TRL3709 Exam Pack

T R L 3 7 0 9 | Summary Accuracy of this Docu men t is Not ens ure d P age |1
AUTHOR'S NOTE (A/N):
The document was compiled
o Mainly using summaries received from other students

o Is therefore subject to each students interpretations / summary style
o With some effort made to consolidate them into a uniform style/document given time constraints
This means that
o This is not a Scope / Guide / Memo and may contain errors

o SOME SECTIONS HAVE BEEN DONE IN DETAIL VS. OTHERS GIVEN ONLY IN BULLET POINTS OR NOT MENTIONED AT ALL
o Study Guide (SG) MO001/4/2016 was used along with textbook (TB)
o Chopra & Meindl 2015, 6th, Global Edition was used by the Author,
but other editions was probably used by various students
PART 1: BUILDING A STRATEGIC FRAMEWORK

A/N: Taken almost exactly from TRL3709-2016-S1 – Summary SU1
UNIT 1: UNDERSTANDING THE SUPPLY CHAIN
1.1 DEF Logistics/Supply Chain (SC): Consists of all parties involved, directly/indirectly, in fulfilling customer request.
- SC Primary Purpose: satisfy customer needs while generating profit
- Fig 1.1: SC Stages (functions, parties involved) & flows basically depicted:
Direction of Physical Product Flow
Component / Raw Wholesalers /

Manufacturers Retailers Customers
Material Suppliers Distributors
Info, Funds and Products Flows/Move along SC
1.2 SC Objective: to generate & grow overall value/surplus TB p15

- DEF SC Surplus: difference between final product’s value to cust. & costs entire SC incurs in filling cust. request.
Supply Chain Surplus = Customer Value – Supply Chain Cost
- Value of final product:
o Varies according to customer (depends on: product functionality, distance from store, stock);
o Estimate using max amount customer is willing to pay for it. (What is it worth to them?)
- DEF Consumer Surplus (remains with cust.) = product value - price.
- Rest of SC surplus = DEF SC Profitability = revenue generated from cust. – overall cost across SC
- Use SC surplus to measure success and not profits generated at an individual stage
- Look for sources of value, revenue & cost
o Customer: only source of revenue (provides positive cash flow)
o Other cash flows are simply fund exchanges within SC because diff stages have diff owners.
o All flows of info, product & funds generate cost manage appropriately for successful SC
- DEF Effective SC Management: managing SC assets & product, info and fund flows to grow total SC surplus.
1.3 Importance of Supply Chain Decisions TB p17

- Close connection between design & management of SC flows (product, info, funds) & SC’s success / failure.
- Decisions impact firm’s success/failure because they significantly influence revenue & cost
- Managers must make sure SC are dynamic, adapt to changing business environments, technology shifts, and
customer expectations
- Successful SC: manage flows to provide customers with high product availability while keeping costs low.
- Various Examples on textbook page 17
1.4 Three Decision Phases in a Supply Chain TB p18
Supply Chain Strategy (Design)

•Company decides how to structure SC over the next several years. Deciding:
•what the chain's configuration will be
•how resources will be allocated
•what processes each stage will perform
•Strategic decisions include:
•Whether to outsource or perform SC function in-house
•Location & capacities of production & warehousing facilities
•Products to be manufactured or stored at various locations
•Firm must ensure that SC configuration supports its strategic objectives & increase SC surplus
CONTINUED
Supply Chain Planning (Function)

•Time frame: quarter to a year  SC's configuration determined in the strategic phase is fixed
•This configuration establishes constraints within which planned must be done
•Goal: is to maximise SC surplus
•Companies start planning phase with a forecast for the coming year
•Planning includes making decisions regarding:
•Which markets will be supplied from which locations
•Subcontracting of manufacturing
•Inventory policies to be followed
•Timing & size of marketing & price promotions
•Companies must include uncertainty in demand, exchange rates & competition over this time
horizon in their decisions
•Result: companies define a set of operating policies that govern short term operations
Supply Chain Operation

•Time horizon: weekly
•During this phase, companies make decisions regarding individual customer oders
•Goal: handle incoming customer orders
•During this phases, firms:
•allocate inventory / production to individual orders
•set a date by which an order is to be filled
•generate pick lists at a warehouse
•allocate an order to a particular shipping mode & shipment
•set delivery schedules of trucks
•place replenishment orders
•Goal: to exploit the reduction of uncertainty & optimise performance
1.5 Three Process Views (Approaches) of Supply Chain TB p20; See also Assignment 1 from 2015-S1
- SC is a sequence of processes & flows that take place within & between different stages & combine to fill a
customer's need for a product
1.5.1 Cycle View used by ERP systems to support SC operations
- Divide SC processes into a series of cycles each performed at the interface between 2 successive stages of a SC
- Specifies roles & responsibilities of each SC member  Useful when considering operational decisions
- 5 SC stages  broken down into 4 Process Cycles  Each consisting of 6 Sub-processes
1. Customer
6. Buyer Returns
Customer Order Cycle 1. Supplier Stage
Reverse Flows to
Markets Product
Supplier / 3rd Party
2. Retailer
Replenishment Cycle
3. Distributor 2. Buyer Stage Places 5. Buyer Stage

Order Receives Supply
Manufacturing Cycle
4. Manufacturer
Procurement Cycle 3. Supplier Stage 4. Supplier Stage

Receives Order Supplies Order
5. Supplier
1.5.2 Push/Pull View: depends on if they are executed in response to or in anticipation of customer orders
- Divided into 2 categories
o Pull processes are initiated by a customer order
Reactive Process  react to customer demand.
Operate in environment in which customer demand is known
o Push processes are initiated & performed in anticipation of customer orders

Speculative Processes  Respond to speculated (forecasted) rather than actual demand
- Push/pull boundary: separates push processes from pull processes relative to timing of customer's order
- View is useful when considering strategic decisions relating to SC design
1.5.3 Macro Processes

Supplier Relationship Internal Supply Chain Customer Relationship
Management (SRM) Management (ISCM) Management (CRM)
•All processes focussing •All processes that are •All processes focus on
on interface between internal to the firm interface between firm
firm & its suppliers •Often handled by & its customers
•Often handled by Manufacturing depart. •Often handled by
Purchasing depart. •Aims to fulfill demand Marketing depart.
•Aims to arrange for & generated by CRM in a •Aims to generate
manage supply sources timely manner at lowest customer demand &
for various possible cost facilitate order
goods/services •Involves: strategic-, placement & tracking
•Involves: sourcing, demand- & supply •Involves: marketing,
negotiating, buying, planning, Fulfillment, Field pricing ,order
design collaboration, Service, Capacities, management, selling,
supply collaboration. Production, Inventory call centre
- Integrating macro processes keeps firm functions from working in isolation & increases overall SC surplus.
o Increases coordination, flow of materials & flow of funds within the firm.
o Reduces inventory holding costs, purchasing costs & transport costs
- Lack of integration hurts SC’s ability to effectively match supply & demand  leads to dissatisfied customers &
high costs
1.6 Examples of Supply Chains TB p25 Ignored for the purpose of this document
1.7 summary of learning objectives TB p29 Mostly integrated into above section
Self-assessment SG p4 & Discussion Questions TB p29

Unit has ±20 pages, all inclusive
UNIT 2: SUPPLY CHAIN PERFORMANCE: ACHIEVING STRATEGIC FIT & SCOPE TB p31
DEF
2.1 Competitive Strategy: indicates the consumer needs that are to be satisfied and the products and services
aimed at these needs
o Formulated by analysing how customers prioritise product cost, delivery period, product range & quality
DEF
- Product Development Strategy: specifies the portfolio of new products that the company will try to develop
DEF
- Marketing & Sales Strategy: specifies how market will be segmented & product positioned, priced, promoted
DEF
- Supply Chain Strategy (SCS): determines the nature of material procurement, transportation of materials,
manufacture of product or creation of service, distribution of product
o also incorporates design decisions e.g. stock management, transport, operational facilities & flow of info
o Consistency and support between SCS, competitive strategy, and other functional strategies is important to
optimise enterprise profitability & flows products, service, info, funds
- Firms Value Chain Fig 2.1: emphasises close relationship between competitive & SCS
Function's:
Finance, Accounting, Information Technology, Human Resources
DEF
2.2 Strategic Fit: Integration of customer priorities that competitive strategy hopes to satisfy with SC capabilities
that SCS aims to build TB p33
o Requires that competitive & SC strategies have the same/aligned goals, consistent with customer needs
o Lack of = SC taking actions inconsistent with customer needs, leading to a reduction in supply chain surplus
and decreasing supply chain profitability
- To achieve strategic fit, a company must accomplish the following:
a) Competitive strategy & all functional strategies must fit together to form a coordinated overall strategy.
b) Different functions in a company must structure their processes & resources to be able to execute these
strategies successfully.
c) Design of overall SC and the role of each stage must be aligned to support the SCS.
2.2.1 Three Steps of Achieving Strategic Fit Study Guide: "Study these steps well – understand & be able to explain them & factors Influencing Strategic Fit"
Step 1: Step 2: Step 3:

•Understanding •Understanding SC •Achieving Strategic Fit
Customer & SC Capabilities Responsiveness consistent with
Uncertainty i.e. needs & IDU i.t.o. efficiency & responsiveness needs, capabilities & IDU
STEP 1: UNDERSTANDING THE CUSTOMER & SUPPLY CHAIN UNCERTAINTY TB p34

- To understand customer, company must identify the needs of the customer segment being served.
- Customer demand varies along several attributes:
 Quantity of the product needed in each lot
 Response time that customers are willing to tolerate
 Variety of products needed
 Service level required e.g. availability / lead time
 Price of the product
 Desired rate of innovation in the product
- Implied Demand Uncertainty = One key measure for combining all these attributes
DEF
- Demand Uncertainty (DU): Uncertainty of a customer demand for a product and
DEF
- Implied Demand Uncertainty (IDU): resulting uncertainty for only the portion of the demand that the
supply chain plans to satisfy based on the attributes the customer desires
Study Guide: "Study Tables 2-1, 2-2, 2-3 and figures 2-3, 2-4, 2-5, 2-6"
- Table 2-1: Impact of Customer Needs on IDU:
CUSTOMER NEED CAUSES IDU TO INCREASE BECAUSE…
Range of quantity increases Wider range of quantity implies greater variance in demand
Lead time decreases Less time to react to orders
Variety of products required increases Demand per product becomes more disaggregated
Number of channels increases Total customer demand is now disaggregated over more channels
Rate of innovation increases New products tend to have more uncertain demand
Required level of service increases Firm now has to handle unusual surges in demand
- Table 2-2: Correlation between IDU & Other Attributes / Characteristics of Demand:
LOW IDU HIGH IDU
often less mature products
Product Margin Low High
Avg. Forecast Error 10% more accurate forecasting 40% - 100%
Avg. Stock-out Rate 1% - 2% 10% - 40% more difficult to match supply & demand
Avg. Forced Season-end Markdown 0% 10% - 25% high because often oversupplied
- Table 2-3: Impact of Supply Source Capability on Supply Uncertainty Uncertainty Resulting from SC's Capability
SUPPLY SOURCE CAPABILITY CAUSES SUPPLY UNCERTAINTY TO…
Frequent Breakdowns Increase
Unpredictable & low yields Increase
Poor Quality Increase
Limited Supply Capacity Increase
Inflexible Supply Capacity Increase
Evolving Production Process Increase
Products' Life-Cycle Position Increase with New products vs. Less with Mature
- Supply uncertainty also strongly affected by product's life-cycle position
- Uncertainty from customer & SC can be combined & mapped on the implied uncertainty spectrum. Fig 2-2
STEP 2: UNDERSTANDING THE SUPPLY CHAIN CAPABILITIES TB p37

DEF
- Supply Chain Responsiveness: SC's ability to High Fig 2-3
 respond to wide ranges of quantities demanded
 meet short lead times
Responsiveness
 handle a large variety of products

 build highly innovative products
 meet a very high service level
 Handle supply uncertainty Low
- There is a cost to achieving responsiveness High Cost Low
DEF
- Supply Chain Efficiency: inverse of the cost of making and delivering the product to the customer
- Increases in cost lower efficiency
FIG 2-3
- Cost-Responsiveness Efficient Frontier: shows lowest possible cost for a given level of responsiveness.
FIG 2-4
- The Responsive Spectrum
STEP 3: ACHIEVING STRATEGIC FIT TB p39

- Ensure that what supply chain does well is consistent with target customer’s needs
FIG 2-5
- Finding the zone of strategic fit Fig 2-6 has been Ignored for the purpose of this document
- All functions in the value chain must support the competitive strategy to achieve strategic fit
- Match SC responsiveness with implied uncertainty from demand & supply (D&S).
- SC design & all the firm's functional strategies must also support the supply chain’s level of responsiveness.
- Comparison of Efficient and Responsive Supply Chains Table 2-4 has been Ignored for the purpose of this document
- Tailoring the SC for Strategic Fit page 42-43 has been Ignored for the purpose of this document 
See Summary of SU 2 by Justin Gous for: Other Issues Affecting Strategic Fit; Multiple Products & Customer Segments; Product Life Cycle; Competitive Changes over Time
DEF
2.3 Scope of Strategic Fit: functions within firm & stages across SC that devise an integrated strategy with an
aligned objective TB p43
o One extreme: each function at each stage develops its own strategy
o Other extreme: all functions in all stages devise a strategy jointly
- Four Developmental Phases + 1 for expanding scope of strategic fit:
 Intraoperation Scope: Min Local Cost Limited scope: each SC stage devises strategy independently. Lack of alignment diminish SC surplus
 Intrafunctional Scope: Min Functional Cost attempt to align all operations within a function. Different functions may have conflicting obj.'s
 Interfunctional Scope: Max Company Profit all functional strategies are developed to align with one another and the competitive strategy
 Intercompany Scope: Max SC surplus requires firms to evaluate every action in the context of the entire SC. ↑ size of surplus to be shared by all
 Agile Intercompany Scope ability to achieve strategic fit when partnering with SC stages changing over time in a dynamic environment
2.4 Obstacles / Challenges to Achieving Strategic Fit TB p46

 Increasing Product Variety and Shrinking Life Cycles
 Globalization and Increasing Uncertainty
 Fragmentation of Supply Chain Ownership
 Changing Technology and Business Environment
 The Environment and Sustainability
2.5 Summary of learning objectives TB p47 Mostly integrated into above section
UNIT 3: SUPPLY CHAIN DRIVERS & METRICS TB p52
3.1 Definitions of financial measures, reported by firms & affected by SC performance TB p52 A/N: Effects have been ignored below
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 Measures return on investment made by
Return on Equity (ROE) =
𝐴𝑣𝑔. 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟 𝐸𝑞𝑢𝑖𝑡𝑦 firm's shareholders
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡
=
𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 Measures return earned on each Rand
Return on Assets (ROA) 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 + [𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 × (1 − 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒)] invested by the firm in assets
=
or 𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
ROA Written as a Product 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

= × = 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 × 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
of 2 Ratios 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠𝑒
Return on Financial Captures amount of ROE attributable to

= 𝑅𝑂𝐸 − 𝑅𝑂𝐴
Leverage (ROFL) financial leverage (e.g. accounts payable, debts)
N.B ratio defining financial leverage;
Accounts Payable Turnover 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
= A low value APT helps a firm improve its
(APT) 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒
financial performance
Accounts Receivable 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
=
Turnover (ART) 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑎𝑏𝑙𝑒
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
Inventory turnover (INVT) = Key Components of Asset Turnover
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠
Property, Plant & 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
=
Equipment Turnover (PPET) 𝑃𝑃&𝐸
= −𝑊𝑒𝑒𝑘𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒 + 𝑊𝑒𝑒𝑘𝑠 𝑖𝑛 𝐼𝑛𝑣𝑒𝑡𝑜𝑟𝑦 + 𝑊𝑒𝑒𝑘𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 Roughly measures avg. amt. of time when
Cash-to-Cash (C2C) = −(
1
)+(
1
)+(
1
)
cash enters process (cost) to when it returns
𝐴𝑃𝑇 𝐼𝑁𝑉𝑇 𝐴𝑅𝑇 (as collected revenue)
- 2 N.B. measures not explicitly part of a firms financial statement:

 Markdowns represents the discounts required to convenience customers to buy excess inventory
 Lost Sales being customer sales that did not materialize because of the absence of product wanted to buy
3.2 Drivers interact to determine SC performance (SCP) in terms of responsiveness & efficiency (R&E)
- They also impact the financial measures as well Study Guide: "Understand definition of each & impacts on SCP"
- THREE LOGISTICAL DRIVERS N.B. Assets for a Company

Facilities TB p59 Actual physical locations where products are stored, assembled or fabricated.
- Two major types: Production Sites & Storage Sites
- ROLE IN SC & STRATEGIC FIT:
o Increasing number of Facilities → Increases Responsiveness and
o Increases flexibility but decreases response time
- COMPONENTS
o Role: Flexible / Dedicated / Combination
o Location:
 Centralise: Economies of Scale  more efficient
 Decentralise: closer to customer
o Capacity: Excess / Unused
- FACILITY-RELATED METRICS
 Capacity  Actual Avg. Flow/Cycle Time
 Utilisation  Flow Time Efficiency
 Processing/setup/down/Idle time  Product Variety
 Production cost per Unit  Top 20% Volume Contribution
 Quality Losses  Avg. Production Batch Size
 Theoretical flow/cycle time of Production  Production Service Level
T R L 3 7 0 9 | Layout Basic View o f this Mo dule & it s Related Mate rials P age |9
Inventory TB p61 Encompasses all the raw materials, work in progress and finished goods within a supply chain
- ROLE IN SC:
o Higher inventory levels Increases responsiveness vs. Low inventory increases SC's efficiency
o DEF Material Flow Time: time elapsing between point at which material enters SC to point at which it exits
o DEF Throughput: rate at which sales occur Little's Law: I = DT; with I Inventory; T flow time; D throughput
- COMPONENTS
o DEF Cycle Invt.: avg. amt. of inventory used to satisfy demand between receipts of supplier shipments
Decide size of replenishment order & how often to place these orders inventory holding cost vs. freq. ordering cost
o DEF Safety Invt.: held in case demand exceeds expectation  counters uncertainty
Trade-off of too much & having to discount vs. too little & losing sales
o DEF Seasonal Invt.: built up to counter predictable seasonal variability in demand
Trade-off cost of carrying add. Invt. Vs. cost of having more flexible production rate
DEF
o Level of Product Availability: fraction of demand that is served on time from product held in inventory
High level of availability provides responsiveness, but also increases costs
- RELATED METRICS
 C2C Cycle Time  Avg. Safety Inventory
 Avg. Inventory  Seasonal Inventory
 Inventory Turns  Fill Rate
 Products with more than a specified  Fraction of Time out of Stock
number of days of inventory  Obsolete Inventory
 Avg. Replenishment Batch Size
Transportation TB p64 Entails moving inventory from point to point in the supply chain
- In the form of many combinations of modes & routes, each with its own performance characteristics
- Outbound transport cost shipping to customer: included in selling ,general & admin cost /expenses,
Inbound transportation costs are typically included in the cost of goods sold
- ROLE IN SC:
o Faster modes ↑ responsiveness vs. slower modes ↑ efficiency
o Appropriate transport allows for facilities & inventory adjustments to find R&E balance
- COMPONENTS
o Design of DEF Transportation Network: collection of transport modes, locations & routes used for shipping
Direct / intermediaries
o Choice of Transport Mode: air, truck, sea, pipelines, internet all influences speeds, size, costs, flexibility
- RELATED METRICS
 Avg. Inbound Transport Cost  Avg. Outbound Transport Size
 Avg. Incoming shipment Size  Fraction Transported by Mode
 Avg. Outbound Transport Cost  Avg. Outbound Transport Cost per Shipment
- THREE CROSS-FUNCTIONAL DRIVERS

Information TB p65 presents management the opportunity to make SC more responsive & more efficient
- consists of data & analysis concerning facilities , inventory ,transportation ,cost , prices and customers
throughout the supply chain
- Directly affects each and every other driver
- ROLE IN SC:
o Investing in info vastly improves both responsiveness & efficiency
o Decision must be made based on strategic position supported by other drivers
- COMPONENTS
o Push vs. Pull: determine whether processes are part of push/pull phases
T R L 3 7 0 9 | Layout Basic View o f this Mo dule & it s Related Mate rials P a g e | 10
o Coordination & Info Sharing: when all stage work toward the maximising total SC profitability objective
based on shared info
o Sales & Operations Planning (S&OP): process of creating overall supply plan production & inventories to meet
anticipated level of demand sales
o Enabling Technologies: deciding which of following technologies to use & how to integrate them into SC:
 Electronic data interchange (EDI)
 Internet
 Enterprise Resource Planning (ERP)
 Supply Chain Management (SCM)
 Radio Frequency Identification (RFID)
- RELATED METRICS
 Forecast Horizon  Seasonal Factors
 Frequency of Update  Variance from Plan
 Forecast Error  Ratio of Demand Variability to Order Variability
Sourcing TB p68 choice of who will perform a particular supply chain activity e.g. production, storage, transport, info management
- Cost show up in cost of goods sold & monies owed to suppliers are recorded under accounts payable
- ROLE IN SC:
o ↑ profits by assigning SC functions to the right party  bringing
higher economies of scale of a higher level of aggregation of uncertainty
- COMPONENTS
o Performing In-House or Outsource task to third party all of it / responsive component / only the efficient component
Best to outsource if SC surplus is significant with little additional risk
o Supplier Selection: decide number of suppliers per activity, evaluation & selection criteria
o Procurement: process of obtaining goods/services within a SC. Structured to increase SC surplus
- RELATED METRICS
 Days Payable Outstanding  Supply Quality
 Avg. Purchase Price  Supply Lead Time
 Range of Purchase Price  % On-Time Deliveries
 Avg. Purchase Quantity  Supplier Reliability
Pricing TB p69 determines how much firms charge for goods/series that it makes available in SC
- Affects buyer behavior & therefore demand & SC performance
- Lever that can be used to match supply & demand
- ROLE IN SC:
o Used to attract the right target customer segment
o Differential pricing can be used to attract customer valuing responsiveness / want efficiency
- COMPONENTS
o Pricing & Economies of Scale: Changeovers make small production runs more expensive than large runs
o Everyday Low Pricing (EDLP) vs. High-Low Pricing: EDLP keep prices steady over time vs. steep discounts
 stable demand vs. peaks
o Fixed Price vs. Menu Pricing: Pricing menu allows for variations with some other attribute response time, location
- RELATED METRICS
 Profit Margin  Avg. Sale Price
 Days Sales Outstanding  Avg. Order Size
 Incremental Fixed Cost per Order  Range of Sale Price
 Incremental Variable Cost per Unit  Range of Periodic Sales
3.3 Framework for Structuring Drivers TB p58
PART 2: DESIGNING A SUPPLY CHAIN NETWORK

UNIT 4: DESIGNING DISTRIBUTION NETWORKS & APPLICATIONS TO E-BUSINESS TB p81
DEF
4.1 Distribution: steps taken to move &store a product from supplier stage to a customer stage in the SC
o occurs between every pair of stages in the supply chain
o key driver of firm's overall profitability because it affects both the SC cost and the consumer value directly
o used to achieve variety of SC objectives
- Process of designing distribution network (DN) has two broad phases:
i. Visualise SC network's broad structure no. of stages & role of each Incl. decisions e.g. selling directly / by intermediary.
ii. Converts broad structure into specific locations & their capability, capacity, and demand allocation
4.2 Factors Influencing DN Design TB p83; See also Assignment 1 from 2015-S2
- At highest level, evaluate DN's performance along 2 Dimensions / Key factors to consider when designing DN:
o customer needs that are met
o cost of meeting customer needs
- Customer value impacted by many factors  focus on measures influenced by DN's structure. Cust. Needs are:
 Response time: amount of time it takes for a customer to receive an order.
 Product variety: amount of different products / configurations that are offered by the DN
 Product availability: availability of having a product in stock.
 Customer experience / convenience: includes the ease with which customers can place and receive orders
and the extent to which this experience is customized.
 Time to market: the time it takes to bring as new product to market.
 Order visibility: the ability of customers to track their orders from placement to delivery.
 Returnability: ease with which customer can return unsatisfactory merchandise & network's ability to handle
such returns. Fig 4.1
Required Number
of Facilities
- Fig 4-1: Relationship between Desired Response Time & Number of Facilities
- Customer desiring quicker response time
increases the number of facilities required in the network. Desired Response Rate
- Following SC Costs are affected when changing distribution network design Fig 4.2
[4 out of the 6 SC drivers listed earlier]
Inventory Cost
:
o Inventories: as number of facilities ↑, inventory & resulting inventory costs also ↑.
Firms ↓ inventory costs by consolidating & limiting the number of facilities SC network
Fig 4-2: Relationship between Number of Facilities & Inventory Costs Number of Facilities
o Transportation:
Fig 4.3
 Inbound transportation costs incurred by bringing material into facility.
Transportation
As long as inbound transportation economies of scale are maintained,

Cost
increasing the number of facilities decrease total transportation cost.

