Managing Supply Chains A Logistics

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 Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

CHAPTER 6 TEST QUESTIONS

True-False

1. Existing supply chain information technologies support timely, cost efficient sharing of information
between suppliers, manufacturers, intermediaries, logistics services providers, and customers.
ANSWER: True

2. "It has been said that information is the lifeline of business, driving effective decisions and action.
Quality of information is less and less important, given advances in technology."
ANSWER: False

3. Information must be real time, not just current.

ANSWER: True

4. Organizations are putting less emphasis on information technology to help them become more
competitive, innovative, and adaptive, relying more on supply chain innovations.
ANSWER: False

5. Collaboration is facilitated by information flow.

ANSWER: True

6. Now that people are computer literate, people are no longer a major barrier to the effective use of
information technology.
ANSWER: False

7. The term supply chain information system (SCIS) is well defined and commonly understood.
ANSWER: False

8. People are not usually the problem when it comes to improving supply chain visibility and
performance problems; rather it is technological capabilities.
ANSWER: False

9. Web-enabled SCIS allows managers to monitor sourcing, transportation, and inventory data at the
order and item level.
ANSWER: True

10. Execution tools have focused on a company's internal logistics activities--order management,
warehouse management, inventory management, labor optimization, and transportation
management--and are being expanded into new integration software applications.
ANSWER: True

11. Event management software is now the "norm" for stage shows, rock concerts, and similar events
where there are many elements to coordinate.
ANSWER: False

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© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
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 Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

12. Business intelligence applications are being used to gather information on competitors and their
suppliers.
ANSWER: False

13. ERP systems are multimodule application software platforms that help organizations manage the
important parts of their businesses.
ANSWER: True

14. Spreadsheets and database programs no longer have a place in SCIS as the new programs have
supplanted them.
ANSWER: False

15. SCIS software planning is relatively straightforward as the choices have been simplified.
ANSWER: False

16. Software applications are now available over the Internet.

ANSWER: True

17. RFID applications are not currently of great interest due to cost.
ANSWER: False

Multiple Choice

18. The ____ of demand, customer orders, delivery status, inventory, stock levels, and production
schedules provides managers with the knowledge needed to make effective situational assessments and
develop appropriate responses.
a. visibility
b. availability
c. accuracy
d. accountability
ANSWER: a

19. Which of the below is not part of the 7 Rs?

a. information
b. cost
c. SCIS
d. place
ANSWER: c

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© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

20. Which of the following is NOT one of the drivers of supply chain excellence?
a. speed
b. collaboration
c. execution
d. price/performance of applications
ANSWER: d

21. ____ is/are a major barrier to the effective use of information technology.
a. Cost
b. People
c. Effective applications
d. Management support
ANSWER: b

22. The term supply chain information system (SCIS) is defined as

a. software that manages the supply chain.
b. technology that has enhanced the ability of companies to pay more attention to customers.
c. information systems that automate the flow of information between a firm and its
suppliers.
d. process management software that may or may not use ASP applications.
ANSWER: c

23. Data synchronization focuses

a. on insuring that all elements are synchronized.
b. on having identical fields and characters so the message is received correctly.
c. collaboration and RFID applications.
d. timely and accurate updates.
ANSWER: d

24. Supply Chain software

a. addresses virtually every function and task that occurs in the supply chain.
b. helps organizations plan, execute, and control supply chain activities in real time.
c. helps to optimize the delivery of goods and maintain visibility of inventory
d. all of these answers
ANSWER: d

25. ERP systems

a. are taking the place of SCIS systems.
b. have information elements needed by SCIS applications.
c. require RFID to be fully functional.
d. are just now starting to become recognized as a critical part of SCIS applications.
ANSWER: b
6-3

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

26. Managers have several options for software implementation. They include
a. internal development.
b. Internet based applications.
c. vendor suppliers.
d. all of these answers
ANSWER: d

Essay

27. What are the 7 Rs of an information system? Name them, and pick two to discuss in more detail.

ANSWER:
Information quality is a critical characteristic of the knowledge flowing across the supply chain. If you
think about it, the seven Rs definition of logistics applies to information as much as products with
some slight alterations--getting the right information to the right partners, in the right quantity, in the
right format, at the right place, at the right time, and at the right cost. Change any "right" to "wrong"
and the capabilities of the decision maker will decline. Thus, information quality is paramount to
effective management of the supply chain. To ensure that valuable, actionable knowledge readily
flows across the supply chain, information must be accessible, relevant, accurate, timely, and
transferable.

