as Outined in the bylaws, Failure to abide by APICS Code of Ethics policy ‘may result in sanctions up to and including decertification. ECM-6 2012 APICS The Association for Operations ManagementAPICS Certified Supply Chain Professional (CSCP) Effective for January 1, 2012-December 31, 2012, exams. CSCP EXAMINATION COMMITTEE Roly White, CFPIM, CIRM, CSCP (Chair) Nishat Ahmed, CPIM, CIRM, CSCP, C.P.M. M.C. Dean, Inc Joanne Gorski, CFPIM, CSCP Fox Valley Technical College Robert Pinchot, CPIM, CSCP DuPont Andrea M, Prudhomme, Ph.D., CPIM, CIRM, CSCP, The Ohio State University Eduardo A. Shelley, CFPIM, CIRM, CSCP Solmex Scope of the Subject Matter Please read the introductory material in this manual for essential information about the examination. ‘The APICS CSCP certification covers concepts, strategies, processes, tools, and technologies applied fo managing the end-to-end forward and ‘backward flow of materials, information, and value ina supply chain. ‘The subject matter is organized into three content areas. Fundamentals of Supply Chain Management (scm) This section provides the foundation for the exam by addressing the concepts and strategies used for effective supply chain management. It includes an overview of supply chain management, managing the supply chain, and improving the supply chain, Strategy, Design, and Compliance This section addresses considerations in the design of a supply chain, the processes that support the organization's strategy, improvement of the sustainability of the organization and its trading partners, and compliance with applicable rogulations and voluntary standards. Implementation and Operations. This section covers managing and balancing supply and demand through measuring, analyzing, and improving supply chain processes. The successful candidate will be able to recognize and analyze specific supply chain situations and ‘opportunities and select the appropriate proaches, tools, techniques, and technologies. The candidate will be able to define the actions necessary to implement selocted solutions. This includes an understanding of, and ability to, manage ‘+ alignment of supply chain processes and capabilities with strategic business goals, + organizational roles and infrastructures in the supply chain + material, information, and financial ows + intra- and interorganizational retationships selection and use of technologies to enable effective process management. Many of the items on this exam require the candidate to apply one or more of the items identified in the outline and key terminology. APICS CSCP Content ‘Three content areas have been designed to organize the APICS CSCP domain. The relative importance of a topic is not necessarily reflected by its appearance in the outline. The relative importance of these topics will vary among industries. The percentage figures given below can be used as a guideline for the APICS CSCP. exam content ] DIAGNOSTIC PERCENTAGE PART MAN TO ‘OF EXAM Fundamentals ‘of Supply Chain a : Management Esa (SCM) Supply Chain Strategy, " Design, and | 99-93% Compliance: Implementation 7 MW | and Operations | 99-39% musi = BOM.Content Outline |, Fundamentals of Supply Chain Management (scm) This section addresses the fundamental concepts used for effective SCM and will provide the foundation for the APICS CSCP exam, It includes an overview of SCM concepts and the need to align resources with the sategy of the organization. Management and improvement of the supply chain are then addressed. Exam questions covering this area will include elements related to the following: ‘A. Supply Chain Management Concepts: A thorough understanding of the roles in a supply chain network and the flow of value through itis required, A broad understanding of the supply chain management processes, objectives, integration, and benefits is also required, Knowiedge in this area encompasses: 1. Basic supply chain a. Entities b. Structures cc. Flows 2. Supply chain management processes ~ SCOR® model a. Planning demand and supply Sourcing goods and services Producing goods and services Delivering goods and services Planning for and processing returns ean Vertical and horizontal integration 4, Supply chain management objectives a. Improved customer service b. Efficient use of systemwide resources ©. Effective use of systemwide resources d. Leverage of partner strengths 5. Supply chain management benefits a. Improved market knowledge b. Increased velocity in the flows of goods and services, funds, and information Increased visibility of flows Reduced variability of flows Integrated operations Improved management of risk Increased sustainability 8 © 2012 APICS The Association for Operations Mar Supply Chain Alignment with Business Strategy: ‘The supply chain strategy should align with and enable the business strategy. Achieving ‘appropriate alignment requires an understanding