Supply Chain Management and ERP
Fill in the Blank:
1. refers to erratic shifts in orders up and down the supply
The Bullwhip Effect; p361
2. _____________________ is the part of the supply chain that includes the
organization’s first-tier suppliers and their suppliers.
Upstream supply chain; p378
3. _____________________ is the part of the supply chain that includes all the
processes used by an organization in transforming inputs to outputs.
Internal Supply Chain; p378
4. includes all processes involved in delivering the
product to final customers.
Downstream supply chain; p378
5. A supply chain involves a from “dirt to dust.”
product life cycle; p358
6. The major source of supply chain uncertainties is the .
demand forecast; p361
7. In a Collaborative Planning Forecasting and Replenishment (CPFR)
partnership, trading partners collaborate on demand forecast using ________.
collaborative e-commerce ; p370
8. Supply chains that involve suppliers and/or customers in other countries are
referred to as ________.
global supply chains; p386
9. SCM systems have emerged as a complement to ERP systems to provide
intelligent decision support; p374
10. Vertical integration and ____________________ were two common solutions
to supply chain problems during the early days.
building inventories; p362
11. Companies can avoid the sting of __________ effect by sharing information.
12. Supply chain includes physical, information, and __________ flows.
13. Which of the following statements most comprehensively defines the supply
a. supply chain refers to the flow of materials and equipment from raw
materials suppliers to factories.
b. supply chain refers to the flow of materials from raw materials suppliers
and factories to warehouses .
c. supply chain refers to the flow of materials, information, and payments,
from raw materials suppliers through factories and warehouses to the end
d. supply chain refers to the flow of materials and services, from raw materials
suppliers through factories and warehouses to the end customers.
14. The supply chain comprises of:
a. two major parts – upstream and downstream supply chains
b. three major parts – upstream, internal, and downstream supply chains
c. two major parts – internal and downstream supply chains
d. three major parts – upstream, internal, and extended supply chains
15. This part of the supply chain includes all the processes involved in delivering
the product to the final customers.
16. A major source of supply chain uncertainty is associated with:
b. fluctuations in foreign exchange rates
c. demand forecasts
d. internal manufacturing schedules
17. Companies may avoid the sting of the ‘bullwhip’ by:
a. sharing information
b. outsourcing non-core processes
c. manufacturing on demand
d. setting a high reorder level
a; pp. 361-362
18. During the early days, two common solutions to supply chain problems were:
a. horizontal integration and vertical integration
b. horizontal integration and building inventories
c. vertical integration and building inventories
d. outsourcing and building inventories
c; pp. 361-362
19. A supply chain transforms into an integrated value chain when:
a. the back office operations are integrated with those of the front office.
b. multiple enterprises collaboratively plan, implement, and manage the flow
of goods, services, and information along the entire chain in a manner that
increases customer-perceived value.
c. neither a nor b
d. a and b
20. Material Requirements Planning (MRP) systems evolved to MRP II systems
a. labor requirement planning and customer relationship management
module was added to MRP.
b. financial planning and customer relationship management module was
added to MRP.
c. labor requirement planning and financial planning module was added to
d. labor requirement planning, customer relationship management and
financial planning module was added to MRP.
21. ERP systems can only be used to automate and integrate processes within a
particular business organization. These systems cannot be used to establish
electronic linkages with customers and suppliers.
22. Which of the following is an intangible benefit of systems integration?
a. Inventory reduction
b. Productivity improvement
c. Information visibility
d. IT cost reduction
23. Supply Chain Management (SCM) systems have emerged as a complement to
ERP systems to provide __________________ capabilities.
a. intelligent decision support
d. customer Support.
24. Business Intelligence refers to analysis performed by
c. Data Mining
d. All of the above
25. Enterprise Resource Planning (ERP) system’s major objective is to
a. electronically link an organization with its suppliers
b. electronically link an organization with its customers
c. integrate all departments and functions within an organization
d. All of the above
26. According to the authors, the use of Enterprise Resource Planning (ERP)
vendors (for leasing ERP systems) has two major downsides. Which of the
following lists those two downsides?
a. Expensive and loss of flexibility
b. Typically long-term lock-in of 5 years; and expensive
c. Typically long-term lock-in of 5 years; and loss of flexibility
d. Expensive and difficult to implement
27. When viewed graphically, supply chains flow linearly in one direction from
the producer to the consumer.