28. What are the six drivers of supply chain excellence?

ANSWER:
Connectivity Information technology is the primary focus of this driver. Geographically dispersed
supply chain partners and facilities are linked electronically via the Internet, extranets, and other
means.

Visibility The critical ability to monitor what is happening across the supply chain is achieved via
technology.

Collaboration By virtue of providing connectivity and visibility, technology facilitates real-time data
sharing between supply chain participants.

Optimization A variety of software is available to help organizations maximize the performance of

supply chain activities.

Execution Supply chain technology promotes efficient execution and integration of key activities on an
hourly and a daily basis to achieve operational excellence.

Speed Properly implemented technologies help organizations rapidly respond to customer

requirements for faster, more consistent flows of materials and information.

6-4

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

29. What are the 10 Golden Rules? Discuss how they are important.

ANSWER:
10 golden rules for success.
1. Secure the commitment of senior management.
2. Remember that it is not just an information technology project.
3. Align the project with business goals.
4. Understand the software capabilities.
5. Select partners carefully.
6. Follow a proven implementation methodology.
7. Take a step-by-step approach for incremental value gains.
8. Be prepared to change business processes.
9. Keep end users informed and involved.
10. Measure success with key performance indicators (KPIs).

30. What are the key requirements of an SCIS system?

ANSWER:
By themselves, software and other SCIS components cannot provide actionable knowledge for supply
chain managers. Data must be collected and synchronized so that it can be used by skilled individuals
in the planning and execution of supply chain processes. Scorecards and dashboards are also needed to
monitor performance and make necessary adjustments. With these requirements satisfied, managers
are able to take full advantage of SCIS data analysis and decision support capabilities. They are also
properly positioned to pursue supply chain excellence.

Data collection of relevant information is needed at every point in the supply chain. Whether it is
captured via bar codes, radio-frequency identification, or other technology, the information must be
relevant, accurate, and accessible to users in real time. A lack of timely information leads to
dysfunctional decisions that spread across the supply chain.

Data synchronization focuses on the timely and accurate updating of item information within and
across enterprises to ensure dependable, consistent product information within a company's systems
and between business partners. It is critical for every organization in the supply chain to have
standardized, complete, accurate, and consistently aligned data in their SCIS to perform at peak
effectiveness. It is impossible for supply chain partners to effectively collaborate, utilize RFID, or
leverage demand driven replenishment techniques if the product, price, or invoice data being
transferred are inaccurate. Thus, organizations must clean and align data internally before sharing it
with partners.

Furthermore, processes have to be in place to maintain high-data quality. This requirement has both
technology and organizational structure implications. First, the organization must be willing to make
data management processes a priority. Second, there must be strong business ownership of product
data and aligned SCIS that enables access to timely, accurate data. Those who succeed will achieve
inventory and logistics cost reductions, as well as fewer out-of-stock situations.

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© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

31. What are supply chain execution tools and suites?

ANSWER:
Supply chain execution tools and suites carry out key tasks from the time an order is placed until it is
fulfilled. This order-driven category of software focuses on the day-today activities required to buy,
make, and deliver the materials that flow through the supply chain. Traditionally, execution tools have
focused on a company's internal logistics activities -- order management, warehouse management,
inventory management, labor optimization, and transportation management. As attention shifts to
integrated supply chain capabilities, the category is encompassing a broader array of functionality
including procurement and supplier relationship management, manufacturing execution and shop floor
control, and customer relationship management.

Supply chain execution doesn't rely upon a single software program. Instead, it consists of a group of
tightly integrated tools that link well with supply chain partners' systems to share relevant data and
provide visibility. Interest and investment in execution tools is growing because of the strong
capabilities being developed, cost savings, and return on investment being achieved. Successful
implementation can provide users with improved inventory visibility, improved data accuracy, faster
throughput and higher inventory turns, better control of transportation costs, and improved customer
service. The tools also support supply chain planning, event management, and performance metrics.

32. What is event management software?

ANSWER:
Supply chain event management tools collect data in real time from multiple sources across the supply
chain and convert them into information that gives business managers a clear picture of how their
supply chain is performing. These systems track the inventory as it flows through the supply chain,
providing graphical displays of expected and actual inventory levels and other key data at each
location. An important feature is their ability to define business rules that trigger alerts when specified
events occur, or when they fail to occur. This capability allows supply chain managers to focus their
attention on managing exceptions rather than having to monitor every movement and compare it
against plan.

