Supply Chain Network Design and Value Creation Quiz

How can the design of a firm’s supply chain network create value for customers?

• By increasing efficiency, effectiveness, and differentiation

• By reducing the number of employees

• By focusing only on product quality

• By eliminating all distribution centers

Answer explanation

The design of a firm's supply chain network can create value for customers by increasing efficiency, effectiveness, and differentiation, leading to better service and unique offerings that meet customer needs.

What was the result of a prominent office products company shrinking its network of distribution facilities?

• Increased cross-docking activity and improved logistical customer service

• Decreased customer satisfaction

• Higher transportation costs

• Reduced product quality

Answer explanation

Shrinking the distribution network led to increased cross-docking activity, which streamlined operations and enhanced logistical customer service, allowing for faster and more efficient deliveries.

After merging, two large grocery industry manufacturers consolidated their logistics network from 54 to 15 strategically located facilities. What was the main reason for this consolidation?

• To improve efficiency and reduce costs

• To increase the number of employees

• To expand into international markets

• To decrease product variety

Answer explanation

The main reason for consolidating the logistics network was to improve efficiency and reduce costs. Fewer facilities can streamline operations and lower overhead, which is crucial in the competitive grocery industry.

Which of the following is the first step in the process of supply chain network design?

• Conduct a Facility Location Analysis

• Perform a Logistics/Supply Chain Audit

• Define the Logistics/Supply Chain Network Design Process

• Make Decisions Regarding Network and Facility Location

Answer explanation

The first step in supply chain network design is to define the logistics/supply chain network design process. This sets the framework for subsequent analyses and decisions regarding facility locations and logistics.

What is the main purpose of performing a logistics/supply chain audit during the network design process?

• To select the final location for a logistics facility

• To provide a comprehensive perspective on the firm’s logistics process and gather essential information for redesign

• To analyze the topography and geology of potential sites

• To apply quantitative models to logistics alternatives

Answer explanation

The main purpose of a logistics/supply chain audit is to provide a comprehensive perspective on the firm’s logistics process, which is essential for gathering information needed for effective redesign.

During which step of the supply chain network design process is a location selection team formed to collect information on specific attributes of candidate cities?

• Step 2: Perform a Logistics/Supply Chain Audit

• Step 3: Examine the Logistics/Supply Chain Network Alternatives

• Step 4: Conduct a Facility Location Analysis

• Step 1: Define the Logistics/Supply Chain Network Design Process

Answer explanation

In Step 4: Conduct a Facility Location Analysis, a location selection team is formed to gather specific information about candidate cities, making it the correct choice for this question.

Suppose a company wants to improve its logistics network by consolidating multiple distribution centers into one. Which step in the supply chain network design process would most likely involve evaluating the cost and service effectiveness of this change?

• Step 1: Define the Logistics/Supply Chain Network Design Process

• Step 2: Perform a Logistics/Supply Chain Audit

• Step 3: Examine the Logistics/Supply Chain Network Alternatives

• Step 5: Make Decisions Regarding Network and Facility Location

Answer explanation

Step 3 involves evaluating different logistics network options, making it the most relevant step for assessing the cost and service effectiveness of consolidating distribution centers.

What is one of the main factors that may cause a company to relocate a facility?

• Decreasing service improvements

• Increasing union influence in the area

• High labor costs or restrictive work rules

• Decreasing transportation costs

Answer explanation

High labor costs or restrictive work rules can significantly impact a company's operational expenses, prompting relocation to areas with more favorable conditions for labor, thus making it a main factor for facility relocation.

Which of the following is a potential consequence of having only logistics managers decide on facility location?

• Achieving only logistics goals and missing broader company objectives

• Improving marketing and production outcomes

• Reducing finance costs in the future

• Enhancing team collaboration

Answer explanation

Having only logistics managers decide on facility location may lead to a focus on logistics goals, potentially neglecting broader company objectives such as marketing, production, and finance, which are crucial for overall success.

Why might an overly complex supply chain network be disadvantageous from a cost perspective?

• It increases the number of local restaurants

• It can lead to higher logistics costs and inefficiencies

• It guarantees higher employee satisfaction

• It reduces the need for transportation services

Answer explanation

An overly complex supply chain can lead to higher logistics costs and inefficiencies due to increased coordination, longer transit times, and potential for errors, making it more expensive to operate.