28. Enterprise Resource Planning (ERP) system’s major objective is to
electronically link an organization with its suppliers.
1. What are the functions of the SCM?
The function of Supply chain Management (SCM) is to plan, organize, and
coordinate all the supply chain’s activities. Today the concept of SCM refers to a
total systems approach to managing the entire supply chain.
2. What are the benefits of SCM?
The goals of modern SCM are to reduce uncertainty and risks in the supply chain,
thereby positively affecting inventory levels, cycle time, business processes, and
customer service. All these benefits contribute to increased profitability and
competitiveness. The benefits of supply chain management have long been
recognized both in business and in the military.
3. What is a supply chain team?
A supply chain team according to Epner (1999) is a team of tightly integrated
businesses that work together to server the customer. Each task is done by the
member of the team who is best positioned, trained, and capable of doing that
4. What are the potential metrics for supply chain operations?
Some potential metrics for supply chain operations are delivery on time (%),
quality at unloading area (number of defects), cost performance, lead time for
procurement, inventory levels (or days of turning an inventory), shrinkage (%),
obsolescence (% of inventory), cost of maintaining inventory, speed of finding
needed items in the store room, availability of items when needed (%), the
percentage of rush orders, percentage of goods returned, and a customers’
5. What are some of tangible and intangible benefits of systems integration?
Tangible Benefits: Inventory reduction, personnel reduction, productivity
improvement, order management improvement, financial-close cycle
improvements, IT cost reduction, procurement cost reduction, cash management
improvements, revenue/profit increases, transportation logistics cost reduction,
maintenance reduction, and on-time delivery improvement
Intangible benefits: Information visibility, new/improved processes, customer
responsiveness, standardization, flexibility, globalization, and business
6. What is ERP?
Enterprise Resource Planning (ERP) is a process of planning and managing all
resources and their use in the entire enterprise. It promises benefits ranging from
increased efficiency to improved quality, productivity, and profitability.
7. What is supply chain intelligence?
The inclusion of business intelligence in supply chain software solutions is called
by some supply chain intelligence (SCI). SCI applications enable strategic
decision making by analyzing data along the entire supply chain.
8. What is order fulfillment?
Order Fulfillment refers not only to providing the customers with what they
ordered and doing it on time, but also to providing all related customer service.
For example, the customer must receive assembly and operation instructions to a
new appliance. This can be done by providing a paper document with the
product, or by providing the instructions on the Web.
9. What is Material Requirements Planning (MRP)?
Material Requirements Planning is a model that essentially integrates
production, purchasing, and inventory management of interrelated products. It
became clear that computer support could greatly enhance use of this model,
which may require daily updating. This resulted in commercial MRP software
packages coming on the market.
10. What does AMT integrate?
Asset Management Tool (AMT) integrates graphical process modeling, analytical
performance optimization, simulation, activity-based costing, and enterprise
database connectivity into a system that allows quantitative analysis of extended
11. What are the components of the Supply Chains?
1. Upstream Supply Chain - Fist-tier Suppliers.
2. Internal Supply Chain - Process used by an organization in transforming the
inputs shipped by the suppliers to outputs.
3. Downstream Supply Chain - Delivering the product to final customers.
12. Explain in detail the problems along the Supply Chain?
The problems along the supply chain stem mainly from two sources:
(1) From uncertainties.
(2) From the need to coordinate several activities, internal units, and business
13. What are the solutions to solve SCM problems?
• Use outsourcing rather than do-it-yourself during demand peaks.
• Similarly, “buy” rather than “make” production inputs whenever
• Configure optimal shipping plans.
• Use the just-in-time approach.
• Reduce the lead time for busying and selling
• Use fewer suppliers.
• Improve supplier-buyer relationships.
• Achieve accurate demand by working closely with suppliers.
5 14. When does a supply chain transform into an integrated value chain?
Supply chain transforms into an integrated value chain when it:
• Extends the chain all the way from sub-suppliers to customer.
• Integrates the back-office operations with those of the front office.