As the geographic scope and number of companies involved in a supply chain grow, the ability to
monitor activities exceeds manual capabilities. Hence, supply chain event management tools are
becoming more important, and more organizations are turning toward these solutions to help them
detect, evaluate, and resolve issues before they snowball into major problems. The newest tools use
optimization techniques to evaluate the severity of the situation and propose alternative solutions to
decision makers or initiate action based on established guidelines.

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Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

33. What is Enterprise Resource Planning (ERP) software?

ANSWER:
ERP systems are multimodule application software platforms that help organizations manage the
important parts of their businesses. Initially concentrated on manufacturing issues, ERP systems now
focus on integrating information and activities across the organization (i.e., the enterprise) via a
common software platform and centralized database system. Key business processes linked via ERP
include accounting and finance, planning, engineering, human resources, purchasing, production,
inventory/ materials management, order processing, and more. The centralized and shared database
system ties the entire organization together, allowing information to be entered once and made
available to all users. Business processes can also be automated for rapid, accurate execution.

As the ERP systems branch out to include supplier relationship management, customer relationship
management, and other supply chain components, the connections between SCIS and ERP grow
stronger. Supply chain members can access the organization through the ERP system to assess
inventory availability, production schedules, and delivery information. In short, the ERP system
provides a mechanism for supply chain members to efficiently share information so that visibility is
improved, transactions are completed with more speed and accuracy, and decision making is
enhanced.

34. What is XML? Describe some of its benefits.

ANSWER:
XML is a robust, logically verifiable text format based on international standards. It provides a flexible
way to create structured, common information formats and share both the format and the data via the
Internet, intranets, and other networks. XML can be used to define complex documents and data
structures such as invoices, inventory descriptions, shipment records, and other supply chain
information.

The benefits of XML are numerous--it is a simultaneously human- and machine-readable format, it
supports multiple languages, its plain text file displays are unencumbered by licenses or restrictions,
and it is platform-independent and thus relatively immune to changes in technology. XML is gaining
traction in the supply chain because it supports the integration of various information systems, is less
complex than EDI, and eliminates the need for value-added networks, which reduces cost while
speeding data transmission.

35. What are some of the questions which must be asked in connection software visions?

ANSWER:
Who will lead our implementation effort? Senior management has neither the time nor direct
knowledge of SCIS to supervise the selection and installation of new applications.

6-7

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 Coyle Managing Supply Chains: A Logistics Approach, 9th Edition
Chapter 6 Test Bank

How will technology support our business needs and processes? As discussed previously, there is a
propensity to adopt software without considering the processes that it will support, leading to
automation of inefficiencies.

What is the status of our existing data? It is critical to assess data quality, relevance, and completeness
to ensure that the needed information is available to use with the technology being considered.

How well does our existing system integrate with suppliers and customers? SCIS fall woefully short
on vital capabilities if they are unable to communicate with supply chain partners in an efficient
manner.

What external issues must our systems address? Given the financial and product flow data contained
within most SCIS, they have a major impact on an organization's ability to address government
mandates Sarbanes-Oxley regulations. This visibility is also imperative for compliance with
governmental security initiatives related to international trade such as the Customs-Trade Partnership
Against Terrorism (C-TPAT) and the Advanced Trade Data Initiative.

36. Define and discuss RFID as it affects supply chain technology.

ANSWER:
While the technology used in RFID has been available for decades and is widely used for aircraft
identification, toll collection, and library book tracking, supply chain applications were largely
conceptual until major organizations began to develop RFID mandates. Like barcoding, RFID is an
automatic identification method. RFID tags consist of a microchip and a printed antenna that can be
packaged into many forms, such as a label or imbedded in between the cardboard layers in a carton or
product packaging. Unique product identification information, in the form of a universal electronic
product code (EPC) identifying the manufacturer, product category, and individual item, is stored on
these 96-bit tags. The tags are affixed to the pallet, case, or individual product and are read when they
pass within proximity of an RFID reader. These tags contain unique identifiers not found on barcodes,
and direct line of sight is not required to read RFID tags. The collected information is relayed back to
the SCIS, updating the location status of the associated product. Initial results of RFID
implementations have been positive, but despite these success stories, the migration to RFID could
slow if key challenges are not addressed. RFID technology costs must continue to decline to make
product tagging economically feasible; equipment issues such as reader range, sensitivity, and
durability must improve; the case for supplier return on investment of RFID mandates must be made;
and consumer privacy issues must be resolved.

6-8

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.