of the forms of competitive advantage being pursued. It also requires an Understanding of the organizational strategy, priorities, capabilties, and the resolution of misalignments or gaps. Knowiedge in this area encompasses: 1. Competitive advantages 2. Business capabilities and strategy 2. Organizational strategy b. Prioritization options ©. Organizational capabilities d. Alignment of capabilities and strategy 3. Resolving misalignment or gaps. 4. Collaboration among trading partners a. Benefits of collaboration b. Requirements for success ‘Supply Chain Design and improvement Considerations: The supply chain strategy should be designed with an understanding of the marketplace. It also requires an understanding of supply chain management design and continuous improvement considerations. Knowledge in this area encompasses: 1. Understanding the marketplace 2. Supply chain design considerations Network configuration Inventory location and levels Product design Information technology ‘Support systems 3. Continuous improvement a. Product considerations ©. Process improvement initiatives ©. Managing change Inventory Management: Inventories throughout the supply chain must be planned and controlled for effective supply chain management. Managing inventories, in turn, requires an understanding of the costs ofmaintaining and not maintaining inventory. Knowledge in this area encompasses: 4, Need for inventory ‘Aggregate and item inventory management Flow of material Functions of inventory Inventory-related cost categories sore Effects of inventory on the financial statements Logistics Fundamentals: An understanding of the logistics function is required. Understanding the role of logistics, types of logistics service providers, and reverse logistics is required Knowledge in this area encompasses: 1. Role of logistics in supply chain management a. Logistics functions b. Logistics value proposition ¢, Flow of goods and information 4. Push, pull, and push-pull systems 2. Logistic service providers a. Types of logistics services b. Advantages of using logistics service providers ¢. Disadvantages of using logistics service providers 3. Reverse logistics a. Activities supported b. Design for reverse logistics c. Benefits Market Segmentation: An understanding of market segmentation is required. Understanding the reasons for identifying market segments, ways to segment markets, and understanding the wants and needs of each segment is important. Knowledge in this area encompasses: 1. Reasons to identify and understand market segments 2. Ways to segment markets 3. Understanding the wants and needs of each segment Demand Planning: An understanding of demand forecasting, the components of demand management, associated linkages, and demand ‘management functional responsibilities and interfaces is required. Knowledge in this area ‘encompasses: 1. Forecasting demand a, Demand forecasting concepts b. Qualitative methods: cc. Quantitative methods d. Combination methods @. Measures of forecast error 2. Components of demand management a. Planning demand b. Communicating demand ©. Influencing demand 4. Prioritizing demand 3, Linkages among the components 4, Demand management functional responsibilities and interfaces a. Product development b. Marketing ©. Sales 4. Operations Customer Relationship Management (CRM) Concepts: Effective customer relationship management includes an understanding of the CRM philosophy. It also requires the understanding of the need, scope, elements, and benefits of CRM. Knowledge in this area ‘encompasses 1. Need for CRM Scope of CRM Elements of CRM Benefits of CRM. Implementing CRM oe een Need for, and uses of, customer information in CRM ‘Supply Management Concepts: Etfective management of all sources of supply requires ‘an understanding of the components of the total cost of ownership and the considerations in deciding whether to source an item internally or ‘externally. It also requires an understanding of CSCP Exam Content Manual ECM-9the types of relationships that can exist between a firm and its suppliers, the development of supply plans, and supplier relationship management. Knowledge in this area encompasses: 1. Total cost of ownership 2. Make versus buy analysis 3, Range of buyer-supplier relationships 4, Developing supply pians 5. Supplier relationship management (SRM) References: 1; 2 (1-6); 3 (1-2, 6-7, 9): 4(1, 8-8); 5(1,3, 5, 8-9, 12) |. Supply Chain Strategy, Design, and Compliance This section addresses considerations in the design of a competitive supply chain, the processes that support the organization's strategy, improvement of the sustainability of the organization and its trading partners, and compliance with applicable regulations. Exam questions covering this area will include elements related to the following: ‘A. Sustainability: Designing and operating a supply chain requires an