Fig 4-3: Relationship between Number of Facilities & Transportation Costs Number of Facilities
↑ no. of facilities to a point where inbound lot sizes are also very small & significant
loss of economies of scale, increasing the number of facilities increases total transportation cost.
 Outbound transportation costs of sending material out of a facility.
Tends to be higher per unit than inbound costs because inbound lot sizes are typically larger.
↑ warehouse locations, ↓ avg. outbound distance to customer & makes outbound transport distance a
smaller fraction of total distance travelled by the product. Fig 4.4
Facility Cost
o Facilities & Handling: facility costs ↓as number of facilities ↓ 

because consolidation of facilities allows firm to exploit economies of scale.
Fig 4-4: Relationship between Number of Facilities & Facility Costs Number of Facilities
o Info: Total logistics costs = Inventory costs + Transport costs + Facility costs Fig 4.5
Response Time
- Fig 4-5: Relationship between Number of Facilities & Facility Costs
Total Logistics Cost
As the number of facilities ↑, total logistics costs first ↓ then ↑
Each firm should have at least number of facilities that min total logistics costs.
Number of Facilities
Firm should add facilities beyond cost-minimizing point only if managers are confident
increase in revenues because of better responsiveness is greater than increase in costs because of the
additional facilities.
4.3 Design Options for a Distribution Network TB p86; Study Guide: "Understand how to apply various stages, (dis)advantages & Tables 4-1 to 4-8"
- Managers must make two key decisions when designing a distribution network:
o Will product be delivered to the customer location or collected from a prearranged site?
o Will product flow through an intermediary (or intermediate location)?
- Based on the firm’s industry and the answers to these two questions, one of six distinct distribution network
designs may be used to move products from factory to customer:
4.3.1 MANUFACTURER STORAGE WITH DIRECT SHIPPING called "Drop-Shipping"

- Product is shipped directly from manufacturer to end customer, bypassing retailer
- Info flows from customer via retailer to manufacture & product is delivered directly to the customer.
- Table 4-1 Performance Characteristics of Manufacturer Storage with Direct Shipping Network Ignored Fig 4.6
Cost Factor Performance
Inventory Lower costs because of aggregation. Benefits of aggregation are highest for low-demand, high-
value items. Benefits are large if product customization can be postponed at the manufacturer.
Transportation Higher transportation costs because of increased distance and disaggregate shipping.
Facilities & Lower facility costs because of aggregation. Some saving on handling costs if manufacturer can
handling manage small shipments or ship from production line.
Information Significant investment in information infrastructure to integrate manufacturer and retailer.
Service Factor Performance
Response time Long response time of one to two weeks because of increased distance and two stages for
order processing. Response time may vary by product, thus complicating receiving.
Product variety Easy to provide a high level of variety.
Product availability Easy to provide a high level of product availability because of aggregation at manufacturer.
Customer Good in terms of home delivery but can suffer if order from several manufacturers is sent as
experience partial shipments.
Time to market Fast, with the product available as soon as the first unit is produced.
Order visibility More difficult but also more important from a customer service perspective.
Returnability Expensive and difficult to implement.
Author's Note: See TRL3709-2016-S1 – Summary SU 4 by Anna Maluleke for more in depth tables
4.3.2 MANUFACTURER STORAGE WITH DIRECT SHIPPING & IN-TRANSIT MERGE: Same as manufacture storage, but pieces of
the order coming from different locations are combined so that the customer gets a single delivery
- Table 4-2 Performance Characteristics of In-Transit Merge Ignored Fig 4.7 for the purpose of this document
Inventory Similar to drop-shipping.
Transportation Somewhat lower transportation costs than drop-shipping.
Facilities & handling Handling costs higher than drop-shipping at carrier; receiving costs lower at customer.
Information Investment is somewhat higher than for drop-shipping.
Response time Similar to drop-shipping; may be marginally higher.
Product variety Similar to drop-shipping.
Product availability Similar to drop-shipping.
Customer experience Better than drop-shipping because only a single delivery has to be received.
Time to market Similar to drop-shipping
Order visibility Similar to drop-shipping.
Returnability Similar to drop-shipping.
4.3.3 DISTRIBUTOR STORAGE WITH CARRIER DELIVERY: inventory is not held by manufactures at the package carriers are
used to transport products from the intermediate location to the final consumer.
- Table 4-3 Performance Characteristics of Distributor Storage with Carrier Delivery Ignored Fig 4.8 for the purpose of this doc
Inventory Higher than manufacturer storage. Difference is not large for faster moving items but can
be large for very slow-moving items.
Transportation Lower than manufacturer storage. Reduction is highest for faster moving items.
Facilities & handling Somewhat higher than manufacturer storage. The difference can be large for very slow-
moving items.
Information Simpler infrastructure compared to manufacturer storage.
Response time Faster than manufacturer storage.
Product variety Lower than manufacturer storage.
Product availability Higher cost to provide the same level of availability as manufacturer storage.
Customer experience Better than manufacturer storage with drop-shipping.
Time to market Higher than manufacturer storage.
Order visibility Easier than manufacturer storage.
Returnability Easier than manufacturer storage.
Author's Note: Ignored Tables 4-7 & 4-8 for the purpose of this doc, although Study Guide does refer to them
4.3.4 DISTRIBUTOR STORAGE WITH LAST MILE DELIVERY: Distributor storage, but the distributor / retailer delivers the
product to the customer’s home instead of using a package carrier.
- Table 4-4 Performance Characteristics of Distributor Storage with Last-Mile Delivery Ignored Fig 4.9 for the purpose of this doc

Inventory Higher than distributor storage with package carrier delivery.
Transportation Very high cost given minimal scale economies. Higher than any other distribution option.
Facilities & handling Facility costs higher than manufacturer storage or distributor storage with package carrier
delivery, but lower than a chain of retail stores.
Information Similar to distributor storage with package carrier delivery.
Response time Very quick. Same day to next-day delivery.
Product variety Somewhat less than distributor storage with package carrier delivery but larger than retail
stores.
Product availability More expensive to provide availability than any other option except retail stores.
Customer experience Very good, particularly for bulky items.
Time to market Slightly higher than distributor storage with package carrier delivery.
Order visibility Less of an issue and easier to implement than manufacturer storage or distributor storage
with package carrier delivery.
Returnability Easier to implement than other previous options. Harder and more expensive than a retail
network.
4.3.5 MANUFACTURER/DISTRIBUTOR STORAGE WITH CUSTOMER PICKUP: store inventory at manufacturer / distributor
warehouse, but customers place their orders online or on the phone and then travel to designated pickup
points to collect their merchandise.
- Orders are shipped from the storage site to the pickup points as needed.
- Table 4-5 Performance Characteristics of Network with Consumer Pickup Sites Ignored Fig 4.10 for the purpose of this document
Inventory Can match any other option, depending on the location of inventory.
Transportation Lower than the use of package carriers, especially if using an existing delivery network.
Facilities & handling Facility costs can be high if new facilities have to be built. Costs are lower if existing
facilities are used. The increase in handling cost at the pickup site can be significant.
Information Significant investment in infrastructure required
Response time Similar to package carrier delivery with manufacturer or distributor storage. Same-day
delivery possible for items stored locally at pickup site.
Product variety Similar to other manufacturer or distributor storage options.
Product availability Similar to other manufacturer or distributor storage options.
Customer experience Lower than other options because of the lack of home delivery. Experience is sensitive to
capability of pickup location.
Time to market Similar to manufacturer storage options.
Order visibility Difficult but essential.
Returnability Somewhat easier given that pickup location can handle returns.
4.3.6 RETAIL STORAGE WITH CUSTOMER PICKUP: inventory is stored locally at retail stores, and customers walk into the
store, place an order online or by phone and pick it up at the retail store.
- Table 4-6 Performance Characteristics of Retail Storage at Consumer Pickup Sites
Inventory Higher than all other options.
Transportation Lower than all other options.
Facilities & handling Higher than other options. The increase in handling cost at the pickup site can be
significant for online and phone orders.
Information Some investment in infrastructure required for online and phone orders.
Response time Same-day (immediate) pickup possible for items stored locally at pickup site.
Product variety Lower than all other options.
Product availability More expensive to provide than all other options.
Customer experience Related to whether shopping is viewed as a positive or negative experience by customer.
Time to market Highest among distribution options.
Order visibility Trivial for in-store orders. Difficult, but essential, for online and phone orders.
Returnability Easier than other options because retail store can provide a substitute.
4.4 Online Sales & Distribution Network TB p99

Impact of Online Sales on Customer Service
Response time to Selling non-downloadable, physical products, online sales take longer  shipping time
consumers involved. No delay for info goods  downloaded immediately.
Product availability Aggregating inventory  company selling online improves product availability.
Better info on customer preferences allows firms selling online to improve availability.
Customer experience Online sales affect customer experience in terms of access, customisation & convenience.
e.g. any time / geographic distance as long as there's Internet access.
Internet offers opportunity to create personalised buying experience for each customer
Faster time to market Firm can introduce new product much more quickly online vs. physical channels.
Order visibility Internet provide visibility of order status  crucial as no physical equivalent
Returnability Harder than retail online orders typically arrive from centralised location.
Proportion of returns likely to be higher  unable to touch & feel product before buying.
Going online thus increases the cost of reverse flows
Direct sales to Manufactures & other SC members that do not have direct contact with customers in
customers traditional channels can get customer feedback & build relationship
Flexible pricing, Ease of changing prices & assortments online  company can much more effectively
product portfolio, and manage revenues from available product portfolio
promotions If access to customer network  Convey promotion info quickly & inexpensively
Efficient funds transfer Internet & cell phones enhances convenience & lowers cost of revenue collection
Product Variety Greater variety because of centralised inventories esp. low-vol., high variety products
CONTINUED
Author's Note: See pages 102 to 112 for Scorecards and examples of e-business impacts
Also Assignment 2 of 2016-S1
Impact of Online Sales on Cost

Inventory Lowers inventory levels by aggregating inventories far from customers if most customers
are willing to wait for delivery.
Facilities Selling online can reduce firm's network facility costs by centralising operations, thereby
decreasing number of facilities required.
On-going operating costs: cust. participation in selection & order placement allows firm to
lower resource costs relative to staffing call centres.
Can lower firm’s order fulfillment costs as it does not have to fill order as soon as it arrives.
Transportation Digitisation & downloading significantly lower cost of transporting these info goods
Non-digital products: aggregating inventories increases outbound transportation relative to
inbound transportation. Cost ↑ esp. with low-value products with predictable demand
Information Online seller can share demand info throughout SC, to improve visibility.
Can further share planning & forecasting info  improving coordination.
Helps reduce overall SC costs and better match supply and demand.
4.5 Practical aspects to take into account when designing DN: TB p112
i. DN's Ownership structure can have as big an impact as the type of distribution network.
i.e. same physical flow but different ownership structures  vastly different performance
ii. N.B to have adaptable distribution networks: adapt to changing technology, environments& rapid change.
iii. Product price, commoditisation & criticality affect the type off distribution system preferred by customers.
High-value/ specialised/ critical products  customer willing to have relationship solely around that product.
Low-value / commoditized products e.g. office supplies  customers prefer none-stop shop
iv. Integrate Internet with existing physical network: To extract max benefit from online channel for physical goods
4.6.2 Discuss the strengths and weaknesses of various distribution options.
- DN's shipping directly to customer: better suited for large variety of high-value products with low & uncertain
demand  networks carry low inventory levels but incur high transport cost & provide a slow response time.
- DN's carrying local inventory: suitable for high demand products, especially if transport is a large fraction of
total cost  networks incur higher inventory cost but lower transport cost & provides faster response time.

UNIT 5: (GLOBAL) NETWORK DESIGN IN THE SUPPLY CHAIN A/N: Combination of two available summaries
5.1 Classify SC Network Design Decisions as follows: TB p120

Facility Role
•What role should each facility play?
•What processes are performed at each facility?
•Decisions: significant as they determine amount of flexibility SC has in changing the way it meets demand.
Facility Location
•Where should facilities be located?
•Decisions have long-term impact on SC's performance because it's expensive to shut down/move a facility
•Good location decisions can help SC be responsive while keeping costs low.
Capacity Allocation
•How much capacity should be allocated to each facility?
•Decisions tend to stay in place for a few years.
•Allocating too
•much capacity → poor utilization & higher costs.
•little → poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.
Market & Supply Allocation
•What markets should each facility serve?
•Which supply sources should feed each facility?
•Significant impact on performance as it affects SC's total production, inventory, & transport costs
•Reconsider decisions on regular basis → changing allocations as production, transport costs, market
conditions or plant capacities change.
•Can change only if facilities are flexible enough to serve diff. markets & receive supply from diff. sources.
- Network design decisions have a significant impact on performance because they

o determine SC configuration
o set constraints within which other SC drivers can be used to decrease SC cost / increase responsiveness
o affect one another
5.2 8 Factors Influencing Network Design Decisions in supply chains: TB p121; Study Guide: "Note the role of these factors"
 Strategic factors
 Technological factors
 Macroeconomic factors Includes Tariffs; Tax Incentives; Exchange Rates & Demand Risk; Freight & Fuel Costs
 Political factors
 Infrastructure factors
 Competitive factors & Positive Externalities between Firms; Locating to Split Market
 Customer response time and local presence
 Logistics and facility costs
CONTINUED
5.3 Framework for Network Design Decisions: TB p126
Phase I: Define SC Strategy/Design

•Involves defining firm’s broad SC design
•Starts with a clear definition of firm’s competitive strategy
•Then specify SC network's capabilities in order to support competitive strategy
•Forecast the likely evolution of global competition & whether competition in each market will be local / global players
Phase II: Define Regional Facility Configuration

•Define configuration using SC strategy, regional demand, costs, infrastructure & competitive strategy
•Obj: to identify regions where facilities will be located, their potential roles & approximate capacity
Phase III: Select a set of Desirable Potential Sites

•within each region where facilities are to be located, based on available infrastructure
•Hard Infrastructure Requirements: availability of suppliers, transport services, communication etc.
•Soft Infrastr. Req.'s: availability of skilled workers, workforce turnover & community's receptivity to business & industry
Phase IV: Location Choices

•Obj.: select from among potential sites, a precise location & capacity allocation for each facility
•Design to max total profits, taking into account expected margin & demand in each market, various logistics & facility
costs, taxes & tariffs at each location
5.4 Three Models Available for Facility Location & Capacity Allocation TB p128
Study Guide: "Only be able to name & explain the models – do not need to study any formulae / calculation"
i. Models for Network Optimisation to Determine Regions: manager considers the regional demand , tariffs ,
economies of scale and aggregate factor costs to decide the regions where facilities are to be allocated
o Incl.: contribution margins, taxes, tariffs, production, transport & inventory costs  used to max profit
ii. Models to Identify Potential Locations within a Region: manager uses makes gravity location models to identify
potential locations in each region where company has decided to locate a plant
o Gravity Location models identify a location that minimises in- & outbound transport costs
Simple to implement but don't account for other N.B. costs
iii. Models for Each Facility Location & Capacity Allocation: manager uses network optimisation model to decide
the location & capacity allocation of each facility; as well as how markets are allocated to facilities
- Managers must make decisions considering a time horizon over which locations & capacities will not be altered.
- Managers also use network design models to assign current demand to the available facilities and identify lanes
along which product will be transported  annually as demand, prices, exchange rates, & tariffs change.
- The following information ideally is available in making the design decision:
 Location of supply sources and markets  Inventory costs by site & as a function of quantity
 Location of potential facility sites  Sale price of product in different regions
 Demand forecast by market  Taxes and tariffs
 Facility, labour, and material costs by site  Desired response time and other service factors
 Transportation costs between each pair of sites
- Given this info, either gravity models or network optimization models may be used to design the network.
5.5 Practical Issues that Influence Network Design Decisions: TB p144

- Do not underestimate the lifespan of facilities
- Do not gloss over the cultural implications
- Do not ignore quality of life issues
- Focus on tariffs and tax incentives when locating facilities
UNIT 6: DESIGNING GLOBAL SUPPLY CHAIN NETWORKS TB p154
6.1 Impact of Globalisation on SC Networks TB p154

- Advantages = ↑ profitability & ↓ costs; Disadvantage = Endure greater risk
- Table 6-1 Sources of Risk / Risk Factors that Impact Global Supply Chain Performance
 Natural disasters  Customer/consumer preference shifts
 Shortage of skilled resources  Performance of supply chain partners
 Geopolitical uncertainty  Logistics capacity/complexity
 Terrorist infiltration of cargo  Forecasting/planning accuracy
 Volatility of fuel prices  Supplier planning/communication issues
 Currency fluctuation  Inflexible supply chain technology
 Port operations/custom delays
6.2 The offshoring decision: Total cost TB p 156 Author's Note: Large theory sections have been left out for the purpose of this document
- Companies fail to gain from offshoring for two primary reasons:
o Focusing exclusively on unit cost rather than total cost when making the offshoring decision.
o Ignoring critical risk factors.
- Evaluate impact of offshoring on these total cost key elements:
 Supplier price  Inventory and warehousing
 Terms  Cost of quality
 Delivery costs  Exchange rate trends and their impact on cost
 Customer duties, value added-taxes, local tax incentives
 Cost of risk, procurement staff, broker fees, infrastructure (IT & facilities), and tooling and mold costs
- Table 6-2 Dimensions to Consider When Evaluating Total Cost from Offshoring
Performance Dimension Activity Impacting Performance Impact of Offshoring
Order communication Order placement More difficult communication
Supply chain visibility Scheduling & expediting Poorer visibility
Raw material costs Sourcing of raw material Could go either way depending on raw
material sourcing
Unit cost Production, quality (production & Labour/fixed costs decrease; quality may
transportation) suffer
Freight costs Transportation modes & quantity Higher freight costs
Taxes & tariffs Border crossing Could go either way
Supply lead time Order communication, supplier production Lead time increase results in poorer
scheduling, production time, customs, forecasts & higher inventories
transportation, receiving
On-time delivery/lead Production, quality, customs, transportation, Poorer on-time delivery & increased
time uncertainty receiving uncertainty resulting in higher inventory
& lower product availability
Minimum order quantity Production, transportation Larger min quantities increase inventory
Product returns Quality Increased returns likely
Inventories Lead times, inventory in transit & production Increase
Working capital Inventories & financial reconciliation Increase
Hidden costs Order communication, invoicing errors, Higher hidden costs
managing exchange rate risk
Stock-outs Ordering, production, transportation with Increase
poorer visibility
6.3 Risk Management in Global SC TB 159

- Table 6-3 Supply Chain Risks to Be Considered During Network Design
Category Risk Drivers
Disruptions Natural disaster, war, terrorism; Labour disputes; Supplier bankruptcy
Delays High capacity utilization at supply source; Inflexibility of supply source; Poor quality or
yield at supply source
Systems risk Information infrastructure breakdown; System integration or extent of systems
being networked
Forecast risk Inaccurate forecasts due to long lead times, seasonality, product variety, short life
cycles, small customer base; Information distortion
Intellectual property risk Vertical integration of supply chain; Global outsourcing and markets
Procurement risk Exchange-rate risk; Price of inputs; Fraction purchased from a single source; Industry-
wide capacity utilization
Receivables risk Number of customers; Financial strength of customers
Inventory risk Rate of product obsolescence; Inventory holding cost; Product value; Demand and
supply uncertainty
Capacity risk Cost of capacity; Capacity flexibility
- Table 6-4 Tailored Risk Mitigation Strategies During Network Design

Risk Mitigation Strategy Tailored Strategies
Increase capacity Focus on low-cost, decentralized capacity for predictable demand. Build centralized
capacity for unpredictable demand. Increase decentralization as cost of capacity drops.
Get redundant suppliers More redundant supply for high-volume products, less redundancy for low-volume
products. Centralize redundancy for low-volume products in a few flexible suppliers.
Increase responsiveness Favour cost over responsiveness for commodity products. Favour responsiveness over
cost for short–life cycle products.
Increase inventory Decentralize inventory of predictable, lower value products. Centralize inventory of
less predictable, higher value products.
Increase flexibility Favour cost over flexibility for predictable, high-volume products. Favour flexibility for
unpredictable, low-volume products. Centralize flexibility in a few locations if it is
expensive.
Pool or aggregate demand Increase aggregation as unpredictability grows.
Increase source capability Prefer capability over cost for high-value, high-risk products. Favour cost over
capability for low-value commodity products. Centralize high capability in flexible
source if possible.
- The following strategies could also be used to mitigate risks & maximise profitability:
o Containment
o DEF Chaining:
In a chained network, each plant is capable of producing two products with the flexibility organised so that
the plants and their products form a chain, thereby mitigating the risk of demand fluctuation
- Flexibility can be divided into three broad categories:

DEF
- New product flexibility: firm’s ability to introduce new products into the market at a rapid rate
DEF
- Mix flexibility: ability to produce a variety of products within a short period time, critical for products whose
demand is small or unpredictable
DEF
- Volume flexibility: firm's ability to operate profitably at different levels of output. Critical in cyclical industries
- Appropriate flexibility is an effective approach for a global supply chain to deal with a variety of tasks and
uncertainties. Some flexibility is valuable to much may not be worth the cost
Study Guide: "Sections 6.4; 6.5 & 6.6 are not prescribed"
6.7 Making Global SC Decisions under Uncertainty in Practice

i. Combine strategic planning and financial planning during global network design
ii. Use multiple metrics to evaluate global supply chain networks
iii. Use financial analysis as an input to decision making, not as the decision-making process
iv. Use estimates along with sensitivity analysis
6.8 Summary of learning objectives TB p181

6.8.1 Identify factors that need to be included in total cost when making global sourcing decisions. Besides unit
cost, total cost should include the impact of global sourcing on freight, inventories, lead time, quality, on-time
delivery, minimum order quantity, working capital, and stock-outs. Other factors to be considered include the
impact on supply chain visibility, order communication, invoicing errors, and the need for currency hedging.
6.8.2 Define uncertainties that are particularly relevant when designing global supply chains. The performance of a
global supply chain is impacted by uncertainty in a number of input factors such as demand, price, exchange
rates, and other economic factors. These uncertainties and any flexibility in the supply chain network must be
taken into account when evaluating alternative designs of a supply chain.
6.8.3 Explain different strategies that may be used to mitigate risk in global supply chains. Operational strategies
that help mitigate risk in global supply chains include carrying excess capacity and inventory, flexible capacity,
redundant suppliers, improved responsiveness, and aggregation of demand. Hedging fuel costs and currencies
are financial strategies that can help mitigate risk. It is important to keep in mind that no risk mitigation strategy
will always pay off. These mitigation strategies are designed to guard against certain extreme states of the
world that may arise in an uncertain global environment
6.8.4 Not Prescribed

UNIT 7: COORDINATION IN A SUPPLY CHAIN TB p260, Par 10.1

DEF
7.1 SC Coordination: aims at improving SC performance by aligning plans & objectives of individual Business.
o Improves if all stages of the chain take actions that are aligned and increase total SC surplus
o Requires each SC stage to share information and take into account the impact its action have on each stage
- Lack of coordination because
 different stages of SC have objectives that conflict or
 info moving between stages is delayed & distorted or
 each stage has different owner.
DEF
- Distortion of information: occurs because complete information is not shared between stages
DEF
- Bullwhip Effect: fluctuations in orders increase as they move up through SC from retailers, wholesalers, manufact.'s to suppliers
o Distribution channel phenomenon in which forecast yield SC inefficiencies.
o The increasing swing in inventory response to shifts in customer demand as you move upstream in SC
o Distorts demand info within SC, with each stage having a different estimate of what demand looks like
o Increases all costs in SC & decrease in customer service
7.2 Table 10-1 Impact of the Lack of Coordination on Supply Chain Performance TB p262, Par 10.2
7 Performance Measures Impact of the Lack of Coordination
Manufacturing cost Increases
Inventory cost Increases
Replenishment lead time Increases
Transportation cost Increases
Labour Cost for Shipping & Receiving Increases
Level of product availability Decreases
/ Profitability
Overall Relationship Across SC Decreases
7.3 Obstacles to Coordination in a SC TB p264, Par 10.3

Author's Note: Simplified for the purpose of this document – See TRL3709-2016-S1 – Summary SU 7 by Nomandla for more detail
Incentive Obstacles
Local Optimisation within SC Functions/Stages Sales Force Incentives encourages forward buying
Info-Processing Obstacles
Forecasting Based on Orders & Not Customer Demand Lack of Info Sharing
Operational Obstacles
Ordering in Large Lots Large Replenishment Lead Times Rationing & Shortage Gaming
Pricing Obstacles
Lot-Size-Based Quantity Discounts Price Fluctuations
Behavioural Obstacles
Can't learn from
View Actions Locally Reacting to current Blaming one another
actions & Lack of trust =
→ Missing the local situation rather for fluctuations →
consequences → duplication of effort;
Impact on other than identifying became enemies
they happen & opportunistic.
Stages causes rather than partners.
elsewhere.
7.4 Managerial Levers to Achieve Coordination TB p268, Par 10.4

- Five managerial actions to increase total supply chain profit and moderate information distortion.
I. ALIGNING OF GOALS & INCENTIVES: so that every participant in SC activities works to maximise total SC profit.
o Aligning goals across SC: focus on SC surplus is unlikely to arise until actions & incentives across the SC
align.
o Aligning incentives across functions: ensuring that the objective any firm uses to evaluate a decision is
aligned with the firms overall objectives.
o Pricing for coordination: a manufacture can use a lot size – based quantity discounts to achieve
coordination for commodity product if the manufacture has large fixed costs associated with each lot.
o Altering sales force incentives from sell in to sell out.
II. IMPROVING INFO VISIBILITY & ACCURACY to Different Stages by Means of:
o Sharing point of sale data: the primary cause of information distortion is the fact that each stage of the
supply chain uses orders to forecast future demand.
o Implementing collaborative forecasting and planning: different stages of SC must forecast and plan
jointly
o Designing single stage control of replenishment: can help diminish information distortion.
III. IMPROVING OPERATIONAL PERFORMANCE & Designing Appropriate Product Rationing Schemes in Case of Shortage
o Reducing replenishment lead times managers decrease the uncertainty of demand during the lead times
o Reducing lot size: managers can reduce information distortion by implementing operational
improvements that reduce lot size.
IV. DESIGNING PRICING STRATEGIES TO STABILISE ORDERS

o Moving from lot size to volume based quantity discount
o Stabilise pricing: Managers can dampen the bullwhip effect by eliminating promotions and charging an
everyday low-price.
V. BUILDING STRATEGIC PARTNERSHIP & TRUST

o Managers find it easier to use the levers to achieve coordination if trust and strategic partnership are
built within the SC
o Sharing of accurate information that is trusted by every stage result in a better matching of supply and
demand throughout the supply chain a lower cost.
o Better relationship also tends to lower the transaction cost between SC stages.
7.5 Two Examples of Inventory Replenishment: TB p273, Par 10.5

- Continuous Replenishment Programs (CRP): wholesaler/manufacturer replenishes a retailer regularly based on
POS Point of Sales data
- Vendor-Managed Inventories (VMI): manufacturer or supplier is responsible for all decisions regarding product
inventories at the retailer.
7.6 Collaborative Planning, Forecasting & Replenishment (CPFR): TB p273, Par10.6

- CPFR: business practice combining intelligence of multiple partners in the planning & fulfilment of cust. demand
- Four Common CPFR Scenarios/Forms
o Retail event collaboration: Stock –outs, excess inventory and unplanned logistic costs affects financial
performance for both the retail and manufacture. Therefore collaboration between retailer and supplier to
plan, forecast, and replenish promotion is effective.
o Distribution Centre (DC )replenishment Collaboration is often the easiest to implement because it requires
aggregate-level of data.
o Store Replenishment Collaboration requires a higher level of investment in technology in technology and
data sharing to be successful.
o Collaborative Assortment Planning is performed at a seasonal interval.
- Four Activities where Sellers & Buyers in a SC may Collaborate
•Partners determine scope of •Collaborative sales forecast projects

collaboration assigning roles, best estimate of consumer demand
responsibilities & clear checkpoints. at POS. T
•In joint business plan: identify •Convert to collaborative order plan
significant events that affect D&S. determining future orders &
2. Demand & delivery req.'s
1. Strategy &
Supply
Planning.
Management
4. Key
3. Execution
Analysis
•As forecasts become firm →

•Focus on identifying exceptions & converted to actual orders.
•evaluating metrics used to assess •Fulfilment of these orders involves
performance / identify trends. production, shipping, receiving &
stocking of products.
7.7 Achieving Coordination in Practice: TB p227, Par 10.7

i. Quantify the bullwhip effect
ii. Get top management commitment for coordination
iii. Devote resources to coordination
iv. Focus on communication with other stages
v. Try to achieve coordination in the entire supply chain network
vi. Use technology to improve connectivity in the supply chain
vii. Share the benefits of coordination equitably
7.8 Organising for Effective Logistics: SG p22

- DEF Hollow Corporation: will exist as small organisation of managers & ‘idea people’ who hire external companies
to perform various types of activities, including manufacturing, logistics, distribution, billing, sales & marketing
o occurs because of increasing use of outsourcing as accepted method for conducting various logistics act.'s
o rationale: organisations should specialise & focus efforts on what they do best & then hire specialists to
perform the other activities
DEF
- Virtual Corporation: Variation of Hollow Corp in which number of companies come together to develop,
produce, sell & distribute a product/service of limited scope. Relationship lasts as long as product is viable
- Manufacturers may use one of Three Organisation Strategies: SG p23
1) Process-based strategy:
•concerned with managing broad group of logistics activities as a value-added chain 

ensuring full integration takes place.
2) Market-based strategy:
•concerned with managing limited group of logistics activities across a multi-division business
or across multiple business units  making joint shipments & facilitating sales & logistical
coordination by a single order-invoice.
3) Channel-based strategy:
•managing logistics activities performed jointly in combination with dealers & distributors 
significant amounts of finished inventories & external control forward-/downstream.
- Coordination of logistics activities can be achieved in several ways, The basic systems generally take into
account the following: SG p 23-24
o Strategic vs. Operational Coordination: level at which logistics activities are positioned within the firm hierarchy
o Centralised vs. Decentralised:
 Centralised: reflects a system in which logistics activities are administered at a central location
 Decentralised: effective for firms with diverse products or markets
o Line vs. Staff Coordination:
- Other organizational approaches are possible. Examples include: SG p 24

o Logistics as a function
o Logistics as a program
o Matrix Organisation Approach
PART 3: MANAGING CROSS-FUNCTIONAL DRIVERS

TB p412; A/N: Taken exactly from TRL3709-2016-S1 – Summary SU 8 by Lindiwe Khumalo
UNIT 8: TRANSPORTATION IN A SUPPLY CHAIN
8.1 THE ROLE OF TRANSPORTATION IN A SUPPLY CHAIN TB p412; Par 14.1
Transportation refers to the movement of products from the supplier up to the final customers.
- Transport N.B supply driver because products are rarely produced & consumed in the same location
- Transport N.B cost component in SC & must be well planned
- Role of transportation is even more significant in global SC
- A SC's success is closely linked to the appropriate use of transportation
- SC also use responsive transportation to centralise inventories & operate with fewer facilities
Relevant Parties:
Shipper party that requires the movement of the product between 2 points in a SC
o Uses transportation to min. total costs while providing appropriate level of responsiveness to cust.
Carrier: party that moves/transports the products

o Makes investment decisions regarding the transportation equipment & some cases, infrastructure
o Then makes operating decisions to try to maximise the return from these assets
o Carriers' effectiveness: influenced by infrastructure such as port, roads, waterways, airports
o Manage infrastructure so that monies are available for maintenance & investment if further capacity is
needed
Other parties besides shipper & carrier that have significant impact on transportations
i. Owners & operators of transportation infrastructure e.g. roads, ports, canals, airports;
ii. Bodies that sets transport policy worldwide
All 4 parties influence the effectiveness of transportation.

