Task 1: Read the extract below from an article about the Bullwhip Effect in supply chain

management. For each question, choose A, B, C or D as the correct answer.

The Bullwhip Effect in supply chain management
Supply chains need to be managed because they are not inherently stable. Demand is never
consistent and demand variability tends to increase as one moves up the supply chain away from
the retail customer. In periods of rising demand, downstream participants increase orders. In
periods of falling demand, orders fall or stop as clients seek to reduce inventory. The effects of each
oscillation are amplified as one moves upstream in the supply chain (further from the customer),
rather like someone cracking a whip, from which the phenomenon gets its name.
The causes of the Bullwhip Effect are many and varied. Natural causes such as quality problems,
strikes, plant fires and variability in demand coming up the supply chain, coupled with time delays
in the manufacturing and shipping of goods coming down it all contribute. There are also other,
additional causes including, for example purposely neglecting to order in an attempt to reduce
inventory or overreacting to backlogs. Free return policies, should companies be unwise enough to
have any, can also create havoc. However, the main culprits are often the measures that both
suppliers and customers take to reduce costs, such as, for example, the supplier sending out batches
of orders together in order to take advantage of full truckload economies. The downside of this as
far as supply chain management is concerned is that larger orders result in greater variance. Sales
promotions can also contribute to demand distortions and often result in retailers forward buying
to benefit more from lower prices. These demand oscillations can launch a ‘mad scramble’ in
manufacturing with an accompanying need to acquire and expedite more raw materials and
reschedule production.
When customers do not have confidence in the supplier’s ability to deliver orders rapidly and
reliably, they tend to behave in certain ways which also have a destabilizing effect on the supply
chain. For example, they order more than they need during a period of short supply, hoping that the
partial shipments they receive will be sufficient. When product availability is considered
satisfactory, they might cancel the balance of future orders with their supplier, who may be left
with a lot of surplus stock as a result. Demand forecast inaccuracies – there is a tendency for
everyone in the chain to add a certain percentage to the demand estimates – exacerbate the
problem and the result is that there is no visibility of true customer demand.
In the past, the Bullwhip Effect has been accepted as normal, and in fact, thought to be an inevitable
part of the order-to-delivery cycle. However, such are the pernicious effects on business
performance that modern companies are increasingly seeking countermeasures to overcome it by
improving their understanding of the product demand patterns at each stage of the supply chain.
Smart companies know how to find solutions such as, for example, countering full truckload
economics by using third party logistics suppliers or sending out assorted truckloads. Introducing
regular, more frequent delivery appointments results in smaller orders and smaller variance, but
doesn’t affect the amount the customer orders, whilst offering products at consistently good prices
minimizes buying surges brought on by temporary promotional discounts.
These are just a few examples of strategies that companies have adopted. The Bullwhip Effect is
such a complex phenomenon that it is only possible to counteract it by a continual and ongoing
process of research and evaluation. Unfortunately, it is the kind of problem that evolves as a
company grows and its supply chain systems evolve and become more complex. To be successful,
it is essential to evolve your solutions with it.
1 What is the Bullwhip Effect?
A When companies increase their orders in times of rising demand.
B The tendency for supply to be greater than demand.
C The tendency for oscillations in supply and demand to escalate.
D When orders decrease in periods of falling demand.
2 According to paragraph two, what is the main cause of the Bullwhip Effect?
A Purposefully neglecting to order.
B Cost reducing measures.
C Free returns policies.
D Natural causes.
3 According to paragraph two, what are the negative effects on the supply chain of full
truckload economies?
A Companies don’t save as much money as they believe they will.
B Larger truckloads result in greater variance in orders.
C Larger truckloads create problems for logistics companies.
D Customers order too much and then expect to take advantage of free returns policies.
4 According to paragraph three, under what circumstances do customers tend to over order?
A When they want to save money.
B When they have lost confidence in the logistics company.
C When they cancel the balance of future orders.
D When they feel they can’t rely on the supplier to deliver their orders reliably and quickly.
5 In the fourth paragraph, what does the author suggest the advantages might be for
suppliers of introducing regular delivery appointments?
A It will discourage retail customers from trying to take advantage of order batching.
B Customer orders won’t decrease overall but will become smaller and more frequent with less
variance.
C Customer orders will increase overall because they will order more and more often.
D Customer orders won’t decrease overall but there will be much greater variance.
6 According to the fourth paragraph, why is it important to consistently sell your products at
a good price?
A Because this increases customer confidence.
B Because this reduces the likelihood that customers will cancel their orders.
C Because this reduces buying surges caused by temporary promotional discounts.
D Because this increases sales and decreases variance.