understanding of the concepts of sustainable business practices and how to ‘adapt and apply them to a specific supply chain, Knowledge in this area encompasses: 1. Economic . Micro and macro considerations . Leading and lagging economic indicators ©. Balancing short-term and long-term performance 2. Environmental a. ISO 14000 Series of Environmental Management Systems Standard b. Governmental regulatory compliance c. Industry-specific guidelines and standards ._ Impact of supply chain decisions 3. Social a, {SO 26000 Guidance on Social Responsibility b. Corporate social responsibility considerations 4. United Nations “The Global Compact” 5. Triple bottom line (TBL) Risk Management: Designing a robust supply chain requires recognizing the sources and forms of risks, the magnitude and potential impact of each, and methods of mitigating each form of risk. Knowledge in this area encompasses: 1. Identification, mitigation, and response to risk ‘a. Forms of risk b. Assessing the risk in a supply chain ‘¢. Mitigating significant risks dd. Responses to risk 2. Security and regulatory concems a. Risk of loss, such as intellectual property or goods . Complying with import and export requirements, such as prohibited goods, labeling, and documentation ©. Costs and benefits of participating in security partnerships, 4. Costs and benefits of meeting sustainability regulations e. Product traceability 3. 180 31000 Risk Management Principles and Guidelines Globalization: Managing globally dispersed sources of supply and demand requires an understanding of the requirements for operating in multiple countries and for moving goods and funds among countries. Knowledge in this area ‘encompasses: 1. Effects of globally dispersed supply and demand a. Export and import participants b. Currency considerations c. Harmonized Tariff Schedule (HTS) d. Total, or landed, cost of acquisition 2. Free trade zones a. Definition b. Benefits ©. Requirements 3. Trading blocs a. Definition b. Effects on supply chains within the bloc c._ Effects on supply chains that extend ‘outside the bloc 40 92012 APICS The Association for Operations Management4 5. ‘Operational considerations a. Exporting issues b. Importing issues c. Incoterms Implications of globalization a. Legal and regulatory considerations b. Acceptable standards of conduct . "Glocalization" D. Logistics: An understanding of the total effect that globalization and supply chain management has on inbound and outbound logistics is important. An understanding of trade-offs among warehousing, transportation, and logislics services’ decision making is also required. Knowledge in this area encompasses: 1 Transportation a. Transportation objectives and considerations b. Stakeholders in transportation decisions ¢. Modes of transportation d. Considerations in mode selection Warehousing a. Warehousing objectives and considerations b. Warehouse capabilities c. Automated material handling Transportation and warehousing trade-offs a. Public/private b. Owningileasing assets c. Capacity constraints ‘Managing the Supply Chain: Managing the supply chain requires an understanding of the dynamics of supply and demand and the need to balance efficiency and responsiveness in the supply chain. It also requires a set of comprehensive measures that are agreed upon and used by the organizations in the supply chain. Knowledge in this area encompasses: 1 Indicators of supply chain performance a. Customer-focused metrics b. Financial metrics . Operational metrics d. Other key performance indicators (KPIs) Responsive versus efficient supply chains a. Attributes of an efficient supply chain b. Attributes of a responsive supply chain cc. Supply chain fit with the organizations’ matkels requirements F. Technology: An understanding of technologies that enable designing, tracking, operating, and communicating among trading partners within a supply chain is necessary. The correct application of appropriate technology is needed for efficient and effective supply chain management. Knowledge in this area encompasses: 1 Role of technology in supply chain management a. Information system architecture b. Use of information technology in the supply chain c. Comprehensive supply chain management system 4. Need for timely and accurate data Key application tools a. Enterprise resources planning (ERP) systems b. Advanced planning and scheduling (APS) systems c. Supply chain event management (SCEM) 4. Warehouse management systems (wus) @. Transportation management systems (Ts) Data acquisition and communications tools a. Interface devices b. Data communications methods ©. Databases—hierarchical/relational/ network d. Acquisition and use of data 2. Automatic identification technologies ‘Supply chain design and optimization tools a. Supply network design b. Supply network optimization Intororganization integration tools a. Information