To understand transportation in SC, N.B to consider the perspectives of all four parties.
Transportation Policy aims to:

- set direction for amount of natural resources that go into improving transportation infrastructure
- prevent abuse of monopoly power,
- promote fair competition
- balance environment, energy & social concerns in transportation
8.2 MODES OF TRANSPORTATION & THEIR PERFORMANCE CHARACTERISTICS TB p414, Par 14.2
Study Guide: "you must be able to describe the different modes & indicate strengths & weaknesses of each"
a) AIR
- Airlines have three cost components
o Fixed costs of infrastructure & equipment;
o Cost of labour & fuel: Independent of passengers/cargo on a flight but is fixed for a flight;
o Variable cost: depends on the passengers/cargo carried
- Cost of the flights are incurred when it takes off
- N.B objective = to maximise the revenue generated per flight
- Revenue management is a significant factor for the success of passenger airlines
- Air carriers offer fast & fairly expensive mode of transportation for cargo
- Best Suited to air transport:
o Small, high value items or
o time sensitive emergency shipments that must travel a long distance
- Normally moves shipments under 500 pounds, incl. high value but lightweight high-tech products
- Over the past 20yrs: weight carried by air has diminished but the value of freight has increased.
- Key issues that air carriers face, include:

o Identifying the location & number of hubs
o Assigning planes to routes
o Setting up maintenance schedules for planes
o Scheduling crews
o Managing prices & availability at different prices
b) PACKAGE CARRIERS
- Transportation companies e.g. FedEX, UPS, postal service
- Carries small packages ranging from letters to shipments weighing about 150 pounds
- Uses air, truck & rail to transport time-critical small packages
- Expensive & cannot compete with less than truckload (LTL) carriers on prices for large shipments
- Provides
o shippers a rapid & reliable delivery
o other value-added services e.g. package tracking, sometimes product processing & assembly
- Preferred mode of transport for online businesses
- Consolidation of shipments is key factor in increasing utilisation & decreasing package carriers' costs
- Have trucks that make local deliveries & pick-up packages
- Key issues that air carriers face, include:
o Location & capacity of transfer points
o Information capability to facilitate & track package flow
o For final delivery to customer: N.B consideration is scheduling & routing of delivery trucks
c) TRUCK
- Expensive
- Offers door-to-door shipments
- Shorter delivery time
- Advantage of requiring no transfer between pick-up & delivery
- Trucking industry consists of two major segments
i. Truck Load (TL) or

 Operations have relatively low fixed costs
 Owning a few trucks often sufficient to enter business
 Characterised by shipments of 10,000 pounds or more
 Challenge: most markets have an imbalance of inbound & outbound flows
 Goal: to schedule shipments that provide high revenue while minimising truck's idle & empty travel
time.
 This is best done by designing routes that pick up loads from market where outbound demand
exceeds inbound supply  these markets tends to offer the highest price
ii. Less than truck load (LTL)

 Operations are priced to encourage shipments in small lots
 Cheaper for larger shipments
 Suited for shipments too large to be mailed as small packages but constitute less than half a TL
 Operators tend to run regional / national hub-and-spoke networks that allow consolidation of partial
Loads
 Shipments take longer than TL shipments because of other loads that need to be picked up & dropped
off
 Fatigue-related accidents correlate with number of hours of driving and increase the total length of
the driver’s trip
d) RAIL
- Rail carrier incur high fixed costs in terms of tracks, locomotives, cars & yards
- Significant trip-related labour & fuel costs is
o independent of number of cars but
o does vary with distance travelled & time taken
- Any idle time, once a train is powered
o is expensive as labour & fuel costs are incurred even though trains are not moving
o Occurs when trains exchange cars for different destinations
o Occurs because of track congestion
- Labour & fuel together account for more than 60% of railroad expense
- N.B. goal that railroad keep locomotives & cars well utilised
- Price structure & heavy load capability make rail ideal mode for carrying
o large, heavy or high-density products
o over long distances
o especially low-value shipments that are not time sensitive
- Transportation time by rail is long
- Major operational issues includes:
o Vehicle & staff scheduling
o Track & terminal delays
o Poor on-time performance
- Performance is hurt by the large amount of time taken at each transition.
- Travel time usually a small fraction of rail shipment's total time
- A railroad can improve on-time performance by scheduling some of the trains instead of building all of them.
e) WATER
- Ideally suited for carrying large loads at low cost
- Primarily used & cheapest mode for movements of large bulk commodity shipments
- Slowest of all modes: Significant delays occurs at ports & terminals
- Difficult to operate for short-haul trips
- Global trade: Dominant mode for shipping all kinds of products
- Cheapest mode of transport
- Major issues in global shipping are:
o Delays at ports
o Customs
o Security & management of containers used
f) PIPELINES
- Used primarily for transport of crude petroleum, refined petroleum products & natural gas
- Significant initial fixed cost incurred in setting up pipeline & related infrastructure
- Related infrastructure does not vary significantly with the diameter of the pipeline
- Best suited when relatively stable & large flows are required
- Effective way of getting crude oil to a port/refinery
- Pipeline pricing usually consist of two components:
o Fixed component related to shippers peak usage
o Second charge relating to actual quantity transported
g) INTERMODAL
- Variety of intermodal combinations are possible: most commonly truck/rail
- Containers are easily transferred from one mode to another
- Use of containers facilitates use of intermodal transport
- Containerised freight often uses truck/water/rail combinations for global freight
- Global trade: because factories & markets not situated next to ports  intermodal often only option
- As quantity shipped using containers grows, so does truck/water/rail intermodal combination
- On land rail/truck intermodal systems offers benefit of
o lowering cost on TL
o delivery times better than rail
bringing together different modes to create a price/service offering unmatched by any single mode
- Creates convenience for shippers that now deal with only one entity, replacing all carriers that together
provide intermodal services
- Key issues in intermodal industry involve
o Exchange of info to facilitate shipment transfer between different modes
o These transfers often involve considerable delays, hindering delivery time performance.
8.3 TRANSPORTATION INFRASTRUCTRE AND POLICIES TB p418, Par 14.3

No summary available so following overview was taken from the Study Guide: & "Key Point" section from TB
- Transport infrastructure consists of elements such as roads, railroads, ports, airports and canals.
- Often require government ownership/regulation because of:
o capital intensity of structure development
o inherently monopolistic nature
- In absence of a monopoly, deregulation & market forces help create effective industry structure.
- Publicly owned: to price usage to reflect marginal impact on the cost to society. Otherwise, overuse &
congestion result because cost borne by user is less than their marginal impact on total cost
- Quasi-market prices need to take into account the discrepancy between incentives of an individual using the
transportation infrastructure & public as a whole (state) that owns the infrastructure. Ignored Fig 14-1 for this doc
- Quasi-market prices for transport infrastructure result in higher prices at peak locations and times and lower
prices otherwise.
- State owned: N.B to price usage so that it reflects the marginal impact on the cost to society.
8.4 DESIGN OPTIONS FOR A TRANSPORTATION NETWORK TB p421, Par 14.4

Design of transport infrastructure influences operational transport decisions of scheduling & routing.
Design objectives: fast responsiveness at low cost
Following are different design options Study guide: Note different design options & their strengths & weaknesses"
a) DIRECT SHIPMENT NETWORK TO SINGLE DESTINATION

- Buyer structures transportation network so that all shipments come directly from each supplier to each
buyer location
- Routing of each shipment is specified
- SC manager only needs to decide
o quantity to ship &
o transportation mode to use
- Decision involves trade-off between transportation & inventory cost
- Major advantage:
o elimination of intermediate warehouses
o simplification of operation & coordination
- Shipment decision is completely local  decision made for one shipment doesn't influence others
- Each shipment goes direct  Transportation time from supplier to buyer location is short
- Network is justified only if demand at buyer locations is large enough that optimal replenishment lot sizes
are close to a truckload form each supplier to each location.
b) DIRECT SHIPPING WITH MILK RUNS

- Milk Run is a route on which truck either
o delivers product from a single supplier to multiple retailers or
o goes from multiple suppliers to a single buyer location.
- Supplier delivers directly to multiple buyer locations on a truck or truck picks up deliveries destined for the
same buyer location from many suppliers.
- SC manager has to decide on the routing for each milk run
- Lower transport costs by consolidating shipments to multiple locations on a single truck
- Makes sense when
o quantity destined for each location too small to fill a truck but
o multiple locations are close enough to each other that their combined quantity fill the truck
c) ALL SHIPMENTS VIA INTERMEDIATES DISTRIBUTION CENTRE [DC] WITH STORAGE
- Product is shipped from suppliers to a central distribution centre
o where it is stored until need by buyers
o when it is shipped to each buyer location
- Storing products at intermediate location is justified if
o Inbound Side: Transportation economies require large shipments
o Outbound Side: shipments cannot be coordinated
- Distribution centre allows SC to achieve economies of scale [EoS]:
o for inbound transportation
o to a point close to final destination because
o each supplier sends large shipment to DC containing products for all location the DC serves
- With DC serving locations nearby, outbound transportation costs is not very large
d) ALL SHIPMENTS VIA INTERMEDIATE TRANSIT POINT WITH CROSS-DOCKING
- Suppliers sends shipments to intermediate transit point
o Where they are cross-docked and
o Sent to buyer location without storing them
- When DC cross-dock product,
o each inbound truck contains product from suppliers for several buyer locations
o each outbound truck contains product for one buyer from several suppliers.
- Major benefits of cross-docking:
o Little inventory needs to be held
o Faster product flows in SC
o Saves on handling cost  product doesn't have to be moved into & out of storage
- Appropriate when EoS in transportation can be achieved on both inbound & outbound sides and both
inbound & outbound shipments can be coordinated
e) SHIPPING VIA DC USING MILK RUNS
- Use milk runs from DC if lot sizes to be delivered to each buyer location are small
- Milk runs reduce outbound transportation costs by consolidating small shipments
- Use of cross-docking with milk runs requires:
o significant degree of coordination &  suitable routing & scheduling
f) TAILORED NETWORK
- Uses combinations of cross-docking, milk runs, TL & LTL carriers + sometimes package carriers
- High-demand products may be shipped directly to high-demand retail outlet whereas
- Low-demand products / shipments to low-demand retail outlets are considered to & from DC
- High complexity of managing because different shipping procedures are used for each product & retail outlet
- Operating this network needs significant investment in information infrastructure to facilitate coordination.
- It allows for selective use of a shipment method to minimise the transformation as well as inventory costs.
TABLE 14-2 PROS AND CONS OF DIFFERENT TRANSPORTATION NETWORKS TB P425

Network Structure Pros Cons
Direct shipping No intermediate warehouse; High inventories (due to large lot
Simple to coordinate size); Significant receiving expense
Direct shipping with milk runs Lower transportation costs for small lots; Increased coordination complexity
Lower inventories
All shipments via central DC with Lower inbound transportation cost Increased inventory cost;
inventory storage through consolidation Increased handling at DC
All shipments via central DC with Low inventory requirement; Lower Increased coordination complexity
cross-dock transportation cost through consolidation
Shipping via DC using milk runs Lower outbound transportation cost for Further increase in coordination
small lots complexity
Tailored network Transportation choice best matches Highest coordination complexity
needs of individual product and store
8.5 TRADE-OFFS IN TRANSPORTATION DESIGN TB p428; Par 14.6; Tables 14-3 & 14-9 ignored for purposes of this doc
- All transportation decisions made by shipper in SC network must take into account their impact on
o Inventory costs
o Facility & processing costs
o Cost of coordination operations
o Level of responsiveness provided to customers
- Managers must consider following trade-offs when making transportation decisions:
a) TRANSPORTATION & INVENTORY COST TRADE-OFF

Two fundamental SC decisions involving this trade-off:
i. Choice of Transportation Mode

 Selecting transportation mode is both a planning & operational decision in a SC
e.g. Planning Decision = Decision regarding carriers with which company contracts
 For both decisions, shipper must balance transportation & inventory costs
 Mode resulting in lowest transport cost  not necessarily lowest total cost for SC
 Cheaper transport mode typically have
 longer lead times &
Higher levels of inventory in SC
 larger minimum shipment quantities
 Modes allowing for shipping in small quantities:
 lower inventory levels but
 tend to be more expensive
 Faster transport modes are preferred for products:
 With high value-to-weight ratio
 For which reducing inventory is important
 Cheaper mode are preferred for products:
 with small value-to-weight ratio
 for which reducing transportation cost is important
 Take into account potential lost sales and cycle, safety & in-transit inventory costs in addition on the
cost of transportation
 Lost sales & inventory costs are influenced by speed, flexibility & reliability of the mode
 Purchase price must also be included if it changes with the choice of transport mode
 Ignoring inventory costs choosing, can result in choices that worsen SC's performance
ii. Inventory Aggregation

 Significantly ↓ required safety inventory by physically aggregating inventories in one location
 Online businesses use technique to gain advantage over firms with facilities at many locations
 Useful for
 products with large value-to-weight ratio
 products with high demand uncertainty
 customer orders large enough to ensure sufficient EoS on outbound transport
 Transport costs generally increases when aggregating inventory
 Highly disaggregated inventories  some aggregation could lower transport costs
 Beyond certain point though inventory aggregation raises total transportation costs
 Good idea when inventory and facility costs form a large fraction of a SC total costs.
 Useful for product with a large value-to- weight and for product with high demand uncertainty
 Good idea if customer orders are large enough to ensure sufficient EOS on outbound transportation
 When products have a low-value-to-weight ratio and customer orders are small, inventory aggregation
may hurt SC’s performance because high transportation costs
b) TRANSPORTATION COST & CUSTOMER RESPONSIVENESS TRADE-OFF

- Transport cost SC incurs is closely linked to degree of responsiveness SC aims to provide
- Firm with High responsiveness, shipping all orders within a day of receiving customer order will have
small outbound shipments = high transportation cost
- Decreasing responsiveness & aggregating orders over a long time horizon before shipping  able to
exploit EoS  incurs lower transport cost because of larger shipments
- Temporal Aggregation: process of combining orders across time
o Shipping delay  Decreases firm's responsiveness but
o Also decreases transportation costs because of EoS resulting in larger shipments
8.6 TAILORED TRANSPORTATION TB p437; Par 14.7

Using different transportation networks & modes based on customer & product characteristics
Most firms sell variety of products & serve many different customer segments
Firms can meet customer needs at lower cost by using tailored transport
Following are the various forms of tailored transportation in SC:
a) TAILORED TRANSPORTATION BY CUSTOMER DENSITY & DISTANCE

- Firms serving high density of customers close to DC
o Often best to own a fleet of trucks
o Used with milk runs originating at DC to supply customers
o This scenario makes good use of vehicles & provide customer contact
- High customer density but large distance from warehouse
o Sending milk runs from warehouse doesn't pay as empty trucks travel long distance return trips
o May not be ideal to own fleet
o Use public carrier with large tracks to haul shipments to cross-dock centre close to customer area
where shipments are loaded onto smaller trucks, using milk runs to deliver product to customers
- Decreasing customer: use of LTL carrier or third party doing milk runs is more economical
o Third party carrier can aggregate shipments across many firms
- If a firms want to serve area with low customer density, far from warehouse
o Even LTL carriers might not be feasible
o Use of package carriers may be best option as long as loads are small
- Consider customer density & distance when deciding on degree of temporal aggregation to use
- Firms should serve areas with high customer density more frequently
o as these areas are likely to provide sufficient EoS in transportation
o making temporal aggregation less valuable
- To lower transportation costs, firms should

o Use higher degree of temporal aggregation and
o Aim for somewhat lower responsiveness when serving areas with low customer density
TABLE 14-10 TAILORED TRANSPORTATION OPTIONS BASED ON CUSTOMER DENSITY AND DISTANCE TB P437
Short Distance Medium Distance Long Distance
High density Private fleet with milk runs Cross-dock with milk runs Cross-dock with milk runs
Medium density Third-party milk runs LTL carrier LTL or package carrier
Low density Third-party milk runs / LTL carrier LTL or package carrier Package carrier
b) TAILORED TRANSPORTATION BY SIZE OF CUSTOMER

- Ship to large customers using TL carrier
- Smaller customers will require LTL carrier or milk runs
- When using milk runs, shipper incurs two types of costs
o Transportation costs based on total route distance
o Delivery costs based on number of deliveries
- Transportation cost is the same whether going to large or small customer
- Delivery to larger customer, Incl. other small customers on the same truck  save on transport cost
- For each small customer: delivery cost per unit is higher than for larger customer
- Not optimal to deliver to small & large customers with the same frequency & the same price
o Option 1: charge higher delivery cost for smaller customer
o Option 2: tailor milk runs to visit larger customers with a higher freq. than smaller customers
- Firms can partition customers into Large (L), medium (M) & small (S) based on demand at each
- Optimal frequency of visits can be calculated based on transportation & delivery costs
- If milk runs visit L customers on the 1st run, M on the 2nd & S on the 3rd, design suitable milk run by:
o Combining large, medium & small customer on each run
o Advantage: each MR carries about the same load & larger customers are provided more frequency
delivery than smaller customers, consistent with their relative costs of delivery
c) TAILORED TRANSPORTATION BY PRODUCT DEMAND & VALUE

- Cycle inventory for high-value products with high demand is disaggregated to save on transport cost
- This allows replenishment orders to be transported less expensively
- Aggregate safety inventory for such products to reduce inventories
o Fast mode of transport can be used if safety inventory is required to meet customer demand
- High-Demand products with low value:
o Disaggregate all inventories & hold close to customer to reduce transport cost
- Low-Demand, high value products
o Aggregate all inventories to save on inventory costs
- Low-demand, low value products
o Hold cycle inventories close to customer & aggregate safety inventories
o To reduce transport costs while taking some advantage from aggregation
o Replenish cycle inventories using inexpensive mode of transport to save costs
TABLE 14-11 TAILORED AGGREGATION STRATEGIES BASED ON VALUE/DEMAND TB P439

Product Type High Value Low Value
Disaggregate cycle inventory. Aggregate safety inventory.
Disaggregate all inventories and use inexpensive
High Demand Inexpensive mode of transportation for replenishing cycle
mode of transportation for replenishment.
inventory and fast mode when using safety inventory.
Aggregate all inventories. If needed, use fast mode of Aggregate only safety inventory. Use inexpensive
Low Demand
transportation for filling customer orders transport mode for replenishing cycle inventory
8.7 THE ROLE OF IT INFORMATION TECHNOLOGY IN TRANSPORTATION TB p439; Par 14.8

Most common application of IT = Use of software to determine transport routes
- Software takes as inputs:
customer location, shipment size, desired delivery times, info on transport infrastructure & capacity
- Inputs are
o formulated into an optimisation problem
o whose solution is a set of routings & packaging list for each vehicle
o that minimise costs while meeting delivery constraints
o Along with routing, vehicle load optimisation software helps improve fleet utilization
- Software accounts for
o Size of the container and size & sequence of each delivery, then
o develops a plan to park vehicle efficiently while allowing for greatest ease of unloading/loading along the
route
- Synchronisation between packing & routing software is N.B. as
o Amount packed on a truck affects routing & routing affects what is packed on a truck
- IT comes into play in the use of
o GPS for tracking real time vehicle location
o Electronic notification of impending arrivals
o Improving customer service & preparedness throughout the SC
- Availability of current info allows for real-time dynamic optimisation of transport routes & deliveries
- Common problems in the use of IT transportation relate to
o Cross-enterprise collaboration
o Narrow view taken by some transportation software
o Transport, often outsourced  successful collaboration requires 3 or more firms working together,
making it much more difficult
o Other problems arise from factors constraining the route selected e.g. customer service, promised delivery times
8.8 MAKING TRANSPORTATION DECISIONS IN PRACTICE TB p439; Par 14.9

a) ALIGN TRANSPORTATION STRATEGY WITH COMPETITIVE STRATEGY
- Managers should ensure firm's transport strategy supports its competitive strategy
- Design functional incentives that help achieve this goal
- Historically, transport function within firms have been evaluated based on the extent to which it can lower
transport costs
o Leads to decisions that lower costs but hurt level of responsiveness provided to customers
o May raise a firms total costs
- Evaluate transport function based on total costs & level of responsiveness achieved with customers
b) CONSIDER BOTH IN-HOUSE & OUTSOURCED TRANSPORTATION

- Consider appropriate combination of company-owned & outsourced transport to meet needs
- Base decision on
o firm's ability to handle transport profitably
o As well as strategic importance of transport to the success of the firm
- Outsourcing is better when shipment sizes are small
- Owning the transport fleet is better when shipment sizes are large & responsiveness is important
- Third party can lower costs by aggregating shipments with those of other companies
c) USE TECHNOLOGY TO IMPROVE TRANSPORTATION PERFORMANCE

- Managers must use IT to decrease costs & improve responsiveness of their transport network
- Software helps managers
o Do transportation planning
o Do modal selection
o Build delivery routes & schedules
- Real-time tracking allows carriers to
o communicate with each vehicle
o Identify its precise location & contents
- Helping carriers to lower costs & become more responsive to change
d) DESIGN FLEXIBILITY INTO THE TRANSPORTATION NETWORK

- During transport network design, take uncertainty in demand & transport availability into account
- Ignoring uncertainty encourages greater use of inexpensive & inflexible modes that perform well when
everything goes as planned  performs poorly when plans change
- Accounting for uncertainty means flexible but more expensive modes in their network
o Modes may be expensive for a particular shipment but
o Including them allows firm to reduce overall cost of providing high responsiveness
8.9 Summary of learning objectives TB p440 See Textbook's section

UNIT 9: SOURCING DECISIONS IN A SUPPLY CHAIN TB p445
9.1 Role of Sourcing in a SC TB p445, Par 15.1

- DEF Purchasing/Procurement: process by which companies acquire raw materials, components, products,
services, or other resources from suppliers to execute their operations. Sourcing is the entire set of business
processes required to purchase goods and services
- Def Sourcing: entire set of business processes required to purchase goods & services
- DEF Outsourcing: SC function being performed by a third party
- Main reason for sourcing is to minimise costs
- N.B Questions about outsourcing of SC activities:
i. Will the third party increase the supply chain surplus relative to performing the activity in-house?
ii. To what extent do risks grow upon outsourcing?
iii. Are there strategic reasons to outsource?
- Process of Sourcing Includes the
 selection of suppliers,
 design of supplier contracts,
 product design collaboration,
 procurement of material/services
 evaluation of supplier performance
- Following are some Benefits from Effective Sourcing Decisions:
o Identifying the right source can result in an activity performed at higher quality & lower cost
o Better economies of scale can be achieved if orders within a firm are aggregated.
o More efficient procurement transactions can significantly reduce the overall cost of purchasing.
o Design collaboration can result in products that are easier to manufacture and distribute, resulting in lower
overall costs
o Good procurement processes can facilitate coordination with the supplier and improve forecasting and
planning  better coordination = lower inventories & better D&S matching
o Appropriate sharing of risk & benefits can result in higher profits for both supplier & buyer
o Firms can achieve a lower purchase price by increasing competition through the use of auctions
9.2 Two Types of Sourcing: TB p447. Par 15.2

 DEF In-House Sourcing: Is when the company decides to do all its functions by itself.
Preferable if the growth in surplus is small or increase in risk is large when considering outsourcing.
 Outsourcing
- Risks of Using a Third Party:
 The Process is Broken
 Underestimation of the Cost of Coordination
 Reduced Customer/Supplier Contact
 Loss of Internal Capability & Growth in Third-Party Power
 Leakage of Sensitive Data & Info
 Ineffective Contracts
 Loss of SC Visibility
 Negative Reputational Impact
- Strategic Factors in Sourcing:
i. Support the Business Strategy
ii. Improve Firm Focus
- 10 Mechanisms Third Parties can use to Grow SC Surplus / LO: Factors affecting decisions to outsource:
1) Capacity Aggregation
•By aggregating demand across multiple firms & gaining production EoS no single firm can
2) Inventory Aggregation
•By aggregating inventories across a large number of customers
3) Transportation Aggregation by transportation intermediaries
•By aggregating transport function to higher level any shipper can on its own
4) Transportation Aggregation by Storage Intermediaries
•By aggregating inbound & outbound transportation.
5) Warehousing Aggregation
•By aggregating warehousing needs over several customers.
6) Procurement Aggregation
•By aggregating procurement for many small players & facilitate EoS in ordering, production & inbound
transport
7) Information Aggregation
•By aggregating info to higher level than achieved by in-house performance.
8) Receivables Aggregation
•If it can aggregate receivables risk to higher level than the firm or
•it has a lower collection cost than the firm
9) Relationship Aggregation
•By decreasing number of relationships required between multiple buyers & sellers
10) Lower Costs & Higher Quality
•If it provides lower cost / higher quality relative to the firm.
9.3 Examples of Successful Third-Party Suppliers TB p453, Par 15.3 Ignored for the purpose of this document
9.4 Total Cost of Ownership (TCO) TB p455, Par 15.4: all costs involved in outsourcing need to be considered. Superficial Summary
Many firms make a mistake of focusing only on the quoted price, ignoring the factors that affect the total cost.
LO #3
- "Identify dimensions of supplier performance that affect total cost"
o Total cost incl.: cost of acquisition, ownership & post-ownership
o Total cost of using supplier is affected by: supplier price, terms, delivery costs, inventory costs, warehousing
costs, quality costs, costs of management effort & administrative support; impact on reputation; supplier
capabilities e.g. lead time, flexibility; other costs e.g. taxes, exchange rates
9.5 Supplier Selection: TB p458, Par 15.5, Superficial Summary. SG: "note aspects TB explain to be able to apply these processes effectively"
Auctions Negotiation
•1st qualify potential suppliers then allow bids on •Firm negotiates with supplier to get reasonable
how much they'll charge to perform function. / lowest price.
•Select supplier with lowest price. •Key to successful negotiation: make it win-win
outcome that grows surplus.
LO #4
9.6 "Describe the benefits of sharing risk & reward (R&R)" TB p460, Par 15.6, Superficial Summary
- Local optimisation hurts SC surplus when risk & reward are not shared
- Suppliers are more likely to act in firm's interest when R&R are shared
- Buyback / Revenue Sharing: effective risk sharing mechanism for products like books with low variable cost
- Quantity flexibility contracts are more effective  better matching of D&S
- When firm wants supplier to improve performance along dimensions e.g. lead time & quality sharing rewards from this
improvement is a suitable incentive
9.7 Impact of Incentives when Outsourcing: TB p 471, Par 15.7, Superficial Summary
- As companies have outsourced more supply chain activities, it has become harder to align the goals of all
parties involved.
- SC Incentives can have unintended consequences when third party's info & actions are hard to observe.
- Lack of Visibility; performance incentives that backfire threshold min too low; Information distortion
- DEF Hockey Stick Phenomenon: pattern in which sales peak close to the end of the evaluation period
9.8 LO #5 " Design a tailored supplier portfolio. TB p473, Par15.8