• Becomes highly customer-centric, focusing on demand generation and
customer service as well as demand fulfillment and logistics.
• Is proactively designed by chain members to compete as an “extended
• Seeks to optimize the value added by information and utility –enhancing
15. What are the contributions made by EC to Supply Chain Management?
EC can make the following contribution to supply chain management:
1 Digitize products such as software
2 Replace with electronic documents all paper documents that move physically.
3. Replace faxes, telephone calls, and telegrams with an electronic messaging
4. Change the nature and structure of the supply chain from linear to a hub.
5. Enhance several of the activities such as collaboration and information
sharing among the partners in the supply chain.
6. Result in shorter supply chain and minimum inventories.
7. Facilitate customer service.
8. Introduce efficiencies into buying and selling
5 16. What are the factors to be considered according to spot4sap.com to avoid failures
and ensure success?
• The customer’s expectations.
• The ERP product capabilities
• The level of change the customer has to go through to make the system fit.
• The level of commitment within the customer organization to see the project
through to completion.
• The customer’s organization and culture and the fit between the customer’s
organization and culture and the project organization and culture.
• The risks presented by politics within the customer organization.
• The consultant’s capabilities, responsibilities and role (if applicable)
17. When Lego company of Denmark decided to go global what were its major
• Choice of countries
• A supportive distribution and service system would be needed.
• Merging the offline and online operations.
• Existing warehouses were optimized to handle distribution to commercial
• It would be necessary to handle returns around the globe
• Currency? How the price will be related to the offline prices?
• How should the company handle the direct mail and track individual
• Invoicing must comply with the regulations of many countries.
• Should Lego create a separate Web site for Mind storms?
• Some countries have strict regulations regarding advertisement ands sales to
children. Also laws on consumer protection vary among countries.
• How to handle restrictions on electronic transfer of individuals’ personal
• How to handle the tax and import duty payments in different countries.
4 18. What are the major activities of EC to facilitate buying and selling along the
1. Upstream Activities.
2. Internal SCM Activities.
3. Downstream Activities.
4. Selling on Own Web Site.
6. Upstream and Downstream Combined.
19. Distinguish between SCM and SCI.
Supply Chain Management
Largely about managing the procurement and production links of the supply
Helps reduce costs through improved operational efficiency
Usually just the SCM application’s data (as a vertical stovepipe)
Records one state of data, representing “now”
Assists in material and production planning
Quantifies cost of some materials
Shows today’s yield but cannot explain influences on it; thus provides no
help for improvements
Supply Chain Intelligence
Provided a broad view of an entire supply chain to reveal full product and
component life cycle
Strategic decision making
Reveals opportunities for cost reduction, but also stimulate revenue growth
Integrates supplier, manufacturing, and product data (horizontal)
Keeps an historic record
Does what-if forecasting based on historic data
Enables an understanding of total cost
Drills into yield figures to reveal what caused the performance level, so it
can be improved.
Collaborative environment with personalizable monitoring of metric.
20. Discuss how Warner-Lambert applies an integrated supply chain.
WL’s supply chain excellence stems from the Collaborative Planning,
Forecasting, and Replenishment (CPFR) program. This is a retailing industry
project for which piloting was done at WL. In the pilot project, WL shared
strategic plans, performance data, and market insight with Wal-Mart over
private networks. The company realized that it could benefit from Wal-Mart’s
market knowledge, just as Wal-Mart could benefit from WL’s product
knowledge. In CPFR, trading partners collaborate on demand forecast using
collaborative e-commerce (see attached figure). The project includes major
SCM and ERP vendors such as SAP and Manugistics.
During the CPFR pilot, WL increased its products’ shelf- fill rate-the extent
to which a store’s shelves are fully stocked-from 87 percent to 98 percent,
earning the company about $8 million a year in additional sales (the
equivalent of a new product launch) for much less investment. WL is now
using the Internet to expand the CPFR program to all its major suppliers and
Warner-Lambert is involved in another collaborative retail industry project,
the Supply-Chain Operations Reference (SCOR), an initiative of the Supply-
Chain Council in the United States. SCOR divides supply chain operations
into parts, giving manufacturers, suppliers, distributors, and retailers, a
framework within which to evaluate the effectiveness of their processes along
the same supply chains.