technology in collaborations and joint processes b. Standardization c. Challenges Electronic business a. Enabling virtual organizations CSCP Exam Content anus BCM-11Internet-enabled supply chains 3. Measuring customer service c. E-business considerations a. Response to inguities 4d. Business-to-business commerce (B2B) b. Order processing and business-to-consumer sales (B2C) c._Level of service G. Influencing and Prioritizing Demand: A thorough d._ Product or service quality understanding of how the members of a supply ©. Customer satisfaction chain can influence demand and how they may need to prioritize demand when necessary is 4. Challenges in implementing CRM required. Knowledge in this area encompasses: |. Supplier Relationship Management (SRM): 4. Designing products and services Successful mplemeniaton of supper relationship management requires an 5. Sandardzation understanding of the underiying concepts, the b. Simpitfcation enabling technologies, and the requirements for . Customization improved management of sources of supply. 4. Sustainability considerations Knowledge in this area encompasses: ©. Design and development collaboration 4. Supplier selection 2. Marketing a. Corporate social responsibilty (CSR) a. Market research b. Negotiations b. Demand generation €. Internet-enabled sourcing ¢. Influencing demand 4. Contract performance @. Alignment with supply chain needs 3. Selling 2 said 2. Developing and implementing SRM 4. Matching customer orders to supply arenes eet ‘a, Need for matching a. Steps in implementing SRM b. Approaches to matching it emanate H. Customer Relationship Management (CRM): 3. Creating aliances with suppliors Effective customer relationship management a istics of a successful includes understanding the underlying Characteristics o relationship concepts; enabling technologies; and Feruienianis for|eprcned demand . Commisment required fora successful management, customer service, and alignment aliance : of customer-facing processes and resources. ‘c. Steps in creating and maintaining an Knowledge in this area encompasses: alliance 41. Developing and implementing CRM as a 4. Using technology to implement SRM strategy a. Components of a SRM system a. Components of CRM strategy b. Portals and trading exchanges b. Aligning CRM strategy and product or ©. Processes enabled by SRM seven meme 4. Effects of SRM on the firm and its ©. Creating a customer relationship suppliers strategy 4. Developing CRM strategy for various Seed Se ‘ypes and segments of customers 6. Challenges in implementing SRM 2 Cena technology to enplemnent Oia J. Inventory Planning and Controt: inventories a. Benefits of using a customer data throughout the supply chain must be planned, warehouse located, and controlled for effective supply chain b. Sales force automation management. Managing inventories in turn ¢. Keys to successful CRM requires an understanding of the total costs of implementation maintaining and not maintaining inventory and the techniques for planning and controlling 2012 APICS The Association for Oper: ns Managementinventory. Knowledge in this area ‘encompasses: 1. Inventory planning a. Locations of inventory b, Levels of inventory 2. Inventory contro! a, Determining order quantities Ordering systems Safety stock and safety lead time Organization of storage locations Methods of tracking inventory Methods for assessing inventory accuracy References: 1; 2 (5-10, 13-15, 17); 3 (1, 3-5, 8-11, 12-13, 17); 4 (1-9); 5 (2-12, 14-15) IL. Implementation and Operations This section addresses managing and balancing supply and demand by measuring, analyzing, and improving supply chain processes. Exam questions will include elements related to the following: ‘A. Supply Chain Dynamics: Managing supply chains requires an understanding of the dynamics of supply and demand and the need to balance efficiency and responsiveness in the supply chain. Italso requires a set of measures that are agreed upon and used by the ‘organizations in the supply chain. Knowledge in this area encompasses 1, Sources of variability in demand 2. Sources of variability in supply 3. Synchronizing supply and demand 4. Metrics: B. Managing Supply from Internal Sources: Managing supply from internal sources requires an understanding of the operations planning and control processes. Knowledge in this area encompasses: 1. Operations planning and control a. Implementation of the salos and operations plan (S&OP) b. Controlling priorities c. Materials and inventory 4. Capacity management 2. Communicating requirements and priorities 3. Measuring performance @. Operational measures b. Financial measures Managing Supply from Extomal Sources: Managing supply from external sources requires an understanding of the basic purchasing processes, selecting suppliers, and evaluating suppliers. Knowledge in this area ‘encompasses: 4. Communicating requirements