- Firms should select a combination of responsive & low-cost sources either onshore, near-shore, or offshore:
•producing product in the market where it is sold, even when it is a high-cost location.
Onshoring •Responsive, onshore sources: best suited for high-value products with volatile
demand & relatively low labour content
Near-
•producing product at a lower cost location near the market.
shoring
•producing product at a low-cost location that may be far from the market.
Offshoring •Low-cost, offshore sources: best suited for products with high labour content, large
predictable demand & low transportation cost relative to product value
- Direct Material: components used to make finished goods

- Indirect Materials: goods used to support the operations of a firm
9.9 Making Sourcing Decisions in Practice: TB p 475, Par 15.9

i. Use multifunctional teams
ii. Ensure appropriate coordination across regions and business units.
iii. Always evaluate the total cost of ownership.
iv. Build long term relationship with key suppliers.
9.10 Summary of learning objectives TB p476 Integrated into above section

UNIT 10: SUSTAINABILITY AND THE SUPPLY CHAIN TB p504; A/N: Taken almost exactly from TRL3709-2016-S1 – Summary SU 10
17.1 Sustainability  key priority in SC design & operation

- SC surplus represents interest of participants only  Necessary to consider others also affected by SC decisions
- Focus on sustainability  better serve more environmentally conscious customers + improving SC performance
- DEF Sustainable Development: Development that meet present needs without compromising future generations’
ability to meet their own needs.
- “3 Pillars” of Sustainable development = economic, environmental & social
- World resources & environment cannot maintain level of growth
- Divide factors driving increased focus on SC sustainability (SCS) into 3 categories, namely:
 Reducing risk & improving SC’s financial performance
 Community pressures & Government Mandates
 Attracting Customers that value Sustainability
- Despite financially viable opportunities to  sustainability; often large upfront investment causes slow activity –
deters firms despite long-term payoff that could follow
- Greater challenge with no obvious ROI (return on investment) – business rationale should be clearly defined
DEF
17.2 Tragedy of commons: dilemma arising when common good doesn't align with the good of individual entities.
i.e. when positive utility gained by single entity outweighs negative utility as spread across multiple parties
- Operates in global environment
- Essentially: environmental pollution
common environ, freely available to all  difficult to get companies to invest in waste reduction efforts, even
though waste hurts everybody
- Other Examples: overuse of natural resources (e.g. fish, water, forest)
- Sustainable solution will require intervention
- Firms will not put in sufficient effort to  impact unless “forced” to or required to pay for their social cost
Some Solutions to this “Tragedy” TB p507

- Problems arising because commons are “free” to all: solve by allocating right to enter them
- Need to choose from options unlikely to be supported by all of their own free will
- “Mutual coercion” (MC): social arrangements/mechanisms coercing all participants to behave towards
helping the common good. Attempt through See section 17.6:
Command-and-Control Approach Market Mechanisms
•Government/Regulators •Theoretical USA Examples:

•Set Standards •cap-and-trade (supply & demand of 'allowances')
•Everybody must adhere Financial incentive towards  emissions
•Inflexible •Emission tax proportional to size of emissions
•Not always cost effective •Requires global coordination in implementation
•E.g. carbon monoxide emissions; fuel efficiency
- Despite absence of perfect solution, N.B. to make a choice – or environmental commons keep degrading
17.3 Key Pillars of Sustainability TB p509

- Economic performance: reported in annual reports
- Social & Environmental performance: reported in global/social responsibility reports
- Actions taken in SC can improve performance in all 3 dimensions
- Measuring performance of all 3 to evaluate impact of SC’s sustainability-related efforts
- Challenge to social & environmental improvements: effort local to firm/SC but benefits more widely distributed
TWO FUNDAMENTAL CHALLENGES WHEN MEASURING & REPORTING SOCIAL & ENVIRONMENTAL PILLARS:
i. Scope over which a category is measured E.g. Outsourcing production  firm’s own energy consumption shows  but entire SC’s may 
Measure impacts across entire SC
Clearly define scope across which all metrics are measured & reported
GHG protocol defines three scope levels:
Scope 1. Direct Emissions: emissions from sources owned/controlled by reporting entity
Scope 2. Indirect emissions from grid-sourced electricity & other utility services incl. heat, steam, cooling
Scope 3. Other indirect emissions from production of purchased materials, outsourced activities etc.
ii. Use of absolute or relative measures of performance

Absolute Measure
•Reports Total amount of energy consumption

•Advantage: Using Scope 3, Reports full impact of SC along category being measured
•Disadvantage: drop in SC sales & production shows lower consumption even though firm may not have improved anything
Relative Measure
•Reports energy consumed per unit of output

•Advantage: More effective at capturing improvement
•Challenge: choice of basic unit per category (Dollars of Sales; Kilograms of Output; Square feet of Space)
Social Pillar TB p510

- Measures firm’s ability to address issues N.B to workforce, customers & society.
o Workforce-related factors: employment quality, health & safety, training & development, diversity &
opportunity
o Customer-related: accurate product info & labelling, impact of product on cust. health & safety
o Social: human rights & impact on local communities
- Examples:
o setting standards suppliers/third parties should adhere to;
o check adherence by performing credible audits
o large firms providing suppliers in emerging economies with support/capability building
- As with the tragedy of commons (ToC), large firms spend insufficient effort on audits & capability building at
suppliers because of absence of effective mechanisms for “mutual coercion”
Environmental Pillar TB p511

- Measures firm’s impact on environment incl. air, land, water & ecosystems
- Difficult to assess claims of environmental responsibility
- Classify activities that improvement pillar as:
o resource reduction: results in more efficient use of natural resources in SC [1st focus when improving sustainability]
Helps environment & saves money company money
Resources Incl. materials, water, energy, land
Likely win-win outcome: helping environ while improving profits
o emission reduction:  hazardous air emissions, waste, water discharges or firm’s environmental impact
in community [2nd focus]
Harmful emissions incl. greenhouse gasses, carbon dioxide, ozone-depleting substances, nitrogen &
sulphur oxides, waste, water discharges.
Challenging to implement as often requires upfront investment & behavioural changes
o product innovation: environmental cost & burden by developing eco-efficient products/services

Sceptically viewed: products making potentially false/misleading/meaningless claims
Greenwashing: products & practices that seem green but fundamentally aim to grow profits
17.4 Sustainability and Supply Chain Drivers TB p512

- Identify opportunities for improving SCS by matching social & environmental pillars with various SC drivers
- Measure firm’s environmental impact for each driver (discussed below) along each pillar (discussed above)
Facilities TB p513
- Significant consumers of energy & water; emitters of waste & greenhouse gases  opportunities for
profitable improvement
- After measuring direct impacts, separate opportunities into those generating positive cash flows or not
- Identify & implement profitable projects first
- Opportunity Examples:
o Walmart’s using energy efficient light bulbs & skylights to cut energy consumption;
o Use technology to stagger energy consumption  reducing peak demand across store network
o Production facilities reusing heat energy generated; reducing water usage
o Often simultaneously improve environmental & financial performance through innovation
Inventory TB p513
- SC’s focus on raw materials, work-in-progress (WIP) & finished goods inventory  as asset on financials
- After-use inventory/discarded products sitting in typical landfill  cost borne collectively by society
- Significant occurrence of waste in SC  materials & energy used to create – lost forever & possibly harmful
- Most damaging aspects from sustainability perspective
- Damage take on form of:
o Harmful additives
o Valuable energy & materials still locked in landfill
- Goal for SC:
o Reduce/limit harmful inventory & unlock unused value in products when discarded
o Track landfill inventory
o Separate: harmful additives & unused value
- Life-cycle assessment: assess environmental impacts associated with product’s life from cradle to grave
- Ideal: designing products that after use become environmental nutrients or return to industrial cycles to
supply high quality raw materials for new products.
Transportation TB p514
- Opportunities for:
o positive cash flow
o improving environmental performance through resource
o emission reduction
o SC design innovation that  transport cost tends to  fuel consumption, emissions & waste generated
o Changing to near-shoring / onshoring  also likely  fuel use & emissions
-  fuel costs encourage firms to restructure products & SC to  transportation costs
- Product design e.g.  packaging & greater density during transport can also  transport cost & emissions
- Examples:  aggregation & fuel efficiency, more efficient loading  cuts costs & environmental damage;
economies of scale in recycling efforts; collaborative backhauling
Sourcing TB p514
- Great social & environmental impact occurs in extended SC outside firm’s own enterprise
- Impact grows as global sourcing increases, especially from low-cost countries
- Powerful players working with their suppliers to improve performance. E.g. Starbucks C.A.F.E program
- Failure to work with suppliers  potential risk of damaging firm’s reputation & sales
- Major Challenge: verifying & tracking supplier sustainability performance
Partially due to tragedy of commons: shared benefits but efforts are concentrated  less effort put in
- Often requires outside activists/third parties to push change/challenge sourcing decisions
Information TB p515
- Good info  challenge to improved SCS (supply chain sustainability)
- Lack of measurement & reporting standards = unverifiable claims of improvement
- Short-term led to company-specific standards & explosion of certifications & certifying agencies
- Long-term talks of working towards common standards  unlikely as incentives are not align across firms
- With universal standards unlikely  consistent scorecard use helps align extended SC’s sustainability efforts
Pricing TB p515
- Differential pricing can improve asset utilisation  resource reduction
- E.g. fuller planes through differential pricing improves profits while reducing fuel consumption per passenger
less need for added capacity in the form of new planes
- Consumption visibility & differential pricing  potential to change consumers’ energy usage & peak demand
- Lower peaks & better asset utilisation improves environmental & economic performance
- SCS Challenge: changing customer’s willingness to pay more for product produced & distributed in a more
sustainable manner e.g. higher costs of renewable energy sources
17.5 Closed-Loop Supply Chains TB p516

- Designing closed-loop supply chains help  landfill inventory through effective recycling/remanufacturing (R/R)
- Right incentives for both cust. & manufacturer + well-developed reverse SC are necessary to promote R/R
- Significant environmental harm when SC outputs end up in landfill.
- Opportunity to improve sustainability: design products that use fewer resources & can be R/R after use retread tires
- Two questions that arise in every industry:
o Why do we not see more instances of remanufacturing?
o What can be done to increase the return of used products
- Extent of recycling/remanufacturing depends on:
o Incentive toR/R
o Cost to R/R
- ToC  lack of effort & cannibalise demand from new products  Unsuccessful recycling & remanufacturing
 Cost of product in landfill borne by society vs. additional costs of recyclable products borne by each firm 
decreases any incentive
- Theoretical incentives to design more enviro-friendly products:

o Polluter Pays Principle: polluter pays cost inflicted on society
Policies incl.: take-back mandates WEEE Directives, advance disposal fees on motor oil, deposit-refund programs
Goal to put cost in place to encourage  in waste + positive incentive to encourage  recycling
o Cannibalisation of demand for new products: fear that remanufactured product sales will  demand for
new products & hurting profitability.
Major deterrent to remanufacturing
Impact depends on presence of distinct customer segments for the product
e.g. 2 distinct, Lower- & higher price segments, could help profits instead of hurting
o Charging Customer for pollution based on precise cost to society

People pay fixed monthly fee for collection, hauling & dumping of trash  lowers incentive to recycle
Pay as you throw (PAYT) model: cost incurred proportional to garbage thrown out   rec. incentive
Links people’s spending on garbage to no. of bags used, rewarding recycling rather than dumping
- Despite incentives, actual cost of R/R has significant impact e.g. high logistics & transportation cost
- Standardised parts help  cost of remanufacturing process, but local presence remains crucial Brightstar example
17.6 The Pricing of Sustainability TB p517

- Crucial to internalise “monetary value” of social/environmental cost
- Firms are structured to naturally account for all cost factors with every effort in place to  these costs
- Firms use more resources inefficiently than if they internalised cost of future shortages on society
- To improve SCS: incorporate suitable prices for social & environmental impacts of different actions such as emissions
SIGNIFICANT CHALLENGES TO SETTING THESE PRICES APPROPRIATELY: Discussed on hand of Pricing of Emissions
- Proposed policies:
o tech. mandates
o performance standards
o emissions pricing:
Theoretical attraction: potential to achieve emissions reduction at lower cost
Charging for emissions  more cost effective in emissions than subsidies/mandates
Finding the right price is challenging
2 Approaches used to price emissions – both encourage firms to  emissions per unit of output:
Challenge: Lack of info on cost to individual firms to  emissions & cost of emissions to society
Carbon Tax
•PoE = tax rate set directly by regulatory authority
•Fixes Price of Emissions (PoE)
•Quantity of emissions decided by emitters
•Lack of info makes it difficult to set correct tax
•Too low = insufficient effort by firms to  emissions
•Too high = forces firms to make too expensive emission reduciton efforts
Cap-and-Trade System (Pure)
•PoE set indirectly & allowed to change
•Quantity of emissions set by regulatory authority:
•Authority sets overall qty. limit by providing allowances equal to this limit
•Firms emitting less sell their surplus allowances to firms emitting more than their share
•This market for allowances yields a PoE
•Lack of info makes it difficult to decide quota of emission allowances
•Too large = too low a PoE
•Too small = too high a price
Hybrid Cap-and-Trade (recommended)
•Advantage: limits volatility in PoE, allowing businesses to better plan environmental activities
•Traded allowances have a floor & ceiling price
•Enforce Ceiling: when hit, add extra allowances
•Regulatory authority sells unlimited allowances at ceiling price
•Enforce Floor: remove allowances|
•Authority purchases any no. of allowances available for sale at floor price
- Dimensions along which any emissions pricing mechanisms should be evaluated:

•Depends on nr. of sources that needs monitoring

Cost of •Charging ultimate emitters can be cumbersome
Administration •Cheaper to charge upstream suppliers (both methods can potentially be
applied)
•Low price volatility  allows better planning of sustainability activities

•Carbon tax fixes PoE
•Cap&Trade displays price volatility
Price Volatility
• volatility by allowing intertemporal banking: firms apply for future
allowances to current emissions / save current allowances for future
•Hybrid limits price volatility
•C&T system caps emissions (except at ceiling price)

Emission
•Carbon Tax: potentially high emissions if cost of reducing emissions is
Uncertainty greater than tax - does not guarantee drop in emissions
•As info about cost & benefits of emissions reduction becomes available 
New Info Adjust PoE accordingly
Uncertainty •Hybrid with intertemporal banking: better able to adjust
•Country/State further along with emission pricing  potentially hurt

competitiveness of own emission intensive firms vs. firms operating outside
borders
Industry
•In Theory: tax on imported & allowance for exported goods can level playing
Competitiveness field
•In Practice: administratevely complex due to different tax levels for
origin/destination
•For countires importing energy supplies, C&T will potentially shift wealth to
energy-exporting countries
Wealth Transfer •PoE encourages lower consumption of fuels like crude oil
to Energy- •Potential misuse:  supply of crude below level achievable with PoE 
Exporting Lowers PoE to zero as allowances demand is less than supply
Countries • supply =  oil price  Oil producers gain revenue
•Limited if energy supply market is competitive
•Carbon tax: wealth transfer doesn't occur; Hybrid: Limited
•Minimise costs of emission pricing policies if government revenue (tax /

from auctioning emission allowances) is returned to consumers in the form
Revenue of:
Neutrality •reduction in marginal rates of pre-existing income
•sales taxes
o General Opinion:
Explicit price on emissions  most cost effective way of reducing emissions
Carbon Tax  simple to administer & provide fixed price that businesses can plan for
However does not guarantee  in emissions and
Difficult for regulatory authority to determine optimal tax rate
C&T limits emissions & flexible enough to incorporate new info as it becomes available
But may display significant price volatility: Limit by implementing price floor & ceiling and allowing
intertemporal banking.
TRL3709/201/1/2019
Tutorial Letter 201/1/2019
Logistics Strategy
TRL3709
Semester 1
Department: Applied Management
IMPORTANT INFORMATION:
This tutorial letter contains important information
about your module.
CONTENTS
1 INTRODUCTION ..........................................................................................................................3
2 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 AND 02 ....................................................4
2.1 Feedback on compulsory Assignment 01......................................................................................4

3 EXAMINATION INFORMATION ................................................................................................. 12
3.1 Examination admission ............................................................................................................... 12

3.2 Examination period ..................................................................................................................... 13
3.3 Examination date ........................................................................................................................ 13
3.4 Previous examination papers ...................................................................................................... 13
3.5 Format of the examination paper ................................................................................................ 13
3.6 Guidelines for the examination.................................................................................................... 14
3.7 Guidelines for answering an examination paper.......................................................................... 14
TRL3709/201
1 INTRODUCTION
Dear Student
I hope that you are finding your studies interesting and informative. We are nearing the end of
the semester, and soon it will be time for the examination. Please read through this tutorial letter
carefully as it contains feedback on compulsory Assignments 01 and 02 and important
guidelines for your examination.
You are welcome to contact me at the contact details below if you have any academic queries
or wish to make an appointment to see me. Please note that the Department: Applied
Management are situated in the Samuel Pauw building on main campus.
My contact details are:

Tel: (012) 433 4668
E-mail: loedoc@unisa.ac.za
If you are not a member of Unisa’s online learning community yet, please register to become
a member of myUnisa as soon as possible! I use this website to communicate important
announcements during the semester.
myUnisa will give you access to all the online study material for the module. Remember that you
can use the myUnisa’s discussion forum to discuss difficult topics with your fellow students.
I hope that you are enjoying your studies and I wish you all the best in your preparation for the
examination.
Kind regards,
Mrs Carmen Poole
LECTURER: Logistics Strategy
3
2 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 AND 02
2.1 Feedback on compulsory Assignment 01
DUE DATE 1 April 2019

UNIQUE ASSIGNMENT NUMBER 854464
SCOPE OF ASSIGNMENT Learning Units 1 - 6
Assignment 01 was partially marked.

This means that you were still required to answer all the questions. Even though only one
or two questions were marked, you receive feedback on all the questions. Please note that
feedback does not entail a detailed memo of an exact answer to each question. This
feedback is more on the theory and how you should have approached the questions.
QUESTION 1
1.1 Summarise the decision phases in a supply chain. (6)

 Supply chain strategy or design
 Supply chain planning
 Supply chain operation
Learning Unit 1 (Chapter 1, section 1.4) (Chopra & Meindl, 2016:18)
A full mark is awarded for the decision phase identified, and another full mark is
awarded per decision phase briefly discussed (one sentence is sufficient).
1.2 For a company to achieve strategic fit, it needs to accomplish three (4)
outcomes. Briefly describe these three outcomes.
 The competitive strategy and all functional strategies must fit together to form a
coordinated overall strategy. Each functional strategy must support other
functional strategies and help a firm reach its competitive strategy goal.
 The different functions in a company must appropriately structure their
processes and resources to be able to execute these strategies successfully.
 The design of the overall supply chain and the role of each stage must be
aligned to support the supply chain strategy.
A full mark is awarded for each action provided above. Two marks for the first one.
TRL3709/201
1.3 There are six drivers of supply chain performance, namely facilities, (10)
inventory, transportation, information, sourcing and pricing. The
components of inventory decisions consist of cycle inventory, safety
inventory, seasonal inventory, level of product availability, and inventory
related metrics. Differentiate between the inventory-related metrics
discussed in Chorpa and Meindl (2016).
 C2C cycle time
 Average inventory
 Inventory turns
 Products with more than a specified number of days of inventory
 Average replenishment batch size
 Average safety inventory
 Seasonal inventory
 Fill rate
 Fraction of time out of stock
 Obsolete inventory
Half a mark was awarded for each inventory-related metric identified, and half a
mark awarded for each inventory-related metric briefly discussed.
1.4 Briefly explain distribution networks in practice. (8)

 The ownership structure of the distribution network can have as big an impact
as the type of distribution network.
 It is important to have adaptable distribution networks.
 Product price, commoditization, and criticality affect the type of distribution
system preferred by customers.
 Integrate the internet with the existing physical network.
Learning Unit 4 (Chapter 4, section 4.5 (Chopra & Meindl, 2016:112-113).
Full mark awarded per element identified, and full mark per element explained.
5
1.5 Supply chain network design decisions are classified along four criteria. (4)
Briefly discuss these four criteria.
 Facility role
 Facility location
 Capacity allocation
 Market and supply allocation
Learning Unit 5 (Chapter 5, section 5.1 (Chopra & Meindl, 2016:120).
Half a mark awarded per criteria identified, half a mark per criteria discussed.
1.6 When a company considers whether they should produce/source their (8)
products offshore, they need to take into account the total cost of offshoring.
Evaluate the impact of offshoring on the eight elements of total cost.
 Supplier price
 Should link costs from direct materials, direct labour, indirect labour,
management, overhead, capital amortization, local taxes, manufacturing
costs, and local regulatory compliance costs.
 Terms
 Costs are affected by net payment terms and volume discounts.
 Delivery costs
 Include in-country transportation, ocean/air freight, destination transport,
and packaging.
 Inventory and warehousing
 Include in-plant inventories, in-plant handling, plant warehouse costs,
supply chain inventories, and supply chain warehousing costs.
 Cost of quality
 Includes cost of validation, cost of performance drop due to poorer quality,
and cost of incremental remedies to combat quality drop.
 Customer duties, value-added tax, local tax incentives
 Cost of risk, procurement staff, broker fees, infrastructure (IT and facilities),
and tooling and mold costs
 Exchange rates trends and their impact on cost
Half a mark awarded per element identified, half a mark per element discussed.
Full marks for the last three.
[40]
TRL3709/201

SCOPE OF ASSIGNMENT Study Units 1 - 10

On third year level, students may not copy and paste directly; half marks will be awarded for
answers provided exactly as in the textbook.
QUESTION 1
1.1 Local optimisation by different stages of the supply chain or an increase in (25)
information delay, distortion and variability are considered obstacles to
coordination. With this statement in mind, summarise the five obstacles to
coordination in a supply chain.
The summary should be centred around the following five obstacles:

 Incentive obstacles
 Information-processing obstacles
 Operational obstacles
 Pricing obstacles
 Behavioural obstacles
Learning Unit 7 (Chapter 10, section 10.3) (Chopra & Meindl, 2016:264-268)
Roughly five marks per obstacle.
[25]
7
QUESTION 2
Yuppiechef is a business-to-customer (B2C) online shop where customers will

find a wide range of kitchen products. Yuppiechef is revising their transportation
design.
Visit their website (https://www.yuppiechef.com/about-us.htm?ref=footerlink) to
gain a better understanding of the organisation and use the information to
answer the questions below.
(i) Report on the role of Information Technology (IT) in transportation (30)

(ii) Advise Yuppiechef on making transportation decisions in practice.
(Question 2 will be evaluated according to the rubric below.)
The theory to be incorporated into this answer can be found in Learning Unit 8
(Chapter 14, section 14.8, Chopra and Meindl, 2016:439-441). A detailed memo
will not be provided, but you should refer to the rubric below for guidance on how
this question was marked.
[30]
TRL3709/201
Referencing Referencing was not included. Referencing was included, Minor/technical errors occurred in Referencing was done correctly.
according to the though, errors occurred in text as the referencing.
Harvard method well as in the reference list.
0 1 2 3
Introduction Student did not write an introduction to the Student wrote a short introduction to the Student wrote a comprehensive introduction
question. question, but merely mentioned that the to the question and explained that the report
OR report would cover the role of IT in transport would cover the role of IT in transport or
Student wrote a short introduction to the or making transportation decisions in making transportation decisions in practice.
question, but did not refer to the role of IT in practice. The introduction contained a brief overview of
transport or making transportation decisions both.
in practice.
0 1 2
Content Content did not answer the Student does not understand the Student slightly understands the Student fully understands the role
question; the role of IT in role of IT in transport; a short role of IT in transport; it was of IT in transport; it was discussed
transport was not discussed. discussion was given. briefly explained. in detail.
0-1 2-3 4-5 6-7
Content did not answer the Student does not understand Student slightly understands Student fully understands making
question; making transportation making transportation decisions making transportation decisions transportation decisions in
decisions in practice was not in practice; a short discussion in practice; it was briefly practice; it was discussed in
discussed. was given. explained. detail.
0-2 3-4 5-6 7-8
Application Student did not apply the theory Student incorporated some Student applied most of the Student successfully applied all of
to Yuppiechef. application to Yuppiechef. theory to Yuppiechef. the theory to Yuppiechef.
0 1-2 3-5 6-8
Conclusion Student did not write a conclusion to the Student wrote a short conclusion to the Student wrote a comprehensive conclusion to
question. question but did not succeeded in the question and succeeded in bringing the
successfully bringing the theory and theory and application together successfully.
application together.
0 1 2
Total /30
9
TRL3709/201
QUESTION 3
3.1 Discuss five ways how the use of a third party can increase the supply (10)
chain surplus.
The discussion should be centred around five of the following:

 Capacity aggregation
 Inventory aggregation
 Transportation aggregation by transportation intermediaries
 Transportation aggregation by storage intermediaries
 Warehousing aggregation
 Procurement aggregation
 Information aggregation
 Receivables aggregation
 Relationship aggregation
 Lower costs and higher quality
One full mark awarded for naming each way to increase supply chain surplus,
one mark for each discussion.
TRL3709/201
3.2 Decision makers all over the world have devoted significant attention to (15)
reducing greenhouse gas (GHG) emissions. Analyse the pricing of
emissions.
The analysis should include a short introduction, and then be centred around the
following:
 Cost of administration
 Price volatility
 Emission uncertainty
 New information uncertainty
 Industry competitiveness
 Wealth transfer to energy-exporting countries
 Revenue neutrality
Learning Unit 10 (Chapter 17, section 17.6) (Chopra & Meindl, 2016:518-519).
One to three full marks awarded for an introduction, full mark for identifying each
pricing mechanism, and full mark for explaining each mechanism.
[25]
11
3 EXAMINATION INFORMATION
3.1 Examination admission
Submission of compulsory Assignment 01 will provide you with admission to the exam.
However, both the assignments will count towards your semester mark, which will contribute
towards your final mark.
Composition of Year Mark

Compulsory Assignment 01 50%
Total Semester Mark 100%
Composition of Final Mark

Semester Mark 20%
Examination Mark 80%
Final Mark 100%
You have to obtain a minimum of 40% in the examination, regardless of your semester mark.
The average of the semester mark and the examination mark must be at least 50% for you to
pass the subject.
EXAMPLE:
If your semester mark is 55% and your examination mark is 60%, your final mark will be
calculated as follows:
0,2 x 55% = 11% 0,8 x 60% = 48%
Your final mark is therefore 59% (11% + 48%).