Task 2: Read the text below about supply chain management in the automobile industry. In
most of the lines there is one extra word that is either grammatically incorrect or does not fit
in with the meaning of the text. Some lines, however, are correct. If a line is correct, write
CORRECT in the space provided below. If there is an extra word in the line, write the extra
word in CAPITAL LETTERS in the answer space. There are two examples, (0): CORRECT and
(00) IT, at the beginning.
 Supply chain management in the automobile industry
0 In the past, car manufacturers used to buy a huge number of components and assemble
00 them in-house to make it all the modules needed in a car. Nowadays, they can purchase the
1 finished modules from of specialized suppliers and put a car together out of these. Under
2 the old system, it was difficult to manage all the different processes and still maintain well
3 quality. For modern car manufacturers, the supply and delivery of the different components
4 and modules is the biggest challenge. Plants will buy a whole module, like to the dashboard
5 or the door from a first-tier supplier, who would have bought the so necessary small parts
6 and components from a second-tier supplier, who would have had purchased their materials
7 from a raw materials supplier. The actual particular assembly plants for automobiles are
8 usually located in near low-cost countries. A small cluster of suppliers often grows up
9 around from the plant and these provide employment for local people and also some skills
10 transfer to the low-cost country. The other significant ‘players’ in the supply chain are all
11 the logistics partners, the companies as responsible for transporting and warehousing, and
12 the providers of financial services. The latter are up for the benefit of customers who
13 might require credit services to help them for purchase vehicles, or who prefer to lease
14 rather than buy. These services are provided by such specialist partner companies, which
are also part of the supply chain.

Task 3: Read the article below about managing difficult conversations at work. Choose the best
sentence from the list to fill each of the gaps and mark a letter A–I. Do not use any letter more
than once. There is an example at the beginning, (0).

Managing difficult conversations at work

Difficult conversations and the disruption they bring to our lives in the workplace are part of
everyone’s experience. All of us have had conversations with colleagues and superiors, or with
clients, that we have found difficult to manage, have raised negative feelings and that have had a
damaging effect on our working relationships. According to research carried out by psychologists
Sue Clark and Mel Myers, difficult conversations at work tend to reveal a number of recurring
features.
(0) E Aggression is often also involved: opinions are put forward and judgements made in an
aggressive or dogmatic way and attempts to express alternative points of view are dismissed with
no real consideration of their merits. However, it seems that the opposite situation, where the
issues concerned seem so delicate and sensitive that it is almost impossible to refer to them
F directly, is just as hard to handle. (1) Evasion and subversion are also recurring features of
difficult conversations. People may employ very effective and socially acceptable techniques to
evade or deny the discussion of difficult issues; and, in so doing, avoid accountability.
Clark and Myers also identified common situations or contexts in which difficult conversations
D are most likely to occur. (2) It is never easy to give negative feedback, be it to a member of staff on
their performance, a colleague who has not done what they said they would do or, worst of all
perhaps, to a senior manager when we disagree with their policy. (3) This is particularly true
I
in situations where our professional judgement is put into question and all the harder if the
criticism comes from a more junior colleague.
 Difficult conversations are often so because they seem to threaten our relationships. Handling a
conflict of views between ourselves and another individual can be hard enough, but it can be even
more challenging to go against what we believe to be the group consensus. (4) As might speaking
H up for a colleague who we believe is being wrongly criticized or making it clear that we do not go
along with a piece of office gossip. Paradoxically, finding a response to situations that are less
overtly charged or hostile can be just as problematic, since we have to ‘rock the boat’ by bringing
into the open problems that are only implied and not stated. How, for example, do we engage with
someone who refuses to discuss things with us, perhaps by carrying on working or responding
jokingly to our attempts to have some serious conversation? What do we say to a manager who
we feel never listens or always responds in a dismissive tone of voice?

Clark and Myers are unequivocal about the adverse effects of difficult conversations on an
G
organization. It is not just that where difficult conversations lead to arguments and stand-offs,
they can have a negative effect on people’s ability to work together: inadequate or poorly
managed feedback, for example on job competencies, can result in organizations continuing to
I carry weaknesses that are not addressed effectively. (5) There are strong links between the
effectiveness of individuals in addressing their work-related difficulties and the capacity of their
organizations to learn and change.