and priorities 2. Supplier performance management a, Ethical and legal considerations Negotiations Contract issues Internet-enabled sourcing ‘Scorecards and performance metrics wage 3. Supplier certification a. Customer and supplier benefits b. Third-party certification ©. Supplier certification process Implementation of Demand Plans: Requires an understanding of the methods for prioritizing and fulfiling demand, Knowledge in this area encompasses: 4. Demand prioritization a, Time fences b. Allocation of supply c, Measures of customer service levels i Fill rates ii. Lead-time monitoring il, Order status reporting 2. Capturing and communicating point-of-sale data a. Capturing data at point-of-sale b. Sharing demand data among trading partners Continuous Improvement: Enhancing the compelitiveness of a supply chain requires an understanding of the techniques and tools of ‘continuous improvement and the appropriate application of each. Knowledge in this area encompasses: 1. Continuous improvement philosophies a. Lean b. Six CSCP Exam Content Hanus ECM-43c. Theory of constraints (TOC) 4. Total quality management (TOM) 2. Continuous improvement tools a. Basic seven tools of quality (87) b. Seven new tools (N7) References: 1; 2 (5-6, 15-16); 3 (9-11, 14-18); 5(2,4,7, 12) ‘An understanding of the following list of terms is recommended. The list is intended to be thorough but not exhaustive. The candidate is also expected to be familiar with the definitions of terms identified in the content outline. A review of the list and study of the topics in the outline may reveal other important terms. Definitions of these terms can be found in the APICS Dictionary, 13th edition, or in the Supplemental Glossary. A ABC analysis active tag ‘advanced planning and scheduling (APS) agent alliance development anticipation inventories assemble-to-order automatic identification and data capture (AIDC) available inventory available-to-promise (ATP) backlog backorder balanced scorecard balance sheet bar coding benchmarking bill of material (BOM) blanket purchase order bottleneck buffer business intelligence business plan business process management business-to-business commerce (B28) business-to-consumer sales (B2C) capable-to-promise (CTP) carrying cost cash flow cash-to-cash cycle time changeover chase strategy collaborative planning, forecasting, and replenishment (CPFR) competitive analysis ‘consignment ‘consortia trade exchanges (CTX) ‘constraint content management applications ‘continuous replenishment cost of goods sold cost of quality cross-docking cross-selling cumulative lead time customer relationship management (CRM) customer service customer service ratio cycle cycle counting ‘oyole stock cycle time database management system (DBMS) data cleansing data dictionary data normalization data warehouse decoupling define, measure, analyze, improve, control (OMAIC) process demand demand forecasting demand management demand planning demand pull demand shaping dependent demand design for the supply chain distribution inventory distribution requirements planning (DRP) distributor 14 ©2012 APICS The Association for Operations Managementelectronic commerce (e-commerce) electronic data interchange (EDI) electronic document electronic product codes (EPCs) end-of-life management ‘engineer-to-order enterprise resources planning (ERP) ‘extensible markup language (XML) extranet extrinsic forecasting method feedback file transfer protocol (FTP) fil rate fluctuation inventory forecast error forecasting general and administrative expenses (G&A) global strategy glocalization graphical user interface (GUI) gross margin harmonized system classification codes. horizontal marketplace hypertext markup language (HTML) hypertext transfer protocol (HTTP) income statement incoterms independent demand information system architecture information technology Intemet interplant demand intranet intransit inventory intrinsic forecast method inventory management inventory optimization software inventory turnover inventory tums inventory valuation inventory velocity inventory visibility 180 26000 Guidance on Social Responsibility 10 31000 Risk Management-Principles and Guidelines J joint replenishment system joint venture Justin-Time (JIT) K kaizen kaizen event kanban kelretsu key performance indicator (KPI) landed cost lead time lean legacy systems level of service level strategy linear programming line haul costs load leveling local area network (LAN) logistics u make-to-order make-lo-stock ‘manufacturing resource planning (MRP i!) market demand market driven market research market share master planning master production schedule (MPS) material requirements planning (MRP) materials management mathematical programming metrics middleware mix forecast modular design strategy modular system multicountry strategy multisourcing CSCP Exam Content Manual ECM-15,