This is higher than 50%, which means that you passed the subject.
TRL3709/201
3.2 Examination period
This module is offered as a semester module. This means:

 As you are registered in the first semester, you will write the examination in May/June
2019.
3.3 Examination date
The date for the exam will be communicated to you by the Examination Department.
3.4 Previous examination papers
Examination papers are available on myUnisa, under “Official study material” to help you with
your preparations with the upcoming examination.
3.5 Format of the examination paper
The Logistics Strategy examination paper consists of a two-hour written examination counting
70 marks. The paper consists of Section A with short questions and Section B with longer
written questions.
The TWO-HOUR examination paper will consist of the following format:

SECTION A
Answer ALL the questions in this section
Question Type Marks Total Marks

Question 1 Compulsory short questions 20 20
SECTION B
Answer any TWO of the three questions in this section
Question 2 Written questions 25
Question 3 Written questions 25 50
70
13
3.6 Guidelines for the examination
The examination questions are theoretical, and some questions may include calculations with
much emphasis on short question and essay type of question derived from self-evaluation
questions of each and every study unit in your Logistics Strategy study guide. However,
where required, you will have to apply the information given to you in the examination paper
practically.
You will need to know your facts well and write them in an organised and logical way. Make
sure that your facts are relevant to the question! Remember that it is not the length (quantity) of
your answer that counts, but the quality of the information that you provide. It is, therefore,
recommended that you read through all the questions carefully and consider the mark
allocation for each question before answering. This will help you to structure you answers
correctly, because the mark allocation indicates how much information to include in your
answer. For example, if the question is worth five marks, it means that you should provide five
valid points or facts in your answer.
The examination paper consists of questions from all study units. To pass the exam, it is
advisable to study the whole study guide and self-evaluation questions at the end of each
and every study unit.
Remember to read through your study material consistently and to go through all the activities
listed at the end of each study unit. Also work carefully through the questions in the compulsory
and self-assessment assignments. All these activities and assignment questions are valuable
for revision purposes.
3.7 Guidelines for answering an examination paper
Please follow these useful guidelines when you write your examination:
1. When you get your examination question paper, the first thing that you should do is to take
two (2) minutes to read through the paper very carefully.
2. Do not rewrite the question in your answer. It is not necessary and you are wasting your
time. Avoid doing this at all times.
3. When you answer the short questions, look at how many marks are being awarded for
the answer. This is an indication of how many facts your answer should contain. For
example, do not write half a page in an answer to a question that counts only three marks.
TRL3709/201
You will not benefit in any way if you do this. If the question counts three marks, that is the
maximum mark that you can achieve for that particular question.
4. When you have to name or list three facts, for example, you are allowed to write your
answer in the form of bullet points.
5. When you are asked to name and describe something, you have to name a fact and give
a brief discussion/description/explanation of that particular fact.
6. When you are asked to explain, define, describe or fully discuss something, you have
to make use of full sentences in your answer. Once again, make sure that you are aware
of how many marks the question is worth so that you know how many facts to give.
7. Avoid repeating information, as this wastes time.
8. Make sure that you discuss the correct facts in a logical manner to achieve the highest
possible mark.
©
Unisa 2019
In terms of the Copyright Act 98 of 1978 no part of this material may be reproduced, be
stored in a retrieval system, be transmitted or used in any form or be published,
redistributed or screened by any means (electronic, mechanical, photocopying, recording or
otherwise) without the prior written permission of UNISA. However, permission to use in
these ways any material in this work that is derived from other sources must be obtained
from the original sources.
15
TRL3709/201/2/2015
LOGISTICS STRATEGY
TRL3709
Semester module
Department of Transport Economics,

Logistics and Tourism
This tutorial letter contains important

information about your module.
Bar code
Contents
1 INTRODUCTION ................................................................................................................... 3
2 MYUNISA .............................................................................................................................. 4
3 GENERAL INFORMATION ................................................................................................... 6
4 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 & 02 .................................................. 7
4.1 Compulsory Assignment 01 ................................................................................................... 7

4.2 Compulsory Assignment 02 ................................................................................................. 10
5 EXAMINATION INFORMATION .......................................................................................... 14
5.1 Examination admission ........................................................................................................ 14

5.2 Examination period .............................................................................................................. 15
5.3 Examination date ................................................................................................................. 15
5.4 Previous examination papers ............................................................................................... 15
5.5 Format of the examination paper ......................................................................................... 15
5.6 Guidelines for the examination ............................................................................................. 16
5.7 Guidelines for answering an examination paper ................................................................... 17
2
TRL3709/201
1 INTRODUCTION
Dear Student
I hope that you are finding your studies interesting and informative! We are nearing the end of
the semester, and soon it will be time for the examination! Please read through this tutorial
letter carefully as it contains feedback on the second semester’s compulsory
Assignments 01 and 02 as well as important guidelines for your examination.
You are welcome to contact me at the contact details below if you have any academic
queries or wish to make an appointment to discuss academic matters with me.
Tel: (012) 433 4668
Ms C Loedolff
(Lecturer: Logistics Strategy)
3
2 MYUNISA
What is myUnisa?
myUnisa is a secure website for registered Unisa students, which will give you direct access
to important information such as course information, and will allow you to update your
personal information on the Unisa student system. You will also be able to join online
discussion forums, submit your assignments and access a number of other resources.
How do I become a myUnisa user?

After receiving confirmation from the university that you are a registered Unisa student, you
must do the following to become part of this innovative learning community:
• Claim your myLife e-mail account before you join myUnisa.
• Go to http://my.unisa.ac.za and click on the “Join myUnisa” link.
• Complete the verification process. (Please read ALL the instructions on the screen.)
Why is it important to become a myUnisa user?

myUnisa will provide you with 24-hour access to your information and learning resources. It
will also allow you to become part of an online learning community, which means that you will
be able to interact with your lecturers and fellow students.
What does it cost to join myUnisa?

myUnisa and myLife are free to all registered Unisa students. If you do not have your own
internet access, you may need to visit an internet cafe, library or learning centre in your area
to access these sites. These centres provide access to the internet for a small fee.
I’ve now registered on myUnisa. How do I login to myUnisa?

Go to http://my.unisa.ac.za, enter your student number in the field labelled “student no” and
enter the password you created during the joining procedure. Do not confuse this password
with the myLife password you will be using for your e-mail account.
Who should I call if I have a problem with myUnisa?

You are welcome to contact Unisa at myUnisaHelp@unisa.ac.za if you have any problems
with myUnisa. Please remember to include your full names, student number and a brief
summary of the problem in the email.
4
TRL3709/201
 myLife email account
How do I claim my myLife email account?

As a registered Unisa student, you already have this e-mail account. Please note that you
need to claim your myLife e-mail box if you wish to receive any e-mail communication from
Unisa.
• Go to myUnisa at http://my.unisa.ac.za and click on the “Claim myLife e-mail” link.
• Provide us with your details by completing the e-form on the screen. This is done for
verification purposes.
• Receive your myLife address and password.
• Access your e-mail account.
Check your myLife e-mail frequently, as it will be your responsibility to manage your myLife e-
mail account. Please note that your myLife e-mail address will be the only official means of
electronic communication between Unisa and you. If you wish to keep/use an existing e-mail
account, you will need to forward or redirect your mail from your myLife account to your
preferred e-mail address.
Contact Unisa at myLifeHelp@unisa.ac.za if you encounter any problems with your myLife
account.
How can I access my myLife e-mail account?

myLife is a web-based e-mail service, which means that you can access your e-mail from
anywhere in the world using an internet browser. Use the link http://www.outlook.com, your
myLife ID (studentnumber@mylife.unisa.ac.za) and your password.
What should I do to forward my myLife e-mail account to another account?

If you prefer to use another e-mail account, you can configure your myLife account to forward
e-mails automatically. Please note that the function listed here is not available in all browsers.
To use the complete set of features available in the Outlook web application, you need to use
Internet Explorer 7 or Internet Explorer 8. Most features are also supported in Firefox 3.0.1 on
computers running Windows XP, Windows 2003, Windows Vista, Windows Server 2008 and
Windows 7 operating systems, and Safari 3.1 on the Mac OS X operating system.
To redirect your myLife e-mail to another e-mail account, please do the following:
• Login to your myLife account (http://outlook.com).
5
• Click on “Options” (top right-hand corner of the myLife e-mail screen).
• Click on the “Organise your inbox with rules” tab.
• Click on the “New” tab.
• Click on the “When the message arrives, and…” on the drop-down list.
• Select the “Apply to all messages” option.
• Click on the “Do the following:” drop-down list.
• Select the “Redirect the message to…” option.
• In the “To” box, type in the e-mail address you want the mail redirected to.
• Click on “OK”.
• Click on “Save”.
3 GENERAL INFORMATION
You will find general Unisa contact details in the myStudies @ Unisa brochure. Please
provide your student number when addressing any enquiries to the university. Unisa is a very
large university and would find it difficult to identify you without the relevant information.
6
TRL3709/201
4 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 & 02
4.1 Compulsory Assignment 01

DUE DATE 11 August 2015
SCOPE OF ASSIGNMENT Study Unit 1, 2 & 5
QUESTION 1
You have been appointed as a consultant for a traditional grocery chain group in South
Africa. The chain is considering implementing online sales or e-business and has asked
you for a full report. Fully explain a scorecard on how online sales or e-business in a
supply chain:
a) affect(s) the ability to meet customer needs
b) influence(s) the cost of meeting those needs
Justify your answer. (25)
At the highest level, performance of a distribution network should be evaluated

along two dimensions:
1) Customer needs that are met
2) Cost of meeting customer needs
A firm must evaluate the impact on customer service and cost as it compares
different distribution network options. The customer needs that are met influence
the company’s revenues, which along with cost decide the profitability of the
delivery network.
1) Although customer value is impacted by many factors, we focus on those

measures that are influenced by the structure of the distribution network:
Response time: the amount of time it takes for a customer to receive an
order.
Product variety: the amount of different products/configurations that are
7
offered by the distribution network.
Product availability: the availability of having a product in stock
Customer experience: includes the ease with which customers can place and
receive orders and the extent to which this experience is customised.
Time to market: the time it takes to bring a new product to market.
Order visibility: the ability of customers to track their orders from placement to
delivery.
Returnability: the ease with which a customer can return unsatisfactory
merchandise and the ability of the network to handle such returns.
It is not the case that customers always want the highest level of performance
along each of these dimensions.
For example, customers ordering a book at Amazon are willing to wait longer
than those who drive to a nearby Exclusive Books to get the same book. In
contrast, customers can find a much larger variety of books at Amazon
compared to the Exclusive Books store.
Firms that target customers who can tolerate a long response time require
only a few locations that may be far from the customer. These companies can
focus on increasing the capacity of each location. In contrast, firms that target
customers who value short response times need to locate facilities close to
them. These firms must have many facilities, each with a low capacity. Thus,
a decrease in the response time customers desire increases the number of
facilities required in the network. This point is shown in figure 4.1 on page 82
of Chopra and Meindl (2013).
2)Changing the distribution network design affects the following supply chain
costs (notice that these are four of the six supply chain drivers mentioned
previously):
Inventories: as the number of facilities in a supply chain increases, the
inventory and resulting inventory costs also increase. To decrease inventory
costs, firms try to consolidate and limit the number of facilities in their supply
chain network
Transportation: inbound transportation costs are the costs incurred in bringing
8
TRL3709/201
material into a facility. Outbound transportation costs are the costs of sending
material out of a facility. Outbound transportation costs per unit tend to be
higher than inbound costs because inbound lot sizes are typically larger (for
example, an Amazon warehouse receives full truckload shipments of books
on the inbound side, but ships out small packages with only a few books per
customer order on the outbound side). Increasing the number of warehouse
locations decreases the average outbound distance to the customer and
makes outbound transportation distance a smaller fraction of the total
distance travelled by the product. Thus, as long as inbound transportation
economies of scale are maintained, increasing the number of facilities
decreases total transportation cost, as shown in figure 4.3 on page 83 of
Chopra and Meindl (2013). If the number of facilities is increased to a point
where inbound lot sizes are also very small and result in a significant loss of
economies of scale in inbound transportation, increasing the number of
facilities increases total transportation cost.
Facilities and handling: facility costs decrease as the number of facilities is
reduced. This is because a consolidation of facilities allows a firm to exploit
economies of scale.
Information
Total logistics costs = Inventory costs + Transportation costs + Facility costs
Each firm should have at least the number of facilities that minimizes total
logistics costs.
A firm should add facilities beyond the cost-minimizing point only if managers
are confident that the increase in revenues because of better responsiveness
is greater than the increase in costs because of the additional facilities.
Study Unit 5, Chopra and Meindl (2013:81–85).

Students must not copy the material directly from the textbook. They must
interpret and apply the theory provided. The report should have an introduction
and conclusion.
TOTAL: [25]
9
DUE DATE 7 September 2015
SCOPE OF ASSIGNMENT Study Unit 11 & 12

This means that you are still required to answer all the questions. Even though only one or
two questions will be marked, you will receive feedback on all the questions. Please note
that feedback does not entail a detailed memo of an exact answer to each question. This
feedback will be more on how you should have approached the questions and typical errors
that students have made.
QUESTION 1
List and explain the factors that can help the logistics executive to improve the (12)
effectiveness of an organisation.
Prioritise the factors and motivate your priorities.
1) Strategic goal setting

Involves the establishment of two clearly defined sets of goals: the
organisation goals and individual employee goals. Both sets must be
compatible and aimed at maximising company/employee effectiveness.
2) Resource acquisition and utilisation
Includes the utilisation of human and financial resources, as well as
technology, to maximise the achievement of corporate goals and objectives.
This involves having properly trained and experienced persons operating the
firm’s private truck fleet, using the proper storage and retrieval systems for
the company’s warehouse and having the capital necessary to take
advantage of forward buying opportunities, massing of inventories and other
capital projects.
3) Performance environment
Having the proper organisational climate that motivates employees to
10
TRL3709/201
maximise their effectiveness and subsequently the effectiveness of the

overall logistics function. Strategies that can be used to develop a goal-
directed performance environment include: proper employee selection and
placement, training and development programmes, task design, and
performance evaluation, combined with a reward structure that promotes
goal-oriented behaviour.
4) Communication process
One of the most important factors influencing logistics effectiveness in any
organisation is the communication process. Without good communication,
logistics policies and procedures cannot be effectively transmitted throughout
the organisation and the feedback of information concerning the success or
failure of those policies and procedures cannot take place. Communication
flows within the logistics area can be downward (boss-employee), upward
(employee-boss) or horizontal (boss-boss or employee-employee).
5) Leadership and decision-making expertise
Comparable to the importance of effective communication in an organisation
is the quality of leadership and decision-making expertise exercised by the
senior logistics executive. In many companies the logistics department or
division is a mirror image of the top logistics executive. If the top executive is
a highly capable and respected individual, and one who makes thoughtful,
logical, and consistent decisions, then the logistics organisation that reports
to him or her will most likely be highly effective. Conversely, a logistics
organisation led by an executive who lacks the necessary leadership and
decision-making skills will usually not be effective.
6) Organisational adaption and innovation
The environment that surrounds the logistics activity requires constant
moving. As conditions change, logistics must adapt and innovate to continue
to provide an optimal cost-service mix to the firm and its markets. It is
important that adaption and innovation not be haphazard and unplanned.
Study guide, Part 5, Stock & Lambert, 2001, Chapter 15: Organising for effective
logistics, p. 102 (598) – 103 (599).
Students must not copy the material directly from the textbook. They must
11
interpret and apply the theory provided. The students should organize the factors
according to their own perceived importance. This ranking should be motivated.
TOTAL [12]
QUESTION 2
List and describe the elements of the strategic planning process for logistics? In your (13)
opinion, which of the elements are the most important?
This question could be interpreted and answered in two ways:
o Students could have discussed and arranged the Components of the

Strategic Logistics Plan
The strategic logistics plan should consist of the following:
1) The management overview, describing the logistics strategy in general terms
and its relationship to the other major business functions.
2) A statement of the logistics objectives related to cost and service for both
products and customers.
3) A description of the individual customer service, inventory, warehousing,
order processing and transportation strategies necessary to support the
overall plan.
4) An outline of the major logistics programme or operational plans described in
sufficient detail to document plans, related costs, timing and their business
impact.
5) A forecast of the necessary workforce and capital requirements.
6) A logistics financial statement detailing operating costs, capital requirements
and cash flow.
7) A description of the business impact of the logistics strategy in terms of
corporate profits, customer service performance and the ipact on other
business functions.
OR
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TRL3709/201
o Students could have discussed and arranged the Requirements of a

Strategic Logistics Plan
The development of a strategic logistics plan requires the following:
1) A thorough understanding and appreciation of corporate strategies and
marketing plans, in order to provide sound strategic planning
recommendations and move toward a logistics system that balances cost and
service effectiveness.
2) A customer service study to determine what elements of service are key, how
service is measured, what levels of performance are expected and how the
firm’s performance compares to that of specific competitors.
3) Identification of the total costs associated with alternative logistics systems to
select the lowest-cost network that meets corporate, marketing and customer
requirements.
Study guide, Part 5, Stock & Lambert, 2001, Chapter 18: The strategic logistics
plan, p. 166 (692) – 168 (694).
Analysis by student should be incorporated in the theory and supported by
information gathered from reliable sources. Students must not copy the material
directly from the textbook. They must interpret and apply the theory provided.
The students should organize the elements according to their own perceived
importance.
TOTAL [13]
13
Both the compulsory assignments will count towards your semester mark, which will
contribute towards your final mark.

Compulsory Multiple Choice Assignment 01 50%
Compulsory Essay-type Assignment 02 50%

Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE
If your semester mark is 55% and your examination mark is 60%, your final
mark will be calculated as follows:
0,2 x 55 = 11% 0,8 x 60 = 48%
Your final mark will therefore be 59% (11% + 48%).
This is higher than 50%, which means that you have passed the module. This
is higher than 50%, which means that you passed the subject.
14
TRL3709/201

• If you are registered for the second semester you will write the examination in Oct/Nov
2015.
Previous examination papers are available on myUnisa.
The Logistics Strategy examination paper consists of a two-hour written examination

consisting of 70 marks. The paper consists of Section A with short questions and Section B
with longer written questions.
SECTION A (Answer ALL the questions in this section)

Question 1 Compulsory Short Questions 20 20
SECTION B (Answer any TWO of the three questions in this section)
Question 2 Long questions 25
Question 3 Long questions 25 50
70
15
Section A comprises of short questions totalling 20 marks. You must answer ALL the
questions in this section.
Section B consists of three questions of which you must answer any two questions totalling
50 marks. Each question will consist of long and short questions. Short questions will include
name, define and describe type questions, long questions will include discuss and explain
type questions. These questions can be asked from a combination of study units.
Please note that only the first two questions will be marked if you answer all three
questions in this section. If you do however answer all three questions please ensure that you
cross out the question that you do not want to be marked. Failing to do so may result in you
losing marks.
The examination questions are completely theoretical, however, where required, you will have
to apply the information given to you in the examination paper practically.
sure that your facts are relevant to the question. Remember that it is not the length (quantity)
of your answer that counts, but the quality of the information that you provide. It is therefore
correctly, since the mark allocation indicates how much information to include in your answer.
For example, if the question is worth five marks, it means that you should provide five valid
points or facts in your answer.
The examination paper consists of questions from all learning units. In order to pass the
exam, it is advisable to study the whole study guide and not only your assignments.
listed throughout and at the end of each learning unit. Also work through the questions in
compulsory multiple choice assignment, essay assignment and self-assessment
questions at the end of each learning unit carefully. All these activities and assignment
questions are valuable for revision purposes.
16
TRL3709/201
1. When you get your examination question paper, the first thing that you should do is to
take two (2) minutes to read through the paper very carefully.
2. Do not re-write the question in your answer. It is not necessary and you are wasting
your own time. Avoid doing this at all times.
3. When answering the short questions, look at how many marks are being awarded for
the answer. This is an indication of how many facts your answer should contain. Do not
write half a page in an answer to a question that counts only three marks, for example.
You will not benefit in any way if you do this. If the question counts three marks, that is
the maximum mark that you can achieve for that particular question.
5. When asked to name and describe something, you have to name a fact and give a
brief discussion/description/explanation of that particular fact.
6. When asked to explain, define, describe or fully discuss something, you have to
make use of full sentences in your answer. Once again, make sure that you are aware of
how many marks the question is worth so that you know how many facts to give.
7. Avoid repeating yourself unnecessarily, as this wastes time.
8. Make sure that you discuss the correct facts in a logical manner in order to achieve
the highest possible mark.
9. Answering in green scripts:
• Make sure the cover of the scrip is filled in correctly (both scripts if 2 were used) -
module code; student number and especially the number of books handed in (this
would help the primary lecturer with enquiries at the Examination Department to check
if your second script is still at their offices.)
• After you have finished writing please fill in the questions you answered on the front (of
both scripts if 2 were used) - starting with question 1. Please keep a line open
between each number - this will help with the correcting of totals when the markers
are requested to remark the scripts.
• One book is enough however sometimes students need more than one. Please start
with question 1 and then follow with the questions you chose to answer. Do not
17
answer each question in a different book. If you use a second script, place it inside
of the first script (first script numbered as 1 of 2) by also filling in the cover of that script
and number it 2 of 2.
• Do your numbering (correctly) on the left hand side of the left margin.
• Try to remember to draw a vertical line of about 1cm on the right hand side of each
page - this helps with allocation of marks.
• If you completed your answer and on a later stage you remembered more information
you want to add to a particular question, do not add it in small font somewhere else on
the page or try to squeeze it in at the question. Just make a note that your
answer continues on page 8 for example (the green answer script has page numbers).
Make a clear indication.
• Please write as neat as possible. It is very difficult to look for marks (if you need
some) and the markers are not capable of reading your handwriting.
• Another tip that may result in better marking of your script would be when you
structure your answer (as indicated at assignment 02).
©
Unisa 2015
18
TRL3709/201/1/2016
LOGISTICS STRATEGY
TRL3709
Semester module
Department of Entrepreneurship, Supply Chain,

Transport, Tourism and Logistics Management

Bar code
1
CONTENTS
1 INTRODUCTION
2 MYUNISA
4.1 Compulsory assignment 01
4.2 Compulsory assignment 02
5.6 Guideline for the examination
2
TRL3709/201
1 INTRODUCTION
Dear Student
I hope that you are finding your studies interesting and informative. We are nearing
the end of the semester, and soon it will be time for the examination. Please read
through this tutorial letter carefully as it contains feedback on the first semester’s
compulsory Assignments 01 and 02 as well as important guidelines for your
examination.
You are welcome to contact me at the contact details below if you have any
academic queries or wish to make an appointment to discuss academic matters
with me.
Tel: (012) 433 4668
Mrs C Poole
2 MYUNISA
What is myUnisa?
myUnisa is a secure website for registered Unisa students, which will give you direct
access to important information such as course information, and will allow you to
update your personal information on the Unisa student system. You will also be able
to join online discussion forums, submit your assignments and access a number of
other resources.

After receiving confirmation from the university that you are a registered Unisa
student, you must do the following to become part of this innovative learning
community:
• Complete the verification process. (Please read ALL the instructions on the
screen.)

myUnisa will provide you with 24-hour access to your information and learning
resources. It will also allow you to become part of an online learning community,
which means that you will be able to interact with your lecturers and fellow students.

myUnisa and myLife are free to all registered Unisa students. If you do not have your
own internet access, you may need to visit an internet cafe, library or learning centre
in your area to access these sites. These centres provide access to the internet for a
small fee.

Go to http://my.unisa.ac.za, enter your student number in the field labelled “student
no” and enter the password you created during the joining procedure. Do not
confuse this password with the myLife password you will be using for your e-mail
account.
4
TRL3709/201

You are welcome to contact Unisa at myUnisaHelp@unisa.ac.za if you have any
problems with myUnisa. Please remember to include your full names, student
number and a brief summary of the problem in the email.

As a registered Unisa student, you already have this e-mail account. Please note
that you need to claim your myLife e-mail box if you wish to receive any e-mail
communication from Unisa.
• Provide us with your details by completing the e-form on the screen. This is done
for verification purposes.
Check your myLife e-mail frequently, as it will be your responsibility to manage your
myLife e-mail account. Please note that your myLife e-mail address will be the only
official means of electronic communication between Unisa and you. If you wish to
keep/use an existing e-mail account, you will need to forward or redirect your mail
from your myLife account to your preferred e-mail address.
Contact Unisa at myLifeHelp@unisa.ac.za if you encounter any problems with your
myLife account.

myLife is a web-based e-mail service, which means that you can access your e-mail
from anywhere in the world using an internet browser. Use the link
http://www.outlook.com, your myLife ID (studentnumber@mylife.unisa.ac.za) and
your password.