The solution Clark and Myers offer is a series of techniques for managing difficult conversations,
based on taking what they call an ‘open-to-learning’ approach to communication. (6) Firstly, it is
A
essential that both parties question their assumptions, such as ‘He’s going to be really angry about
this’, ‘She’s just not a creative person’, etc., since these function as boundaries to our thinking and
make it difficult for us to take on board information that does not fit with our personal ‘taken for
C granted’ position. (7) Secondly, we should ensure that we promote partnership in the
conversation by doing things like checking our understanding of the other person’s viewpoint and
B agenda instead of being totally preoccupied with ramming through our own. (8) This involves
taking care not to take it for granted that the other person has all the information they need: we
should always check assumptions such as ‘She knows the situation’ or ‘My reasons are obvious’; it
is also important to avoid relegating certain problems as no-go areas for discussion because we
believe they are potentially upsetting, embarrassing or threatening.
A Being ‘open to learning’ is based on how we deal with three aspects of our thinking: assumptions,
partnership and information exchange.
B Finally, we need to check that we are promoting the exchange of all relevant information.
C In the worst case, our assumptions even lead us to misinterpret and distort new information so
that it fits them.
D Top of the list are situations involving either the giving or receiving of criticism.
E Commonly, these types of conversations occur in situations where people feel threatened by
criticism of their behaviour, competence and judgement.
F How do you discuss a problem that has become ‘taboo’ even to mention?
G When managers handle difficult conversations badly, the result can be reduced confidence in
management and a correspondingly reduced commitment to the organization.
H For example, putting forward a point of view that runs counter to the general opinion of the
meeting often feels like a tremendous risk.
I However, responding to criticism on some aspect of our own performance is just as difficult,
perhaps even more so.
Task 4: Read the article below about staying in touch with your customers. For each gap 1–13,
write one
word in CAPITAL LETTERS in the answer space. There is an example at the beginning, (0)

Staying in touch with your customers

We are in the middle (0) OF an information revolution which is helping to give us more information
about customer behaviour and choices than we have (1) enjoyed before. However, it seems that the
essence of excellent customer communication hasn’t really changed. Here are some ideas to keep us in
touch with what our customers really want and really need.
Customers take more time to find a solution than we think.
Because information is so easily available not just from conventional websites but also via
conversations on social networking sites, email and discussion boards, customers begin to form their
opinions long before companies have had a chance to pitch their product or service. Companies tend to
focus on their initial contact with customers, believing that shoppers’ experience with a product or
service begins (2) they walk into a store or visit a website. In fact, their journey begins much, much
earlier. That means companies must seek out customers sooner. Recent research (3) a large home
design company into customer behaviour revealed that ‘by the time customers wheel their shopping
carts up and down the store aisles, they’ve more or less already made their choices – they’re shopping
for solutions, (4) inspiration. If companies haven’t made contact with customers before then, they’ve
probably already lost them.’

Customers want solutions.

The purpose of all products and services should be to (5) a problem, fulfil a need or get a job done. In
the words of marketing guru Bill Downs ‘That customer over there doesn’t want a 20mm drill. He
wants a 20mm hole.’ (The point being that he needs a drill to make it.) Companies need to expand
their thinking, and their product portfolios to be more solution-centric. Take the recent example of a
new weight loss pill marketed by a leading pharmaceuticals and healthcare company. From the
beginning, the company understood that the sales of the product would depend ultimately on
customer success stories and so they marketed it not (6) as another weight loss drug, but also as a
comprehensive ‘weight loss programme’, including professional coaching and support, online
networks and communities to connect customers with others on the programme, making it possible
for dieters to share their success stories and help others to lose the kilos.
Your competitors aren’t always who you think they are.
If you remember that customers want solutions, then you will soon begin to see the alternative ways
in (7) the products and services offered by companies who are not your direct competitors help fulfil
those same needs. Take the example of a spa business. Customers go to a spa to fulfil a need for
relaxation. However, they could also choose to relax by spending a quiet morning playing golf or an
afternoon’s browsing in the local bookstore. Alternative suppliers that can also provide relaxation
aren’t limited to the other spas within a 15 kilometre radius. Companies that look beyond the limited
context of their (8) activity and see their competition from this broader viewpoint will find new ways
to stay relevant. Partnerships are a great way to get the bigger picture. W Hotels and Bliss spas are one
famous example; Nike and Apple’s® iPod are (9) . Whilst many W Hotels are opening Bliss spas and
offering Bliss products and promotions to their guests, Nike developed shoes that can communicate
with your iPhone and tell you how fast you have been running and sell running gear with iPhone
pockets.
A customer’s journey never ends.
Why cut off the conversation after working so hard to make that first sale? Companies that really
understand customers know the importance (10) keeping them involved. You need to ensure that
their journey is a circle, not a straight line by providing reasons and ways for (11) to use your products
and services many times. If you can offer a lifestyle brand as opposed to a brand linked to one-off
products or services, you can keep your customers loyal over a lifetime. A leading manufacturer of
babies’ nappies recently showed the way by diversifying from simply nappies to a complete maternity
and childcare resource. The company begins (12) finding mothers-to-be and stays involved in their
lives with a wide (13) of products and a variety of services for each stage of the baby’s development.
At each significant point throughout the first few years of the baby’s life, from weaning, to teething to
potty training, these mothers start their journey with the company all over again.