If you prefer to use another e-mail account, you can configure your myLife account to
forward e-mails automatically. Please note that the function listed here is not
5
available in all browsers. To use the complete set of features available in the Outlook
web application, you need to use Internet Explorer 7 or Internet Explorer 8. Most
features are also supported in Firefox 3.0.1 on computers running Windows XP,
Windows 2003, Windows Vista, Windows Server 2008 and Windows 7 operating
systems, and Safari 3.1 on the Mac OS X operating system.
You will find general Unisa contact details in the myStudies@Unisa brochure. Please
provide your student number when addressing any enquiries to the university. Unisa
is a very large university and would find it difficult to identify you without the relevant
information.
6
TRL3709/201

DUE DATE 22 February 2016
SCOPE OF ASSIGNMENT TUT101 & Learning Units 1 - 5
1. The module code for Logistics Strategy is … (1)

[1] TRL3709.
[2] TRT3709.
[3] TRL3907.
[4] TRT3907.
1 is the correct answer and can be found in the TUT101.
2. Where can you find all the necessary information regarding this module? (1)
[1] Tutorial Letter 201
[3] FAQs tab on myUnisa
[4] Additional resources tab on myUnisa
3. The lecturer’s contact details can be found under the following tab on (1)
myUnisa:
[1] FAQs
[2] Learning units
[3] Additional resources
[4] Official study material
1 is the correct answer and can be found on myUnisa.
7
4. If you have any administrative queries you should … (1)
[1] contact the lecturer.
[2] contact the departmental secretary.
[3] consult the myStudies @ Unisa brochure.
[4] contact the Department of Transport Economics, Logistics and
Tourism.
5. The factors influencing network design decisions are … (1)

[1] facility, location, capacity, technological, infrastructure, competitive,
and market and supply.
[2] response time, product variety and availability, customer experience,
time to market, order visibility and returnability.
[3] tariffs and tax incentives, exchange-rate and demand risk, freight and
fuel costs, positive externalities between firms and a split in the
market.
[4] strategic, technological, macroeconomic, political,
infrastructure, competitive, logistics and facility costs, and
customer response time and local presence.
4 is the correct answer and can be found in the textbook, Chapter 5, p 121
– 126.
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TRL3709/201
6. The factors influencing distribution network design are … (1)

[1] facility, location, capacity, technological, infrastructure, competitive,
and market and supply.
[2] response time, product variety and availability, customer
experience, time to market, order visibility and returnability.
[3] tariffs and tax incentives, exchange-rate and demand risk, freight and
fuel costs, positive externalities between firms and a split in the
market.
[4] strategic, technological, macroeconomic, political, infrastructure,
competitive, logistics and facility costs, and customer response time
and local presence.
2 is the correct answer and can be found in the textbook, Chapter 4, p 83.
7. There are a number of basic steps to achieving strategic fit. In the correct (1)
order, these steps are:
[1] Understanding supply chain uncertainty and capabilities,
understanding the customer and achieving strategic fit.
[2] Understanding the customer, understanding supply chain uncertainty
and capabilities, and achieving strategic fit.
[3] Understanding the customer and supply chain uncertainty,
understanding the supply chain capabilities and achieving
strategic fit.
[4] Understanding the supply chain capabilities, understanding the
customer and supply chain uncertainty and achieving strategic fit.
9
8. A typical supply chain can be graphically illustrated as below. (1)
Identify, in the correct order, a, b, c, d and e.

[1] Supplier; manufacturer; wholesaler; retailer, customer.
[2] Supplier; retailer; manufacturer; wholesaler, customer.
[3] Suppliers; distributors; manufacturers; retailers; customer.
[4] Customer; retailers; wholesalers; manufacturers; suppliers.
9. An important ratio that defines financial leverage is … (1)

[1] return on equity (ROE).
[2] inventory turnover (INVT).
[3] accounts payable turnover (APT).
[4] accounts receivable turnover (ART).
10. The cycle view of supply chain processes consist of four cycles. Which of (1)
the following is not a cycle in the cycle view of supply chain processes?
[1] Manufacturing cycle
[2] Replenishment cycle
[3] Customer order cycle
[4] Customer return cycle
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TRL3709/201
11. You are a manager at ABC Logistics. As a manager, you must track a (1)
number of information-related metrics that influence supply chain
performance. Which of the following metrics is not an information-related
metric?
[1] Forecast horizon
[2] Seasonal factors
[3] Variance from plan
[4] Percentage of on-time deliveries
4 is the correct answer and can be found in the textbook, Chapter 3, p 67-
68.
12. You are the owner of a small online sales company, which you run from (1)
your house. In the past year, sales have more than doubled and you are
considering renting a warehouse from where you can manage the stock.
Having a warehouse will enable you to buy and store more stock than you
are currently able to do and thus you will be better able to keep up with the
customer demand. In order to make a design decision, you need access to
certain information, such as …
[1] transport costs between sites, demand forecast by market, location
of supply sources and markets, political factors and sale price of
products in different regions.
of supply sources and markets, location of customers and sale price
of products in different regions.
of supply sources and markets, infrastructure requirements and sale
price of products in different regions.
[4] transport costs between sites, demand forecast by market,
location of supply sources and markets, location of potential
facility sites and sale price of products in different regions.
11
13. (1)
The figure above represents the relationship between the ………. and …
[1] number of facilities; facility costs.
[2] number of facilities; inventory costs.
[3] number of facilities; transportation cost.
[4] desired response time; number of facilities.
14. What does the figure below represent?
[1] The cost-transport efficient frontier

[2] The facility-transport efficient frontier
[3] The cost-responsiveness efficient frontier
[4] The inventory-responsiveness efficient frontier
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TRL3709/201
15. Mercedes recently developed a new truck with an operating system that is (1)
completely different from anything currently on the market. Where would
you place this new truck on the Implied Uncertainty Spectrum?
[1] a
[2] b
[3] c
[4] between b and c
TOTAL: [15]
13
DUE DATE 29 March 2016
This means that you were still required to answer all the questions. Even though
only one or two questions were marked, you receive feedback on all the
questions. Please note that feedback does not entail a detailed memo of an exact
answer to each question. This feedback will be more on the theory and how you
should have approached the questions.
“From the investors that gave Brazil Dafiti, Germany Zalando and Australia The
Iconic, comes South Africa’s most comprehensive online footwear store ZANDO.
This online fashion store has been brought to South Africa by European Investors
Rocket Internet.
Zando offers you the most comprehensive international and local fashion brands for
sale online in South Africa. Step out in our ladies' and men's shoes and sports
trainers, shop our stylish apparel or find your look’s finishing touch from our
accessory ranges - we have got you stylishly covered. Zando strives to offer
shoppers the latest trends and must-haves for every season.
We want to bring you the best shopping experience. Our cutting-edge product
teamed with Zando’s excellent customer service and the advantages of an easy and
secure online shopping experience will give you just that!” (Zando, 2015).
Visit Zando’s website ( http://www.zando.co.za/faq/) and answer the following

questions:
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TRL3709/201
QUESTION 1
1.1 How would you characterise Zando’s competitive strategy? (4)

A model answer would include the following elements, one mark awarded
for each point, to a maximum of 4 marks:
 Define ‘competitive strategy’: a company’s competitive strategy
defines, relative to its competitors, the set of customer needs that it
seeks to satisfy through its products and services.
 Zando’s strategy, similar to the example of McMaster-Carr, is based
on providing its customers with convenience, availability and
responsiveness.
 Like Blue Nile, Zando’s customers are not able to see, touch and fit
the products before purchase, but that Zando does offer a 14 days
return period.
 Zando offers a wide variety of products, possibly more than most
brick-and-mortar stores.
 Competitive strategy is defined based on how the customer prioritises
product cost, delivery time, variety and quality.
 A customer purchasing products through Zando is concerned with
products variety, cost, the latest fashion trends and response time
(other suggestions also welcome).
Chapter 2, section 2.1, p 31 – 33.

Chopra, S. & Meindl, P. 2015. Supply Chain Management: Strategy,
Planning and Operation. 6th ed. Pearson: England.
1.2 What are they key customer needs that Zando aims to fill? (6)
This is an open question, where students have to explore Zando’s
website and suggest what customer needs they think Zando tries to meet.
Suggested answers include, but are not limited to:
 The need for the latest fashion items
 The need for convenience
 The need for safe payment methods
15
 The need for fast delivery
 The need for variety
 Etc.
Students must give at least three needs and motivate why they chose a
specific need.
Zando. 2016. Home. [Online] Available from: http://www.zando.co.za/

[Accessed: 2016-03-09].
1.3 Where would you place the demand faced by Zando on the implied (8)
demand uncertainty spectrum? Motivate your answer.
for each point, to a maximum of 8 marks:
 Define ‘implied demand uncertainty’: it is the resulting uncertainty for
only the portion of the demand the supply chain plans to satisfy,
based on the attributes the customer desires.
 Explain how this differs from demand uncertainty.
Customise Table 2-2 to reflect Zando’s customers’ needs:
 Quantity – Zando stocks large quantities of each product
 Lead time – Zando offers a short lead time
 Product variety – Zando offers a wide variety of items
 Distribution channels – limited to online sales
 Rate of innovation – constantly adding new products to their collection
 Service level – Zando prides itself in its excellent customer service
Further explanations will also be considered for marks.
Student has state whether they think Zando has a low or high implied
demand uncertainty and motivate their answer.

Zando. 2016. Home. [Online] Available from: http://www.zando.co.za/
[Accessed: 2016-03-09].
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TRL3709/201
1.4 How can Zando expand the scope of strategic fit across its supply (8)
chain?
for each point explained in full, to a maximum of 5 marks for theory:
 Intraoperation scope: minimising local cost
 Intrafunctional scope: minimising functional cost
 Interfunctional scope: maximising company profit
 Intercompany scope: maximising supply chain surplus
 Agile intercompany scope
Three marks were awarded for application to Zando.

1.5 What are some of the problems that can arise when each stage of (7)
the supply chain focusses only on its own profits when making
decisions?
Here students must use their own knowledge to answer the question. The
answer is based on a variety of information throughout Chapter 2. Logical,
motivated answers will be accepted.
One of the main problems to arise is the reduction of overall supply chain
profitability.

17
1.6 What actions can help Zando and their manufacturers work together (7)
to expand the scope of strategic fit?
Here students must use their own knowledge to answer the question. The
answer is based on a variety of information throughout Chapter 2. Logical,
motivated answers will be accepted.

TOTAL: [40]
QUESTION 2
2.1 What distribution network design does Zando make use of? Motivate (3)
your answer.
Zando makes use of three types of distribution networks, namely:
 Manufacturer storage with direct shipping and in-transit merge
 Distributor storage with carrier delivery
 Manufacturer/distributor storage with customer pick-up
Half a mark was awarded for naming each network design and half a
mark for the motivation/application.

2.2 Apply the online sales scorecard to Zando. (27)

• Introduction (Briefly discuss the scorecard categories)
• Zando’s online scorecard analysis
• Conclusion
The answer for this question could be found in Chapter 4 of the textbook,
section 4.3 and was evaluated based on the rubric on the next page.

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TRL3709/201
Question 2.2 was evaluated as follows:
Referencing Referencing Referencing was Referencing was Minor Referencing

according to was not attempted; attempted, (technical) was done
the Harvard attempted. however errors however errors error occurred correctly.
method occurred in text was made in in referencing.
as well as in the either in-text
reference list. referencing or in
the reference list
with minor
technical errors.
0 1 2 3 4
Introduction Student did Student Student wrote a Student wrote Student wrote
not write an attempted to write short introduction, an introduction an introduction
introduction an introduction, but the and correctly and correctly
but content was scorecard identified the identified and
not relevant categories were scorecard briefly discussed
incorrectly categories. the scorecard
identified. categories.
0 1 2 3 4
Content Content did Reader does not Reader slightly Reader slightly Reader fully
not answer understand the understands the understands understands
the question. work; a short work; it was the work; it online sales and
(A scorecard discussion was explained in was briefly the distribution
was not given. shallow detail. explained. network.
created).
0 1-2 3-4 5-6 7 - 10
Application No attempt A slight attempt An acceptable A good The theory was
was made at was made at attempt was attempt was successfully
applying the applying the made to apply the made to apply applied to
theory to theory to Zando. theory to Zando. the theory to Zando.
Zando. Zando.
0 1-2 3-4 3-4 7-8
Conclusion No A conclusion
conclusion was written.
was written.
0 1
Total 27
TOTAL: [30]
19
Both the compulsory assignments will count towards your semester mark, which will
contribute towards your final mark.


Semester Mark 20%
Final Mark 100%
You have to obtain a minimum of 40% in the examination, regardless of your

semester mark. The average of the semester mark and the examination mark must
be at least 50% for you to pass the subject.
EXAMPLE
If your semester mark is 55% and your examination mark is 60%, your final mark
will be calculated as follows:
0,2 x 55 = 11% 0,8 x 60 = 48%

• As you are registered in the first semester you will write the examination in
May/June 2015.
20
TRL3709/201
The date for the exam will be communicated to you by the Examination
Department.
There are old examination papers available on myUnisa under the Official Study
Material link.
Please note that Question 3.1 in the May/June 2013 examination paper did not have
a question. Marks were allocated to students who distinguished between the
primary and secondary activities of an airline.
The Tourism Distribution examination paper consists of a two-hour written

examination counting 70 marks. The paper consists of Section A with short
questions and Section B with longer written questions.

70
21
Section A comprises of short questions totaling 20 marks. You must answer ALL
the questions in this section.
Section B consists of three questions of which you must answer any two
questions totaling 50 marks. Each question will consist of long and short questions.
Short questions will include name, define and describe type questions, long
questions will include discuss and explain type questions. These questions can be
asked from a combination of study units.
Please note that only the first two questions will be marked if you answer all
three questions in this section. If you do however answer all three questions please
ensure that you cross out the question that you do not want to be marked. Failing to
do so may result in you losing marks.
The examination questions are completely theoretical, with much emphasis on

definitions and terminology. However, where required, you will have to apply the
information given to you in the examination paper practically.
You will need to know your facts well and write them in an organised and logical
way. Make sure that your facts are relevant to the question. Remember that it is not
the length (quantity) of your answer that counts, but the quality of the information
that you provide. It is therefore recommended that you read through all the questions
carefully and consider the mark allocation for each question before answering.
This will help you to structure you answers correctly, since the mark allocation
indicates how much information to include in your answer. For example, if the
question is worth five marks, it means that you should provide five valid points or
facts in your answer.
The examination paper consists of questions from all study units. In order to pass
the exam, it is advisable to study the whole study guide and not only your
assignments.
22
TRL3709/201
Remember to read through your study material consistently and to go through all the
activities listed at the end of each study unit. Also work through the questions in
compulsory multiple choice assignment, essay assignment and self-assessment
questions at the end of each study unit carefully. All these activities and assignment
questions are valuable for revision purposes.
1. When you get your examination question paper, the first thing that you should
do is to take two (2) minutes to read through the paper very carefully.
2. Do not re-write the question in your answer. It is not necessary and you are
wasting your own time. Avoid doing this at all times.
3. When answering the short questions, look at how many marks are being
awarded for the answer. This is an indication of how many facts your answer
should contain. Do not write half a page in an answer to a question that counts
only three marks, for example. You will not benefit in any way if you do this. If
the question counts three marks, that is the maximum mark that you can
achieve for that particular question.
4. When you have to name or list three facts, for example, you are allowed to
write your answer in the form of bullet points.
5. When asked to name and describe something, you have to name a fact and
give a brief discussion/description/explanation of that particular fact.
6. When asked to explain, define, describe or discuss something, you have to
make use of full sentences in your answer. Once again, make sure that you are
aware of how many marks the question is worth so that you know how many
facts to give.
8. Make sure that you discuss the correct facts in a logical manner in order to
achieve the highest possible mark.
9. Make sure the cover of the scrip is filled in correctly - module code; student
number, ID number.
23
10. After you have finished writing, please encircle questions you answered on
the front.
11. If you completed your answer and on a later stage you remembered more
information you want to add to a particular question, do not add it in small font
somewhere else on the page or try to squeeze it in at the question. Just make
a note that your answer continues on page 8 for example. Make a clear
indication.
12. Please write as neat as possible. It is very difficult to look for marks (if you
need some) and the markers are not capable of reading your handwriting.
©
Unisa 2016
In terms of the Copyright Act 98 of 1978 no part of this material may be

reproduced, be stored in a retrieval system, be transmitted or used in any form or
be published, redistributed or screened by any means (electronic, mechanical,
photocopying, recording or otherwise) without the prior written permission of
UNISA. However, permission to use in these ways any material in this work that
is derived from other sources must be obtained from the original sources.
24
TRL3709/201/2/2016
LOGISTICS STRATEGY
TRL3709
2nd Semester


Bar code
1
CONTENT
1 INTRODUCTION 1
2 MYUNISA 2
3 GENERAL INFORMATION 4
4 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 & 02 5
4.1 Compulsory assignment 01 5
4.2 Compulsory assignment 02 11
5 EXAMINATION INFORMATION 15
5.1 Examination admission 15
5.2 Examination period 16
5.3 Examination date 16
5.4 Previous examination papers 16
5.5 Format of the examination paper 16
5.6 Guideline for the examination 17
5.7 Guidelines for answering an examination paper 18

TRL3709/201/2/2016
1 INTRODUCTION
Dear Student
carefully as it contains feedback on the second semester’s compulsory Assignments 01
and 02 as well as important guidelines for your examination.
or wish to make an appointment to discuss academic matters with me.
Tel: (012) 433 4668
Mrs C Poole
1
2 MYUNISA
What is myUnisa?
myUnisa is a secure website for registered Unisa students, which will give you direct access to
important information such as course information, and will allow you to update your personal
information on the Unisa student system. You will also be able to join online discussion forums,
submit your assignments and access a number of other resources.

After receiving confirmation from the university that you are a registered Unisa student, you
must do the following to become part of this innovative learning community:
• Complete the verification process. (Please read ALL the instructions on the screen.)

myUnisa will provide you with 24-hour access to your information and learning resources. It will
also allow you to become part of an online learning community, which means that you will be
able to interact with your lecturers and fellow students.

myUnisa and myLife are free to all registered Unisa students. If you do not have your own
internet access, you may need to visit an internet cafe, library or learning centre in your area to
access these sites. These centres provide access to the internet for a small fee.

Go to http://my.unisa.ac.za, enter your student number in the field labelled “student no” and
enter the password you created during the joining procedure. Do not confuse this password with
the myLife password you will be using for your e-mail account.
You are welcome to contact Unisa at myUnisaHelp@unisa.ac.za if you have any problems with
myUnisa. Please remember to include your full names, student number and a brief summary of
the problem in the email.
2
TRL3709/201

As a registered Unisa student, you already have this e-mail account. Please note that you need
to claim your myLife e-mail box if you wish to receive any e-mail communication from Unisa.
• Provide us with your details by completing the e-form on the screen. This is done for
verification purposes.
Check your myLife e-mail frequently, as it will be your responsibility to manage your myLife e-
mail account. Please note that your myLife e-mail address will be the only official means of
electronic communication between Unisa and you. If you wish to keep/use an existing e-mail
account, you will need to forward or redirect your mail from your myLife account to your
preferred e-mail address.
Contact Unisa at myLifeHelp@unisa.ac.za if you encounter any problems with your myLife
account.

myLife is a web-based e-mail service, which means that you can access your e-mail from
anywhere in the world using an internet browser. Use the link http://www.outlook.com, your
myLife ID (studentnumber@mylife.unisa.ac.za) and your password.

If you prefer to use another e-mail account, you can configure your myLife account to forward e-
mails automatically. Please note that the function listed here is not available in all browsers. To
use the complete set of features available in the Outlook web application, you need to use
Internet Explorer 7 or Internet Explorer 8. Most features are also supported in Firefox 3.0.1 on
computers running Windows XP, Windows 2003, Windows Vista, Windows Server 2008 and
Windows 7 operating systems, and Safari 3.1 on the Mac OS X operating system.
3
You will find general Unisa contact details in the myStudies@Unisa brochure. Please provide
your student number when addressing any enquiries to the university. Unisa is a very large
university and would find it difficult to identify you without the relevant information.
4
TRL3709/201

DUE DATE 8 AUGUST 2016
SCOPE OF ASSIGNMENT TUT101 & Learning Units 1 - 5
1. The module code for Logistics Strategy is … (1)

[1] TRT3709.
[2] TRT3907.
[3] TRL3907.
[4] TRL3709.
[1] The Tutorial Letter 201
[2] The Tutorial Letter 101
[3] The FAQs tab on myUnisa
[4] The Additional resources tab on myUnisa
3. The lecturer’s contact details can be found under the following tab on myUnisa: (1)
[1] FAQs
[2] Learning units
[3] Additional resources
[4] Official study material
5
[3] consult the myStudies @ Unisa brochure.
[4] contact the Department of Transport Economics, Logistics and Tourism.
5. Offshoring typically lowers ………., but increases ………. (1)

[1] risks and fixed costs; risk, freight costs and working capital.
[2] labour and fixed costs; risk, freight costs and working capital.
[3] freight and fixed costs; risk, labour costs and working capital.
[4] product design and fixed costs; risk, freight costs and working capital.
2 is the correct answer and can be found in Chapter 6, p 159.
6. The bullwhip effect refers to … (1)

[1] fluctuations in orders that increase as they move up the supply chain
from retailers to wholesalers to manufacturers to suppliers.
[2] fluctuations in orders that decrease as they move up the supply chain from
retailers to wholesalers to manufacturers to suppliers.
[3] fluctuations in orders that decrease as they move down the supply chain from
[4] fluctuations in orders that increase as they move down the supply chain from
6
TRL3709/201
7. (1)
Identify A, B and C, in this order.

[1] Inventory profile, cycle inventory, safety inventory
[2] Safety inventory, cycle inventory, inventory profile
[3] Cycle inventory, safety inventory, average inventory
[4] Average inventory, cycle inventory, safety inventory
8. The figure below is a schematic presentation of … (1)
[1] a direct shipment network.

[2] milk runs from distribution centre.
[3] all shipments via distribution centre.
[4] milk runs from multiple suppliers or to multiple buyer locations.
7
9. In the absence of risk sharing, ………. aim for a ………. level of product availability (1)
than would be required to ………. supply chain profits.
[1] retailers; lower; maximise
[2] retailers; higher; maximise
[3] suppliers; lower; maximise
[4] suppliers; higher; maximise
10. The factors driving an increased focus on supply chain sustainability can be divided (1)
into three categories. Which of the following is not one of these three categories?
[1] Attracting customers that value sustainability.
[2] Community pressures and government mandates.
[3] Reducing the cost of recycling and remanufacturing.
[4] Reducing risk and improving the financial performance of the supply chain.
3 is the correct answer and can be found in the Chapter 17, p 505.
11. When considering offshoring, companies need to evaluate the impact of offshoring (1)
on a number of key elements of total cost. Which of the following is not an element
of total cost?
[1] Product returns
[2] Inventory and warehousing
[3] Customer duties, value-added taxes, local tax incentives
[4] Exchange rate trends and their impact of cost
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TRL3709/201
12. CPFR is the abbreviation for ………. and is defined as … (1)

[1] continuous planning, forecasting and replenishment; a business practice that
combines the intelligence of a single partner in the planning and fulfilment of
customer demand.
[2] collaborative planning, forecasting and replenishment; a business
practice that combines the intelligence of multiple partners in the
planning and fulfilment of customer demand.
[3] collaborative partnerships, forecasting and replenishment; a business
practice that combines the intelligence of multiple partners in the planning
and fulfilment of customer demand.
[4] coordinated partnerships, forecasting and replenishment; a business practice
that combines the intelligence of multiple partners in the planning and
fulfilment of customer demand.
13. (1)
What does the figure above represent?

[1] Square-root law
[2] Cost-responsiveness efficient frontier
[3] Variation in total safety inventory and number of independent stocking
locations
[4] Relationship between total safety inventory and number of independent
stocking locations
9
14. The ………. is responsible for transporting goods in the supply chain. (1)
[1] carrier
[2] shipper
[3] consigner
[4] consignee
15. Complete the table below summarising how and when a third party can increase (1)
the supply chain surplus. Order you answer alphabetically from a – d.
[1] High growth in surplus; high growth in surplus; no growth in surplus when
cost of capital is lower for third party; low growth in surplus
[2] High growth in surplus; low growth in surplus; high growth in surplus unless
cost of capital is lower for third party; low growth in surplus
[3] High growth in surplus; high growth in surplus; no growth in surplus
unless cost of capital is lower for third party; low growth in surplus
[4] Low growth in surplus; high growth in surplus; no growth in surplus unless
cost of capital is lower for third party; high growth in surplus

TOTAL [15]
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TRL3709/201

DUE DATE 19 SEPTEMBER 2016

This means that you were still required to answer all the questions. Even though only one or
two questions were marked, you receive feedback on all the questions. Please note that
feedback does not entail a detailed memo of an exact answer to each question. This feedback
will be more on the theory and how you should have approached the questions.
Read the following extract from a case study on Makro and answer the questions that
follow, based on the case study.
“About Makro
Makro trades in food, general merchandise and liquor. All stores operate in major
metropolitan areas and apart from the food offering which is largely resold by independent
traders into the LSM 3 – 6 markets, all target the LSM 6 – 10 market.
Size of company
Makro comprises 13 warehouse clubs in South Africa and two similar formats in Zimbabwe.
Location
South Africa and Zimbabwe
Managing the Supply Chain

[A] major concern for retailers, [such as Makro] is supply chain management. “The latest SAP
solution allows Makro to highlight a range of its SCM needs,” says Shortt. “The difference in
functionality between the two versions of the software illustrates the strength of the SAP
solution for retail today. “Efficiency is the name of the game in retail and this has been
improved in all areas of Makro’s business – from the supply chain, to the warehouse, to the
store stock controls, the forecasting and even on to the IT department itself. IT staff benefit
from easier administration, fewer support calls and faster database management, so they can
focus on generating value for the business, instead of just being a support desk.”
11
“Another area where there are opportunities to generate further value for the company is
business intelligence. That, along with customer relations management, offers Makro
extensive abilities to improve its business efficiency and service to its customers far into the
future.”
“We are already busy with the third phase of the deployment, which sees these systems
being built on the established platform of the new solution.” From Makro’s viewpoint, the
project started with a focus on risk aversion and mitigation. The new SAP solution that UCS
Solutions has supplied is now providing even greater value and return on the investment
made by Makro.
“Flexibility and a stable platform for future improvements are key elements of the new
solution,” says Schoeman. “We anticipate the new solution will offer the same longevity and
even better value than its predecessor.” (UCS Solutions, n/d).
References
USC Solutions. Not dated. Case study: Makro - Efficiency is the name of the game and Makro
takes it to the highest level with UCS Solutions. [Online] Available from:
http://www.ucs.co.za/images/Case_Studies/Makro_Case_Study.pdf [Accessed: 2015-08-
12].
QUESTION 1
1.1 Makro already has retail outlets in Zimbabwe, but is now considering expanding (28)
its reach to include Namibia as well. As Makro’s supply chain manager, advise
the company on risk management in global supply chains.
The answer to this question can be found in the textbook, Chapter 6 on pages
159 – 163.
Students’ answers should be centred around the ‘Supply chain risks to be
considered during network design’ (Table 6-3), ‘Tailored risk mitigation
strategies during network design’ (Table 6-4) and ‘Flexibility, chaining and
containment’.
12
TRL3709/201
The introduction should provide some background to the topic and indicate what
will be discussed in the rest of the report.
The body should contain the theory on ‘Supply chain risks to be considered
during network design’ (Table 6-3), ‘Tailored risk mitigation strategies during
network design’ (Table 6-4) and ‘Flexibility, chaining and containment’. This
theory should consistently be applied to Makro.
The conclusion should not be too lengthy and should round off the report,
making suggestions appropriate to the Makro case study.
Chopra, S. & Meindl, P. 2015. Supply Chain Management: Strategy, Planning

and Operation. 6th ed. Pearson: England.
Question 1 was evaluated as follows:

(Please note that the rubric was slightly adjusted to accommodate a wider mark
allocation range)
Referencing Referencing Referencing was Referencing was Minor (technical) Referencing was
according to was not attempted; attempted, however error occurred in done correctly.
the Harvard attempted. however errors errors was made in referencing.
method occurred in text either in-text
as well as in the referencing or in
reference list. the reference list
with minor technical
errors.
0 1 2 3 4
Introduction Student did Student Student wrote a Student wrote Student wrote an
not write an attempted to write short introduction, an introduction, introduction and
introduction. an introduction, but the theory was but the theory correctly included
but content was incomplete. lacked depth. all the relevant
not relevant. theory.
0 1 2 3 4
13
Content Content did Student does not Student slightly Student slightly Student fully
not answer understand the understands the understands the understands risk
the question. work; no work; it was work; it was management in
discussion or a explained in briefly global supply
short discussion shallow detail. explained. chains.
was given.
0 1-2 3-4 5-6 7 - 10
Application No attempt A slight attempt An acceptable A good attempt The theory was
was made at was made at attempt was made was made to successfully
applying the applying the to apply the theory apply the theory applied to Makro.
theory to theory to Makro. to Makro. to Makro.
Makro.
0 1-2 3-4 5-6 7-8
Conclusion No A short, irrelevant A comprehensive,
conclusion conclusion was relevant conclusion
was written. written. was written.
0 2 2
Total 28
TOTAL: [28]
QUESTION 2
2.1 Advise Makro on achieving the key three pillars of sustainability in their supply (25)
chain.
The answer to this question can be found in the textbook, Chapter 17 on pages
509 – 512.
Students’ answers should be centred on the three pillars of sustainability,
namely social, environmental and economic.
The textbook focusses more on the social and environmental pillars, so
students may use additional sources to supplement their answers, granted the
content was not directly copied and it was appropriately referenced.
Chopra, S. & Meindl, P. 2015. Supply Chain Management: Strategy, Planning

and Operation. 6th ed. Pearson: England.
TOTAL: [25]
14
TRL3709/201
Both the compulsory assignments will count towards your semester mark, which will contribute


Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE
If your semester mark is 55% and your examination mark is 60%, your final mark
will be calculated as follows:
0,2 x 55 = 11% 0,8 x 60 = 48%
15

 As you are registered in the second semester, you will write the examination in
October/November 2016.
There are old examination papers available on myUnisa under the Official Study Material link.
Please note that Question 3.1 in the May/June 2013 examination paper did not have a question.
Marks were allocated to students who distinguished between the primary and secondary
activities of an airline.
The Tourism Distribution examination paper consists of a two-hour written examination

counting 70 marks. The paper consists of Section A with short questions and Section B with
longer written questions.

70
16
TRL3709/201
Section A comprises of short questions totaling 20 marks. You must answer ALL the
questions in this section.
Section B consists of three questions of which you must answer any two questions totaling
50 marks. Each question will consist of long and short questions. Short questions will include
name, define and describe type questions, long questions will include discuss and explain type
questions. These questions can be asked from a combination of study units.
Please note that only the first two questions will be marked if you answer all three questions
in this section. If you do however answer all three questions please ensure that you cross out
the question that you do not want to be marked. Failing to do so may result in you losing marks.
The examination questions are completely theoretical, with much emphasis on definitions and
terminology. However, where required, you will have to apply the information given to you in
the examination paper practically.
sure that your facts are relevant to the question. Remember that it is not the length (quantity) of
your answer that counts, but the quality of the information that you provide. It is therefore
correctly, since the mark allocation indicates how much information to include in your answer.
For example, if the question is worth five marks, it means that you should provide five valid
points or facts in your answer.
The examination paper consists of questions from all study units. In order to pass the exam, it
is advisable to study the whole study guide and not only your assignments.
listed at the end of each study unit. Also work through the questions in compulsory multiple
17
choice assignment, essay assignment and self-assessment questions at the end of each
study unit carefully. All these activities and assignment questions are valuable for revision
purposes.
2. Do not re-write the question in your answer. It is not necessary and you are wasting your
own time. Avoid doing this at all times.
3. When answering the short questions, look at how many marks are being awarded for
the answer. This is an indication of how many facts your answer should contain. Do not
write half a page in an answer to a question that counts only three marks, for example.
5. When asked to name and describe something, you have to name a fact and give a brief
discussion/description/explanation of that particular fact.
6. When asked to explain, define, describe or discuss something, you have to make use of
full sentences in your answer. Once again, make sure that you are aware of how many
marks the question is worth so that you know how many facts to give.
8. Make sure that you discuss the correct facts in a logical manner in order to achieve the
highest possible mark.
9. Make sure the cover of the scrip is filled in correctly - module code; student number, ID
number.
10. After you have finished writing, please encircle questions you answered on the front.
11. If you completed your answer and on a later stage you remembered more information you
want to add to a particular question, do not add it in small font somewhere else on the
page or try to squeeze it in at the question. Just make a note that your answer continues
on page 8 for example. Make a clear indication.
18
TRL3709/201
12. Please write as neat as possible. It is very difficult to look for marks (if you need some)
when the markers are not capable of reading your handwriting.
©
Unisa 2016
stored in a retrieval system, be transmitted or used in any form or be published, redistributed
or screened by any means (electronic, mechanical, photocopying, recording or otherwise)
without the prior written permission of UNISA. However, permission to use in these ways any
material in this work that is derived from other sources must be obtained from the original
sources.
19
TRL3709/201/1/2019
Logistics Strategy
TRL3709
Semester 1
about your module.
CONTENTS
1 INTRODUCTION ..........................................................................................................................3


TRL3709/201
1 INTRODUCTION
Dear Student
Management are situated in the Samuel Pauw building on main campus.

Tel: (012) 433 4668
examination.
Kind regards,
Mrs Carmen Poole
3


QUESTION 1
1.1 Summarise the decision phases in a supply chain. (6)

 Supply chain strategy or design
 Supply chain planning
 Supply chain operation
awarded per decision phase briefly discussed (one sentence is sufficient).
1.2 For a company to achieve strategic fit, it needs to accomplish three (4)
outcomes. Briefly describe these three outcomes.
 The competitive strategy and all functional strategies must fit together to form a
coordinated overall strategy. Each functional strategy must support other
functional strategies and help a firm reach its competitive strategy goal.
 The different functions in a company must appropriately structure their
processes and resources to be able to execute these strategies successfully.
 The design of the overall supply chain and the role of each stage must be
aligned to support the supply chain strategy.
A full mark is awarded for each action provided above. Two marks for the first one.
TRL3709/201
1.3 There are six drivers of supply chain performance, namely facilities, (10)
inventory, transportation, information, sourcing and pricing. The
components of inventory decisions consist of cycle inventory, safety
inventory, seasonal inventory, level of product availability, and inventory
related metrics. Differentiate between the inventory-related metrics
discussed in Chorpa and Meindl (2016).
 C2C cycle time
 Average inventory
 Inventory turns
 Products with more than a specified number of days of inventory
 Average replenishment batch size
 Average safety inventory
 Seasonal inventory
 Fill rate
 Fraction of time out of stock
 Obsolete inventory
Half a mark was awarded for each inventory-related metric identified, and half a
mark awarded for each inventory-related metric briefly discussed.
1.4 Briefly explain distribution networks in practice. (8)

 The ownership structure of the distribution network can have as big an impact
as the type of distribution network.
 It is important to have adaptable distribution networks.
 Product price, commoditization, and criticality affect the type of distribution
system preferred by customers.
 Integrate the internet with the existing physical network.
Full mark awarded per element identified, and full mark per element explained.
5
1.5 Supply chain network design decisions are classified along four criteria. (4)
Briefly discuss these four criteria.
 Facility role
 Facility location
 Capacity allocation
 Market and supply allocation
Half a mark awarded per criteria identified, half a mark per criteria discussed.
1.6 When a company considers whether they should produce/source their (8)
products offshore, they need to take into account the total cost of offshoring.
Evaluate the impact of offshoring on the eight elements of total cost.
 Supplier price
 Should link costs from direct materials, direct labour, indirect labour,
management, overhead, capital amortization, local taxes, manufacturing
costs, and local regulatory compliance costs.
 Terms
 Costs are affected by net payment terms and volume discounts.
 Delivery costs
 Include in-country transportation, ocean/air freight, destination transport,
and packaging.
 Inventory and warehousing
 Include in-plant inventories, in-plant handling, plant warehouse costs,
supply chain inventories, and supply chain warehousing costs.
 Cost of quality
 Includes cost of validation, cost of performance drop due to poorer quality,
and cost of incremental remedies to combat quality drop.
 Customer duties, value-added tax, local tax incentives
 Cost of risk, procurement staff, broker fees, infrastructure (IT and facilities),
and tooling and mold costs
 Exchange rates trends and their impact on cost
Half a mark awarded per element identified, half a mark per element discussed.
Full marks for the last three.
[40]
TRL3709/201


QUESTION 1
1.1 Local optimisation by different stages of the supply chain or an increase in (25)
information delay, distortion and variability are considered obstacles to
coordination. With this statement in mind, summarise the five obstacles to
The summary should be centred around the following five obstacles:

 Incentive obstacles
 Information-processing obstacles
 Operational obstacles
 Pricing obstacles
 Behavioural obstacles
Roughly five marks per obstacle.
[25]
7
QUESTION 2
Yuppiechef is a business-to-customer (B2C) online shop where customers will

find a wide range of kitchen products. Yuppiechef is revising their transportation
design.
Visit their website (https://www.yuppiechef.com/about-us.htm?ref=footerlink) to
gain a better understanding of the organisation and use the information to
answer the questions below.

(ii) Advise Yuppiechef on making transportation decisions in practice.
[30]
TRL3709/201
according to the though, errors occurred in text as the referencing.
Harvard method well as in the reference list.
0 1 2 3
Introduction Student did not write an introduction to the Student wrote a short introduction to the Student wrote a comprehensive introduction
question. question, but merely mentioned that the to the question and explained that the report
OR report would cover the role of IT in transport would cover the role of IT in transport or
Student wrote a short introduction to the or making transportation decisions in making transportation decisions in practice.
question, but did not refer to the role of IT in practice. The introduction contained a brief overview of
transport or making transportation decisions both.
in practice.
0 1 2
Content Content did not answer the Student does not understand the Student slightly understands the Student fully understands the role
question; the role of IT in role of IT in transport; a short role of IT in transport; it was of IT in transport; it was discussed
transport was not discussed. discussion was given. briefly explained. in detail.
0-1 2-3 4-5 6-7
Content did not answer the Student does not understand Student slightly understands Student fully understands making
question; making transportation making transportation decisions making transportation decisions transportation decisions in
0-2 3-4 5-6 7-8
Application Student did not apply the theory Student incorporated some Student applied most of the Student successfully applied all of
to Yuppiechef. application to Yuppiechef. theory to Yuppiechef. the theory to Yuppiechef.
0 1-2 3-5 6-8
Conclusion Student did not write a conclusion to the Student wrote a short conclusion to the Student wrote a comprehensive conclusion to
question. question but did not succeeded in the question and succeeded in bringing the
successfully bringing the theory and theory and application together successfully.
application together.
0 1 2
Total /30
9
TRL3709/201
QUESTION 3
3.1 Discuss five ways how the use of a third party can increase the supply (10)
chain surplus.
The discussion should be centred around five of the following:

 Capacity aggregation
 Inventory aggregation
 Transportation aggregation by transportation intermediaries
 Transportation aggregation by storage intermediaries
 Warehousing aggregation
 Procurement aggregation
 Information aggregation
 Receivables aggregation
 Relationship aggregation
 Lower costs and higher quality
One full mark awarded for naming each way to increase supply chain surplus,
one mark for each discussion.
TRL3709/201
emissions.
following:
 Cost of administration
 Price volatility
 Emission uncertainty
 New information uncertainty
 Industry competitiveness
 Wealth transfer to energy-exporting countries
 Revenue neutrality
[25]
11


Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE:
0,2 x 55% = 11% 0,8 x 60% = 48%

TRL3709/201

 As you are registered in the first semester, you will write the examination in May/June
2019.
written questions.

SECTION A

SECTION B
70
13
practically.
TRL3709/201
possible mark.
©
Unisa 2019
15
Logistics Strategy
TRL3709
Semester 1
about your module.
CONTENTS
1 INTRODUCTION ............................................................................................................................... 3
2 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 AND 02 ...................................................... 3
2.1 Feedback on compulsory Assignment 01 ......................................................................................... 4

2.2 Feedback on compulsory Assignment 02 ......................................................................................... 5
3 EXAMINATION INFORMATION....................................................................................................... 9
3.1 Examination admission...................................................................................................................... 9

3.2 Examination period .......................................................................................................................... 10
3.3 Examination date ............................................................................................................................. 10
3.4 Previous examination papers .......................................................................................................... 10
3.5 Format of the examination paper .................................................................................................... 10
3.6 Guidelines for the examination........................................................................................................ 11
3.7 Guidelines for answering an examination paper............................................................................. 11
1 INTRODUCTION
Dear Student
Management are situated in the Anton Lembede building on main campus.

Tel: (012) 433 4668
examination.
Kind regards,
Mrs Carmen Poole



QUESTION 1
1.1 Differentiate between the cycle and push/pull views of the supply chain. (3)
Cycle view
✓ The processes in a supply chain are divided into a series of cycles, each
performed at the interface between two successive stages of the supply chain.
Push view
✓ Push processes are initiated and performed in anticipation of customer orders.
Pull view
✓ Pull processes are initiated by a customer order.
A full mark is awarded per view discussed.
1.2 Explain why achieving strategic fit is crucial for a company’s overall (4)
success.
✓ Here, students can give any sensible, relevant explanation based on the theory
in the section below.
A full mark is awarded for each sensible reason provided.
1.3 Discuss three challenges to achieving and maintaining strategic fit. (6)
✓ Increasing product variety and shrinking life cycles
✓ Globalisation and increasing uncertainty
✓ Fragmentation of supply chain ownership
✓ Changing technology and business environment
✓ The environment and sustanability
One mark per challenge identified, one mark per challenge discussed.
1.4 Summarise four information-related metrics that managers should track. (4)
✓ Forecast horizon
✓ Frequency of update
✓ Forecast error
✓ Seasonal factors
✓ Variance from plan
✓ Ration of demand variability to order variability
Half a mark per metric identified, half a mark per metric summarised.
1.5 Explain the concept of “Manufacturer or distributor storage with customer (4)
pickup” as a design option for distribution networks. Provide a local example
(textbook examples will not be accepted).
✓ Refer to theory in textbook.
Three marks theory, one mark for local example.
1.6 Illustrate the four phases in network design decisions. (4)

✓ Phase 1: define a supply chain strategy/design
✓ Phase 2: Define the regional facility configuration
✓ Phase 3: Select a set of desirable potential sites
✓ Phase 4: Location choices
Half mark per phase identified. Two marks for drawing.
[25]
DUE DATE 13 May 2020


QUESTION 1
Shoprite Holdings is the largest supermarket retailer on the African continent.

They have thousands of stores and a network of distribution centres across 15
African countries.
Report on how Shoprite Holdings can manage and mitigate risks in their global
supply chain.
(Question 1 will be evaluated according to the rubric below.) (30)
(Chapter 6, section 6.3, Chopra and Meindl, 2016:159-163). A detailed memo will
not be provided, but you should refer to the rubric below for guidance on how this
question was marked.
[30]
Referencing Referencing was not Referencing was included, though, errors Minor/technical errors occurred in Referencing was done
according to the included. occurred in text as well as in the reference list. the referencing. correctly.
Harvard method 0 1 2 3
Introduction The student did not write an introduction to the The student wrote a short introduction to The student wrote a comprehensive
question. the question, but merely mentioned that introduction to the question and explained that
OR the report would cover the management the report would cover the management and
The student wrote a short introduction to the and mitigation of risks in global supply mitigation of risks in global supply chains. The
question, but did not refer to the management chains.. introduction contained a brief overview of both.
and mitigation of risks in global supply chains.
0 1 2
Content The student did not answer the The student does not understand the The student slightly understands The student fully understands
question; the management of management of risks in global supply the management of risks in the management of risks in
risks in global supply chains chains; a short discussion was given. global supply chains; it was global supply chains; it was
was not discussed. briefly explained. discussed in detail.
0-1 2-3 4-5 6-7
The student did not answer the The student does not understand the The student slightly understands The student fully understands
question; the mitigation of risks mitigation of risks in global supply the mitigation of risks in global the mitigation of risks in
in global supply chains was not chains; a short discussion was given. supply chains; it was briefly global supply chains; it was
discussed. explained. discussed in detail.
0-2 3-4 5-6 7-8
Application The student did not apply the The student incorporated some The student applied The student successfully applied all of the
theory to Shoprite Holdings. application to Shoprite Holdings. most of the theory to theory to Shoprite Holdings.
Shoprite Holdings.
0 1-2 3-5 6-8
Conclusion The student did not write a The student wrote a short conclusion to the The student wrote a comprehensive conclusion to the
conclusion to the question. question but did not succeeded in successfully question and succeeded in bringing the theory and
bringing the theory and application together. application together successfully.
0 1 2
Total /30
QUESTION 2
2.1 Discuss supply chain coordination and the bullwhip effect. (10)
Ten marks theory.
emissions.
following:
✓ Cost of administration
✓ Price volatility
✓ Emission uncertainty
✓ New information uncertainty
✓ Industry competitiveness
✓ Wealth transfer to energy-exporting countries
✓ Revenue neutrality
[25]


Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE:
0,2 x 55% = 11% 0,8 x 60% = 48%


• As you are registered in the first semester, you will write the examination in May/June
2020.
written questions.

SECTION A

SECTION B
70
practically.
possible mark.
©
Unisa 2020
TRL3709/201/2/2017
Logistics Strategy
TRL3709
Semester 2

about your module.
Open Rubric
CONTENTS
1 INTRODUCTION ..........................................................................................................................3

2.2 Feedback on compulsory Assignment 02.................................................................................... 10

2
TRL3709/201
1 INTRODUCTION
Dear Student
or wish to make an appointment to see me. Please note that the Department of
Entrepreneurship, Supply Chain, Transport, Tourism and Logistics Management moved to a
new building in Hazelwood, called Club One (corner of Dely and Albert Streets).

Tel: (012) 433 4668
If you are not a member of Unisa’s online learning community yet, please register to become a
member of myUnisa as soon as possible! I use this website to communicate important
myUnisa will give you access to all the online study material for the module. Remember that
you can use the myUnisa’s discussion forum to discuss difficult topics with your fellow
students.
examination.
Kind regards,
Mrs Carmen Poole
3
DUE DATE 10 August 2017

1. The module code for Logistics Strategy is ... (1)

[1] TRT3709.
[2] TRL3709.
[3] TRT3707.
[4] TRL3707.
2 is the correct answer and can be found in the Tutorial Letter 101.
2. How many learning units do you have to study for the module TRL3709? (1)
[1] 1
[2] 9
[3] 10
[4] 11
[2] Tutorial letter 201
[3] FAQs tab on myUnisa
[4] Additional Resources tab on myUnisa
4
TRL3709/201

[3] consult the Study @ Unisa brochure.
[4] contact the Department of Entrepreneurship, Supply Chain, Transport
Economics, Tourism and Logistics Management.
5. Which of the following statements is correct? (1)

[1] A firm may choose to build a flexible global supply chain even in the
presence of little demand or supply uncertainty if certainty exists in
exchange rates or prices.
[2] The degree of demand and price uncertainty has a significant
influence on the appropriate portfolio of long- and short-term
warehousing space that a firm should carry.
[3] Appropriate flexibility is an effective approach for a global supply chain to
deal with a variety of risks and uncertainties. Extra flexibility is always
worth the cost.
[4] When faced with uncertain conditions, it is always best to sign long-term
contracts (because they are typically cheaper) and avoid all flexible
capacity (because it is more expensive).
2 is the correct answer and can be found in Learning Unit 6 (Chopra & Meindl,
2016:154-181)
5
6. What type of network is this design? (1)
[1] Chained network with two long chains

[2] Chained network with one long chain
[3] Fully flexible network
[4] Dedicated network
2016:162)
7. Decisions made during the supply chain design phase regarding significant (1)
investments in the supply chain, such as the number and size of plants to build,
the number of trucks to purchase or lease, and whether to build or lease
warehouse space …
[1] are irrelevant regarding how the supply chain will compete.
[2] are the only consideration regarding how the supply chain will compete.
[3] have little impact on how the supply chain must compete.
[4] define the boundaries within which the supply chain must compete.
2016:120-153)
8. Which of the following statements is incorrect? (1)

[1] Supply chain coordination improves if all stages of the chain take actions
that are aligned and together increase total supply chain surplus.
[2] Incentive obstacles refer to situations where incentives offered to different
stages or participants in a supply chain lead to actions that increase
variability and reduce total supply chain profits.
[3] Tying allocation to past sales removes any incentive a retailer may have to
inflate orders, as a result, dampening the bullwhip effect.
[4] The bullwhip effect enables different stages of the supply chain to
have a consistent estimate of what demand looks like.
6
TRL3709/201
2016:261)
9. Situations where incentives offered to different stages or participants in a supply (1)

chain lead to actions that increase variability and reduce total supply chain profits
are referred to as …
[1] incentive obstacles.
[2] information processing obstacles.
[3] behavioural obstacles.
[4] information processing obstacles.
2016:264)
10. Which method would serve to reduce the information distortion in a supply chain (1)
consisting of a fabricator, manufacturer, supplier, and a retailer?
[1] Make the supplier responsible for all decisions regarding product
[2] Make the customer responsible for all decisions regarding product
[3] Make the manufacturer responsible for all decisions regarding
product inventories at the retailer.
[4] Make both the fabricator and retailer responsible for all decisions regarding
product inventories at the retailer.
2016:268-269)
11. Transportation plays a key role in every supply chain because … (1)
[1] products are rarely produced and consumed in the same location.
[2] transportation is not a factor in determining profitability.
[3] products are normally produced and consumed in the same location.
[4] the cost of transportation is inconsequential.
2016:412)
7
12. Which of the following uses transportation to minimise the total cost (1)
(transportation, inventory, information, and facility) while providing an appropriate
level of responsiveness to the customer?
[1] The carrier
[2] The manufacturer
[3] The supplier
[4] The shipper
2016:413)
13. A contract that is used to induce performance improvement from a supplier along (1)
dimensions, such as lead time, where the benefit of improvement accrues
primarily to the buyer, whereas the effort for improvement comes primarily from
the supplier is a …
[1] revenue-sharing contract.
[2] quantity flexibility contract.
[3] shared savings contract.
[4] buyback or returns contract.
2016:470)
14. ………. continues to be one of the biggest challenges to improved supply chain (1)
sustainability.
[1] Reducing packaging
[2] Water consumption
[3] Waste generation
[4] Good information
2016:515)
8
TRL3709/201
15. Under a carbon tax system, the price of emissions is … (1)

[1] the tax rate set directly by the regulatory authority.
[2] agreed upon by all firms competing for the same pool of customers.
[3] decided by the emitters.
[4] determined by the fraction of total carbon assignable to the company.
2016:518)
SEMESTER 2 ASSIGNMENT 1 TOTAL: [15]
9


QUESTION 1
What is the bullwhip effect and how does it relate to a lack of coordination in a (3)
supply chain?
 The bullwhip effect is one outcome of the lack of supply chain coordination.
 The bullwhip effect distorts demand information within the supply chain, with
each stage having a different estimate of what demand looks like.
 The bullwhip effect causes increased fluctuations in orders as they move up
the supply chain from retailers to wholesalers to manufacturers to suppliers.
Learning Unit 7, Chopra & Meindl (2016:261)
QUESTION 2
In what way can improper incentives lead to a lack of coordination in a supply (10)
chain? What countermeasures can be used to offset this effect?
 Incentive obstacles occur in situations when incentives offered to different
stages or participants in a supply chain lead to actions that increase variability
and reduce total supply chain profits.
 Local optimization within functions or stages of a supply chain
 Incentives that focus only on the local impact of an action result in
10
TRL3709/201
decisions that do not maximise total supply chain surplus.

 For example, if the compensation of a transport manager is at a firm is
linked to the average transport cost per unit, the manager is likely to use
actions that lower transport costs, even if they raise inventory costs, or hurt
customer service.
 It is natural for any participant in the supply chain to take actions that
optimise performance measures along which they are evaluated. Buying
decisions based on maximising profits at a single stage of the supply chain
lead to ordering policies that do not maximise supply chain profits.
 Sales force incentives

 Improperly structured sales force incentives are a significant obstacle to
 In many firms, sales force incentives are based on exceeding sales
thresholds during an evaluation period of a month or a quarter.
 The sales typically measured by a manufacturer are the quantity sold to
distributors or retailers (sell-in),
 not the quantity sold to final consumers (sell-through).
 Measuring performance based on sell-in is often justified on the grounds
that the manufacturer’s sales force does not control sell-through.
 A sales force incentive based on sell-in results in order variability being
larger than customer demand variability because the sales force tends to
push products toward the end of the incentive period.
Learning Unit 7, Chopra & Meindl (2016:264)
QUESTION 3
What problems result if each stage of a supply chain views its demand as the (15)
orders placed by the downstream stage? How should firms within a supply chain
communicate to facilitate coordination?
 Information-processing obstacles occur when demand information is distorted
as it moves between different stages of the supply chain, leading to increased
variability in orders within the supply chain.
 Forecasting based on orders and not customer demand
 When stages within a supply chain make forecasts that are based on
11
orders they receive, any variability in customer demand is magnified as
orders move up the supply chain to manufacturers and suppliers.
 In supply chains where the fundamental means of communication among
different stages are the orders that are placed, information is distorted as it
moves up the supply chain.
 Each stage views its primary role within the supply chain as one of filling
orders placed by its downstream partner.
 Thus, each stage views its demand as the stream of orders received and
produces a forecast based on this information.
 In such a scenario, a small change in customer demand becomes
magnified as it moves up the supply chain in the form of customer orders.
 Consider the impact of a random increase in customer demand at a
retailer.
 The retailer may interpret part of this random increase as a growth trend.
 This interpretation will lead the retailer to order more than the observed
increase in demand because the retailer expects growth to continue into
the future and thus orders to cover for future anticipated growth.
 The increase in the order placed with the wholesaler is thus larger than the
observed increase in demand at the retailer. Part of the increase is a one-
time increase. The wholesaler, however, has no way to interpret the order
increase correctly.
 The wholesaler simply observes a jump in the order size and infers a
growth trend.
 The growth trend inferred by the wholesaler will be larger than that inferred
by the retailer (recall that the retailer increased the order size to account for
future growth).
 The wholesaler will thus place an even larger order with the manufacturer.
 As we go further up the supply chain, the order size is magnified.
 When periods of random increase are followed by periods of random
decrease, the retailer will anticipate a declining trend and reduce order
size.
 This reduction will also become magnified as it moves up the supply chain.
Chapter 10 (Chopra & Meindl, 2016:264-265)
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TRL3709/201
QUESTION 4
What modes of transportation are best suited for large, low-value shipments? (5)
Why?
 Rail
 The price structure and heavy load capabilities make rail an ideal mode for
carrying large, heavy, or high-density products over long distances.
 Transportation time by rail, however, can be long. Rail is thus ideal for
heavy, low-value shipments that are not time-sensitive.
 Water
 Water is ideally suited for carrying large loads at a low cost.
Rail and water Chapter 14 (Chopra & Meindl, 2016:416-417)
QUESTION 5
An auto manufacturer sources both office supplies and subsystems such as (7)
seats. What, if any, difference in sourcing strategy would you recommend for the
two types of products?
 Subsystems are direct materials, used to make finished goods.
 Given the direct link to production, suppliers for direct materials should be
selected based on their ability to collaborate and coordinate across the
supply chain.
 Collaboration is important at both the design and production phases.
 Collaboration during design can help reduce component costs, whereas
collaboration during production can help improve coordination of the supply
chain through improved planning and visibility.
 Office supplies are indirect materials, used to support the operations of a

firm.
 Indirect materials are often a small fraction of the money spent by a firm but
can represent a big headache for procurement department.
 The purchase of indirect materials typically involves many transactions with
each transaction being small.
 Each transaction can be costly because of the difficulty of selecting goods,
getting approval, and creating and sending a purchase order.
13
 Suppliers for indirect material should thus be selected based on their ability
to simplify each transaction.
QUESTION 6
Study the CSR report for Woolworths. (Available from: http://www. (30)
woolworthsholdings.co.za/investor/annual_reports/ar2015/whl_2015_gbj.pdf).
Identify actions across a few supply chain drivers that have improved
sustainability. Identify actions across a few supply chain drivers that have
improved sustainability. Which areas has the company found challenging to
improve?
Refer to the evaluation rubric on the next page.
The answer to this question can be found in the textbook, Chapter 17 (Chopra &
Meindl, 2016:512-516)
Students’ answers should be centred on the theory about sustainability and
supply chain drivers, namely facilities, inventory, transportation, sourcing,
information and pricing.
[25]
14
TRL3709/201
Question 6 will be evaluated according to the following rubric:

Referencing Referencing Referencing was Referencing was Minor (technical) Referencing was
according to was not attempted; attempted, error occurred in done correctly.
the Harvard attempted. however errors however errors referencing.
method occurred in text was made in
as well as in the either in-text
reference list. referencing or in
the reference list
with minor
technical errors.
0 1 2 3 4
Introduction Student did not Student Student wrote a Student wrote an Student wrote an
write an attempted to short introduction, but introduction and
introduction. write an introduction, but the theory correctly
introduction, but the theory was lacked depth. included all the
content was not incomplete. relevant theory.
relevant.
0 1 2 3 4
Content Content did not Student does not Student slightly Student slightly Student fully
answer the understand the understands the understands the understands risk
question. work; no work; it was work; it was management in
discussion or a explained in briefly explained. global supply
short discussion shallow detail. chains.
was given.
0 1-2 3-4 5-6 7 - 10
Application No attempt A slight attempt An acceptable A good attempt The theory was
was made at was made at attempt was was made to successfully
applying the applying the made to apply apply the theory applied to
theory to theory to the theory to to Woolworths. Woolworths.
Woolworths. Woolworths. Woolworths.
0 1-2 3-4 5-6 7-8
Conclusion No conclusion A short, A
was written. irrelevant comprehensive,
conclusion was relevant
written. conclusion was
written.
0 1-2 3-4
Total: 30
15


Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE:
0,2 x 55% = 11% 0,8 x 60% = 48%

16
TRL3709/201

 As you are registered in the second semester, you will write the examination in
written questions.

SECTION A

SECTION B
70
17
practically.
18
TRL3709/201
possible mark.
©
Unisa 2017
19
TRL3709/201/2/2020
Logistics Strategy
TRL3709
Semester 1
about your module.
Open Rubric
CONTENTS
1 INTRODUCTION ............................................................................................................................ 3
2 FEEDBACK ON COMPULSORY ASSIGNMENTS 01 AND 02 .................................................... 4
2.1 Feedback on compulsory Assignment 01 ....................................................................................... 4

2.2 Feedback on compulsory Assignment 02 ....................................................................................... 6
3 EXAMINATION INFORMATION .................................................................................................... 9
3.1 Examination admission ................................................................................................................... 9

3.2 Examination period ....................................................................................................................... 10
3.3 Examination date .......................................................................................................................... 10
3.4 Previous examination papers ....................................................................................................... 10
3.5 Format of the examination paper .................................................................................................. 10
3.6 Guidelines for the examination ..................................................................................................... 11
3.7 Guidelines for answering an examination paper........................................................................... 11
2
TRL3709/201/2/2020
1 INTRODUCTION
Dear Student
Management are situated in the Anton Lembede building on main campus.

Tel: (012) 433 4668
examination.
Kind regards,
Mrs Carmen Poole

I have marked as I will be marking in the exam. This means you received half marks for
answers copied directly from the textbook (or any other source) even if it is referenced, and
half marks for half answers.
QUESTION 1
1.1 Identify the three key supply chain decision phases and briefly discuss each (6)
one.
✓ Supply chain strategy or design
✓ Supply chain planning
✓ Supply chain operation
awarded per decision phase briefly discussed in student’s own words.
1.2 Customer demand from different segments varies along with several (3)
attributes. Discuss the customer needs in terms of the variety of products
needed, the service level required and the price of the product.

Full mark per attribute discussed in student’s own words.
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TRL3709/201/2/2020
1.3 Differentiate between cycle, safety and seasonal inventory. Provide your own (6)
examples of each (textbook examples will not be accepted).

Full mark per inventory type discussed in student’s own words. One mark for
student’s own, relevant example.
1.4 Summarise four pricing-related metrics that managers should track. (4)
✓ Profit margin
✓ Days sales outstanding
✓ Incremental fixed cost per order
✓ Incremental variable cost per order
✓ Average sale price
✓ Average order size
✓ Range of sale price
✓ Range of periodic sales
Half a mark per metric identified, half a mark per metric summarised in student’s
own words.
1.5 Briefly explain the impact of online sales on the cost of inventory, facilities, (4)
transportation and information.

One mark per impact category explained in student’s own words.
1.6 Discuss how local political factors could influence a firm’s network design (2)
decisions.
Learning Unit 5 (Chapter 5, section 5.2) (Chopra & Meindl, 2016:124).

Two marks theory for political factors discussed in student’s own words.
[25]


This means that you were still required to answer all the questions. Even though only one or
two questions were marked, you receive feedback on all the questions. Please note that
feedback does not entail a detailed memo of an exact answer to each question. This feedback
is more on the theory and how you should have approached the questions.
answers provided exactly as in the textbook, or any other source.
QUESTION 1
1.1 Supply chain coordination improves if all stages of the supply chain take (14)
actions that are aligned and increase total supply chain surplus. Discuss
how a company can achieve coordination in practice.
Learning Unit 7 (Chapter 10, section 10.7, Chopra & Meindl, 2016:277-278).
A detailed memo will not be provided.
Two marks per action discussed in student’s own words.
1.2 Sustainability has become a key priority in the design and operation of (11)
supply chains in the twenty-first century. For individuals and firms to focus
on sustainability, they need to internalise the monetary value of the social
or environmental cost of their actions.
Considering the above statement, discuss the pricing of emissions that

firms may incur.
(Chapter 17, section 17.6, Chopra & Meindl, 2016:517-519).
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TRL3709/201/2/2020
Four marks for a general discussion in student’s own words. Seven marks for the
seven emission pricing mechanisms discussed in student’s own words.
A detailed memo will not be provided.
[25]
QUESTION 2
Shoprite Holdings is the largest supermarket retailer on the African continent.

They have thousands of stores and a network of distribution centres across 15
African countries. Answer the questions below.

(ii) Advise Shoprite Holdings on making transportation decisions in practice.
[30]
according to the though, errors occurred in the the referencing.
Harvard method text as well as in the reference
list.
0 1 2 3
Introduction The student did not write an introduction to The student wrote a short introduction to the The student wrote a comprehensive
the question. question, but merely mentioned that the introduction to the question and explained
OR report would cover the role of IT in transport that the report would cover the role of IT in
The student wrote a short introduction to the or making transportation decisions in transport or making transportation decisions
question, but did not refer to the role of IT in practice. in practice. The introduction contained a brief
transport or making transportation decisions overview of both.
in practice.
0 1 2
Content The student did not answer the The student does not understand The student slightly understands The student fully understands the
question; the role of IT in the role of IT in transport; a short the role of IT in transport; it was role of IT in transport; it was
transport was not discussed. discussion was given. briefly explained. discussed in detail.
0-1 2-3 4-5 6-7
The student did not answer the The student does not understand The student slightly understands The student fully understands
question; making transportation making transportation decisions making transportation decisions making transportation decisions in
0-2 3-4 5-6 7-8
Application The student did not apply the The student incorporated some The student applied most of the The student successfully applied
theory to Shoprite Holdings. application to Shoprite Holdings. theory to Shoprite Holdings. all of the theory to Shoprite
Holdings.
0 1-2 3-5 6-8
Conclusion The student did not write a conclusion to the The student wrote a short conclusion to the The student wrote a comprehensive
question. question but did not succeeded in conclusion to the question and succeeded in
successfully bringing the theory and bringing the theory and application together
application together. successfully.
0 1 2
Total /30
8
TRL3709/201/2/2020


Semester Mark 20%
Final Mark 100%
pass the subject.
EXAMPLE:
0,2 x 55% = 11% 0,8 x 60% = 48%


• As you are registered in the second semester, you will write the examination in
The Logistics Strategy examination paper consists of a two-hour online written examination
counting 70 marks. The paper consists of Section A with short questions and Section B with
longer written questions.

SECTION A

SECTION B
70
10
TRL3709/201/2/2020
The examination questions are theoretical, however, where required, you will have to apply the
information given to you in the examination paper practically.
study unit.
possible mark.
©
Unisa 2020
12
TRL3709/201/3/2021

Logistics Strategy
TRL3709
Semesters 1 and 2
DEPARTMENT OF APPLIED MANAGEMENT
This tutorial letter contains the answers to both assignements.
BARCODE
Open Rubric
CONTENTS
Page
1 INTRODUCTION ............................................................................................................................ 3
2 GUIDELINES FOR ANSWERING ASSIGNMENT 01 .................................................................... 3
3 GUIDELINES FOR ANSWERING ASSIGNMENT 02 .................................................................... 8
4 SEPTEMBER/OCTOBER/NOVEMBER/DECEMBER EXAMINATION PERIOD ........................ 12
5 CONCLUDING REMARKS .......................................................................................................... 13
2
TRL3709/201/3/2021
Dear Student
1 INTRODUCTION
Remember there is only one semester and one tuition and assessment period in 2021.
Therefore, this tutorial letter contains the answers to Assignment 01 and 02, which were the
same for all.
2 GUIDELINES FOR ANSWERING ASSIGNMENT 01

The answer below is not a model answer. It is only a guideline to indicate which aspects you
were expected to include in the discussion of your assignment.
Although the answers may vary among students, an answer will still be correct and acceptable
as long as the reasoning is sound and covers the crux of the question. You needed first to study
the relevant theory in the study material and then apply it to the scenarios at hand. You can use
the theory as a basis to explain the appropriate citation in the scenario, as long as the answers
are in your own words. You can use underlining or markers to highlight certain important words
or main concepts.
General note: When you answer any assessment questions, note the verb since it will indicate
the expected detail and structure of your answer. In addition, the marks allocated to a question
will guide you regarding the time you should spend on the question and the required detail.
ASSIGNMENT QUESTIONS 30 MARKS
1. You grow your own herbs on a smallholding in KwaZulu-Natal. You supply herbs to a
company that produces a range of herbs, spices, sauces and stocks, and then sells it
further. Draw a basic supply chain indicating the major role players in your herb
supply chain with relevant examples from the above-mentioned scenario. (6).
Refer to Learning Unit 1 (Chapter 1, section 1.1) (Chopra & Meindl, 2016:15 or Chopra,
2019:16).
3
Final Manu-
customer facturer
(√) (√)
Retailer Whole-
saler (√)
(√)
(√) (√) (Drawing)
Mark allocation: The drawing should be based on Figure 1-2. The student needs to identify
any reasonable participant per stage. The above is an example. One mark per block
(containing both theory and example), except supplier block (this answer was given) and two
marks for the drawing.
Please note that the drawing should be done by the student – no marks for Google
images.
Total marks: 6 marks
2 You are a work at home mom or dad (WAHM or WAHD) who produces cloth diapers
and certain clothing items on a small scale. Answer the following questions:
Refer Learning Unit 2 (Chapter 2, section 2.2) (Chopra & Meindl, 2016:35-36 or Chopra,
2019:36-39)
i) Differentiate between demand uncertainty and implied demand uncertainty. (2)
Demand uncertainty reflects the uncertainty of customer demand for a product. (√)
Implied demand uncertainty is the resulting uncertainty for only the portion of demand that the
supply chain plans to satisfy based on the attributes the customer desires. (√)
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TRL3709/201/3/2021
Mark allocation: no marks for answers copied from the prescribed book or any other sources.
Answers should be in students’ own words. One mark per concept.
ii) You realise that there is more interest in children’s clothing than in adult clothing, so
you have decided to discontinue your adult items. How does this affect the implied
demand uncertainty of your products? Motivate your answer.
Decreases implied demand uncertainty (√)

Reasons: Variety of products required decreases (√)
because demand per product becomes more predictable. (√)
Answers should be in students’ own words. One mark for indicating decrease, and one
mark for correct motivation.
Total marks: any 2 marks
iii) You noticed that more orders are coming in, as there has been a move to support
small local businesses. Based on this, you decided to employ someone to help with
the manufacturing of the products, which also means the product is completed
faster. How does this scenario affect the implied demand uncertainty of your
product? Motivate your answer. (4)
Change: Range of quantity required increases – increases implied demand uncertainty (√)
Motivation - because a broader range of quantity required implies greater variance in demand.
(√)
Change: Lead time decreases – increases implied demand uncertainty, (√)
Motivation - because there is less time in which to react to orders. (√)
Answers should be in students’ own words. One mark for indicating each change (there are
two) causes an increase, one mark for each motivation
5
3. With regards to information as a supply chain driver, summarise the enabling
technologies that managers can use in their supply chain. (5)
Refer to Learning Unit 3. However, this question tests the student’s knowledge and insight
regarding various information technologies available to be used in a supply chain. Students
might need to use the Internet in obtaining the answers.
Students’ answers could include the following:

Electronic data exchange (ED) (√)
The Internet (√)
Enterprise resource planning (ERP) (√)
Supply chain management software (√)
Radio Frequency Identification (√)
Block chain (√)
Cloud (√)
AI (√)
Answers should be in students’ own words. Half marks if students listed the answers;
they need to briefly summarise each available ‘tool’ for one mark. One mark for both
identifying and providing a brief summary.
4. Discuss the relationships between the desired response time and the number of
facilities. (4)
Refer to Learning Unit 4 (Chapter 4, section 4.2) (Chopra & Meindle, 2016:84 or Chopra, 2019:
85-86).
Short response time (√) near customers = many facilities (√)
Long response time (√) = few facilities (√)
Answers should be in students’ own words. One mark for identifying the response time and
one for indicating the facilities. No marks for increased transportation costs, or inventory costs
6
TRL3709/201/3/2021
etc. as this question was only about the response time (long, or short, not increase or
decrease) and the facilities.
5 Explain how the global Covid-19 outbreak (as a macroeconomic factor) has
influenced network design decisions. (7)
Refer to Unit 5 (Chapter 5, section 5.2 (Chopra & Meindl, 2016:122-124 or Chopra, 2019:122-
124). However, to be able to answer this question, students need to do a bit of research.
Students’ answers could have covered the following with examples from any relevant sources:
Macroeconomic factors are:
Taxes and tax incentives (√)

Exchange rate and demand risks (√)
Freight and fuel cost (√)
Political factors (√)
Infrastructure factors (√)
Competitive factors (√)
Answers should be in students’ own words. Students need to reference the source
which was used in answering question 5. No referencing in the text – half a mark. If the
answer was list as above – half a mark.
Total marks: any 7 relevant issues/impacts.
7
3 GUIDELINES FOR ANSWERING ASSIGNMENT 02
Assignment 02, together with Assignment 01, contributes to your year mark. As mentioned in
tutorial letter 001, assignment 02 will be partially marked. We decided on Question 2, as it is an
excellent question to practice your writing skills.
QUESTION 1 25 MARKS
1.1 The Covid-19 pandemic has given rise to a very uncertain environment, especially
with regards to international trade (global supply chains). Under this uncertainty,
explain how a company that imports the majority of its products should go about
making supply chain decisions. (12)
Refer to Learning Unit 6 (Chapter 6, 6.7) (Chopra & Meindl, 2016:180-181). Please note that
this section is not in the 2019 edition.
The answer should cover the following:
Combine strategic planning and financial planning during global network design (√) (√) +
relevant application
Use Multiple metrics to evaluate global supply chain networks. (√) (√) + relevant application
Use financial analysis as an input to decision making, not as the decision-making process (√)
(√) + relevant application
Use estimates along with sensitivity analysis (√) (√) + relevant application
(please note that for listing half a mark)
Answers should be in students’ own words. Eight marks for the theory and four marks
for application.
8
TRL3709/201/3/2021
1.2 You, are a small-scale grower of fresh fruits and vegetables, found that you had a
particularly good crop during the last harvest. You harvested a total of 25% more
than the previous year. The problem is that the grocery chain you sell to only put in
an order for the same amount as the previous year. You decide to strike a bargain
with them where they pay a slightly lower price per item, in exchange for taking more
of your stock. The grocery chain did not communicate this change to their individual
retail shop owners/managers. Explain the effect of the lack of coordination on the
performance of each retailer. Include an introduction and conclusion. (13)
Refer to Learning Unit 7 (Chapter 10, section 10.2) (Chopra & Meindl, 2016:262 -263 or
Chopra, 2019:260 – 261).
Introduction
What you are going to discuss regarding the effect of the lack of coordination on the
performance of each retailer. (half mark)
Effect and lack of coordination
Manufacturing costs – does not increase in the case (√) + application (√)
Inventory costs – increases (√) + application (√)
Replenishment lead time – increase (√) + application (√)
Transportation costs – increase (√) + application (√)
Labour cost for shipping and receiving – increase (√) + application (√)
Level of product availability - increase in this instance (√) + application (√)
Relationships across the supply chain – negative impact (√) + application (√)
Conclusion
What you have discussed and the results. (half mark)
9
Answers should be in students’ own words.
QUESTION 2 33 MARKS
Report on the decisions on in-housing or outsourcing faced by many companies during

this time of COVID-19, making use of theory from the prescribed textbook and examples
from the PWC report.
To be able to answer Question 2, students need to download the article via the link that was
provided.
Refer to Learning Unit 9 (Chapter 15, section 15.2). (Chopra & Meindl, 2016:447–453 or
Chopra, 2019:442-445).
A detailed memo will not be provided as it was marked according to the rubric on the next page.
Use the rubric for guidance to see how this question was marked. In cases where the content
was copied directly from the prescribed book or any other sources, no marks were awarded.
10
TRL3709/201/3/2021
Referencing Referencing was not included. Referencing was included, though, Minor/technical errors occurred in Referencing was done
according to the errors occurred in the text as well as the referencing. correctly.
Harvard method in the reference list.
0 1 2 3
Introduction The student did not write an introduction to the The student wrote a short The student wrote a comprehensive introduction to
question. OR introduction to the question but the question and explained that the report would
merely mentioned that the report cover the decision to in-house or outsource. The
The student wrote a short introduction to the would cover the decision to in- introduction contained a brief overview of the sub-
question but did not refer to the decision to in- house or outsource. topics to be discussed.
house or outsource.
0 1 2
Content The student did not answer the The student does not understand The student slightly understands The student fully understands
question; how third parties how third parties increase the how third parties increase the how third parties increase the
increase the supply chain supply chain surplus was; a short supply chain surplus was; it was supply chain surplus was; it was
surplus was not discussed. discussion was given. briefly explained. discussed in detail.
0-2 3-5 6-8 9-10
The student did not answer the The student does not understand The student slightly understands The student fully understands
question; the risks of using a the the risks of using a third the risks of using a third party; it the risks of using a third party; it
third party was not discussed. party; a short discussion was was briefly explained. was discussed in detail.
given.
0-2 3-4 5-6 7-8
Application The student did not apply the The student incorporated some The student applied most of The student successfully applied all of
COVID-19. application to COVID-19. the theory to COVID-19. the theory to COVID-19.
0 1-2 3-5 6-8
Conclusion The student did not write a The student wrote a short conclusion to the The student wrote a comprehensive conclusion to
conclusion to the question. question but did not succeed in successfully the question and succeeded in bringing the theory
bringing the theory and application together. and application together successfully.
0 1 2
Total /33
11
4 SEPTEMBER/OCTOBER/NOVEMBER/DECEMBER EXAMINATION PERIOD
Please note that the examination will be online.
As the examination will be conducted online, you will have access to your study material (and
other sources of information) during the examination session. This does not, however, mean
that you should not prepare for the examination. Remember that your time is limited. If
you are not well prepared, you will struggle to find the information needed to answer the
examination questions. While there will be a theoretical component to the questions assessing
your knowledge of the subject matter, the main aim of the assessment will be to test your
understanding of the material. You will therefore be required to apply your knowledge to
practical scenarios (similar to the approach that was followed in Assignment 01). Merely copying
information from your study material will not be sufficient. You will obtain a zero mark if you
copy and paste the answers from your study material. All the prescribed material will be covered
in the examination.
The examination will be conducted as a portfolio examination based

on an examination question paper.
Format of the
examination paper The examination will be managed on the myExams platform.
https://myexams.unisa.ac.za/portal
Date of the
To be announced*
examination
Duration of the
3 hours
examination
Format of the The examination paper will consist of essay-type/case study
questions questions.
Number of
The examination paper will consist of three compulsory questions
questions to be
which will range from 2 to 30 marks. There will be no elective
answered by
questions.
students
Total number of 80 marks
12
TRL3709/201/3/2021
marks for the paper
*IMPORTANT: Please verify the date and time on your examination timetable. The lecturer
cannot be held responsible if you misread the examination timetable. Also note that the
exam is scheduled on South African Standard Time. If you are taking the online
assessment abroad, ensure that you log in at the correct South African time.
5 CONCLUDING REMARKS
I trust that the above guidelines will assist you in evaluating your answers for Assignments 01
and 02, and that this tutorial letter will give you an indication of the format you can expect in the
examination. I wish you every success in your studies. Please contact me (trolleg@unisa.ac.za)
if you encounter any problems with the content of the module. Communicate with the relevant
administrative sections for any other inquiries. Best wishes for your examination preparation.
Kind regards
EG Trollip
DEPARTMENT OF APPLIED MANAGEMENT

UNISA
HOPOLA, KHUMBULA, TSUNDZUKA, ONTHOU

(Remember):
Remember to log on to myUnisa check for new announcements.
We are halfway there!
Time to start prepping for your exams!
Good luck and ask your lecturer to assist you if you need help!
©
Unisa 2021
13
SEMESTER 1 ASSIGNMENT 1
QUESTION 1
1.1 Differentiate between the cycle and push/pull views of the supply chain. (3)
Cycle view
✓ The processes in a supply chain are divided into a series of cycles, each
performed at the interface between two successive stages of the supply chain.
Push view
✓ Push processes are initiated and performed in anticipation of customer orders.
Pull view
✓ Pull processes are initiated by a customer order.
A full mark is awarded per view discussed.
1.2 Explain why achieving strategic fit is crucial for a company’s overall success. (4)
✓ Here, students can give any sensible, relevant explanation based on the theory
in the section below.
A full mark is awarded for each sensible reason provided.
1.3 Discuss three challenges to achieving and maintaining strategic fit. (6)
✓ Increasing product variety and shrinking life cycles
✓ Globalisation and increasing uncertainty
✓ Fragmentation of supply chain ownership
✓ Changing technology and business environment
✓ The environment and sustanability
One mark per challenge identified, one mark per challenge discussed.
1.4 Summarise four information-related metrics that managers should track. (4)
✓ Forecast horizon
✓ Frequency of update
✓ Forecast error
✓ Seasonal factors
✓ Variance from plan
✓ Ration of demand variability to order variability
Half a mark per metric identified, half a mark per metric summarised.
1.5 Explain the concept of “Manufacturer or distributor storage with customer (4)
pickup” as a design option for distribution networks. Provide a local example
(textbook examples will not be accepted).
✓ Refer to theory in textbook.
Three marks theory, one mark for local example.
1.6 Illustrate the four phases in network design decisions. (4)

✓ Phase 1: define a supply chain strategy/design
✓ Phase 2: Define the regional facility configuration
✓ Phase 3: Select a set of desirable potential sites
✓ Phase 4: Location choices
Half mark per phase identified. Two marks for drawing.
[25]

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T R L 3 7 0 9 | Summary Accuracy of this Docu men t is Not ens ure d P age |1

AUTHOR'S NOTE (A/N):

The document was compiled

o Mainly using summaries received from other students

This means that

o This is not a Scope / Guide / Memo and may contain errors

PART 1: BUILDING A STRATEGIC FRAMEWORK

Component / Raw Wholesalers /

Info, Funds and Products Flows/Move along SC

1.2 SC Objective: to generate & grow overall value/surplus TB p15

1.3 Importance of Supply Chain Decisions TB p17

1.4 Three Decision Phases in a Supply Chain TB p18

Supply Chain Strategy (Design)

Supply Chain Planning (Function)

Supply Chain Operation

3. Distributor 2. Buyer Stage Places 5. Buyer Stage

Procurement Cycle 3. Supplier Stage 4. Supplier Stage

o Push processes are initiated & performed in anticipation of customer orders

1.5.3 Macro Processes

Self-assessment SG p4 & Discussion Questions TB p29

Step 1: Step 2: Step 3:

STEP 1: UNDERSTANDING THE CUSTOMER & SUPPLY CHAIN UNCERTAINTY TB p34

STEP 2: UNDERSTANDING THE SUPPLY CHAIN CAPABILITIES TB p37

 handle a large variety of products

STEP 3: ACHIEVING STRATEGIC FIT TB p39

2.4 Obstacles / Challenges to Achieving Strategic Fit TB p46

UNIT 3: SUPPLY CHAIN DRIVERS & METRICS TB p52

ROA Written as a Product 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

Return on Financial Captures amount of ROE attributable to

- 2 N.B. measures not explicitly part of a firms financial statement:

- THREE LOGISTICAL DRIVERS N.B. Assets for a Company

- THREE CROSS-FUNCTIONAL DRIVERS

3.3 Framework for Structuring Drivers TB p58

PART 2: DESIGNING A SUPPLY CHAIN NETWORK

As long as inbound transportation economies of scale are maintained,

increasing the number of facilities decrease total transportation cost.

o Facilities & Handling: facility costs ↓as number of facilities ↓ 

4.3.1 MANUFACTURER STORAGE WITH DIRECT SHIPPING called "Drop-Shipping"

Cost Factor Performance

4.4 Online Sales & Distribution Network TB p99

Impact of Online Sales on Cost

Self-assessment SG p14 & Discussion Questions TB p114

5.1 Classify SC Network Design Decisions as follows: TB p120

- Network design decisions have a significant impact on performance because they

5.3 Framework for Network Design Decisions: TB p126

Phase I: Define SC Strategy/Design

Phase II: Define Regional Facility Configuration

Phase III: Select a set of Desirable Potential Sites

Phase IV: Location Choices

5.5 Practical Issues that Influence Network Design Decisions: TB p144

UNIT 6: DESIGNING GLOBAL SUPPLY CHAIN NETWORKS TB p154

6.1 Impact of Globalisation on SC Networks TB p154

6.3 Risk Management in Global SC TB 159

- Table 6-4 Tailored Risk Mitigation Strategies During Network Design

- Flexibility can be divided into three broad categories:

6.7 Making Global SC Decisions under Uncertainty in Practice

6.8 Summary of learning objectives TB p181

6.8.4 Not Prescribed

Self-assessment SG p20 & Discussion Questions TB p181

UNIT 7: COORDINATION IN A SUPPLY CHAIN TB p260, Par 10.1

7.3 Obstacles to Coordination in a SC TB p264, Par 10.3

7.4 Managerial Levers to Achieve Coordination TB p268, Par 10.4

IV. DESIGNING PRICING STRATEGIES TO STABILISE ORDERS