Production & Operation Management

1. CHAPTER 27: Supply Chain Management
Responses to Questions
1. Philosophy is a pursuit of knowledge – happenings and causes – within
and outside of oneself. Philosophy has an orientation beyond ‘self’ and
towards the common good of all. A management thought, principle and/or
system can be called a philosophy if it goes beyond a firm and touches
others. Supply chain is one such concept that goes much beyond the
individual firm and encompasses several firms with an intention of
benefiting all – the end users and firms in the chain.
2. The new technological developments, particularly in telecommunications
and transport, have made it essential for any firm to develop quick
responses to any business/customer need. Such agile responses
necessitate a close coordination and cooperation between a firm and its
associates. For global business, the backward and forward integration
becomes very helpful towards achieving such coordination and
cooperation. Hence, supply chains have caught on.
3. Managing production is as much about the flow of information as about
the product. In coordinating various global suppliers and other associates
on the supply chain, an efficient information system is of paramount
importance.
4. Supply chain tiers should extend up to a point where it makes business
sense.
5. Keiretsu were the Japanese supply chains of yore. Today, the supply
chains have become global supply chains. The only difference may be,
that the Keiretsu were more ‘patriarchal’ while the global chain structure
today is more ‘democratic’. However, this difference, if any, is of
perception.
6. Supply chain makes the response to changing customer needs very swift
due to the high degree of coordination. Moreover, it brings out the core
competence of each firm to the fore.
7. A major comparative advantage of India is its large pool of educated –
university educated – technically qualified manpower available at low
wages.
Therefore, many jobs requiring these skills can be outsourced to India.
Precisely, this is what has been happening over the recent past. There is
a vast pool of such human resource that can be tapped for various
functions including R&D.

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8. In the short-run the prospects are good. But, as the economy grows and
wages rise, the Indian human pool is going to lose some of its
attractiveness. The way to stay in competition would be to improve quality
of the manpower and occupy another niche.
9. For instance, ‘foundry’ could be a firm’s ‘core competence’ i.e. something
it does better than most others. Supply chain consists of firms that have
different core competencies which do business together. Different
companies such as an engineering goods company, a foundry specialist
firm, a forgings specialist firm, a specialist in manufacturing fasteners etc
could form a supply chain giving rise to much synergy.
If the core competence of a firm changes, for whatever reason, and if the
changed competence is of little use to the supply chain, that particular firm
has no use – for itself and for others in the chain – staying in the supply
chain. It has to - and eventually it will - get out.
10. Confidential, proprietary information is shared only with long-term trusted
friends and business associates. Information is, indeed, power – more so
in today’s world. Supply chains are close-knit groupings and hence there
are almost no risks in sharing information within the chain of firms. Any
violation of this confidentiality can destabilize an errant supply chain
member. That company can lose its place in the chain. For it to find
another set of customers would be very difficult. This acts as a deterrent
for straying by the member firms.
11. The principles of Supply Chain being (i) unified objective, (ii) alignment
and (iii) coordination between partners, these principles can be applied
internally. Needless to point out that “charity begins at home” or supply
chain begins within the company.
12. JIT needs a high degree of coordination between various internal and
external activities. Supply chain exists for achieving a good coordination
between different business associates. Supply chain is of much help to
JIT production. So, supply chain management is welcome in JIT; JIT can
also be applied in a supply chain to the extent feasible. If a few firms on
the chain are based abroad, it may be difficult to put them on a true JIT
supply.
13. Yes. Product designing can be and is being outsourced. However, the
secrecy issues have to be taken care of.
14. Business is some kind of relationship. It is being increasingly recognized
that long-term relationships are good in business. Supply chains are an
example. When one speaks of certain cultures being ‘relationship-
oriented’, he is probably referring to other criteria being flouted for the

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sake of relationship. This may not be advisable, as the essential aspects
of a business may get overlooked to the detriment of the business firm.
Business relationship means ‘aligning’ to the criteria and not flouting them.
15. In selecting a supplier one should check whether he would fit in with one’s
business goals: short-and-long term. This statement includes a host of
criteria other than the price.
16. Purchasing manager needs to develop the capabilities of the suppliers on
the chain. All are members of a team. Merely ‘assessing’ the performance
of the vendor is not enough; the vendor is a part of the supply-chain family
and needs to be trained, assisted, oriented and moulded – just like a
coach of a sports team would do with his team members.
17. Whatever the sector, supplies are needed. Similarly, service sector firms
offer supplies of ‘services’, which are to be offered on time and of a
required quality. The concept of services as ‘supplies’ is gaining much
ground in the recent times. In fact, India is being perceived as a country
that could provide supplies of various services. Accounts, engineering
design, R & D, back-office jobs can be outsourced to India, just as GM or
Ford might outsource the supply of castings and/or forgings to companies
based in India.
18. The basic objectives of POM have not changed. The market has widened
and has become global. The technology has taken rapid strides and the
expectations of customers regarding the quality, quick delivery of products
and services have increased. Customers are global; supplies are also
global. Technology has shrunk the world. Global customers demand rapid
satisfaction of their needs. Therefore, global supply chains are a product
of this changed business environment.
If any, the market would widen in the future and supply chains - in one
form or the other - would be even more necessary.

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CHAPTER 27: Supply Chain Management
Objective Questions
1. Supply chain is for the flow of:
a. materials
b. information
c. services
√d. all the above
2. Keiretsu is:
√a. earlier Japanese supply chain.
b. a negotiation technique.
c. a Japanese retail chain.
d. a Korean business family.
3. Core Competence means:
a. highest level of efficiency in a country.
b. the comparative advantage of a nation.
√c. something that a firm does best.
d. the ‘bottom line’ in a business.
4. Organization of a supply chain is:
a. a hierarchical setup like in a Keiretsu.
b. a free market competitive organization.
√c. a hybrid of a & b.
d. none of the above.
5. As regards the objectives of Supply Chain and of Production/
Operations Management, it can be said that:
a. the objectives are different.
√b. in a supply chain, the very same objectives of Production/
Operations management get accentuated.
c. the objectives of Production/Operations management are wider
than that of a supply chain.
d. the supply chains are outward-looking, whereas Production/
Operations management is inward-looking.
6. For a supply chain:
a. Bayesian analysis is of no use.
b. Learning curve does not apply.
c. Vehicle route scheduling is not appropriate.
√d. none of the above is true.

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7. Multisourcing does the following:
√a. increases overall variability in quality.
b. decreases overall variability in quality.
c. decreases overall variability in delivery.
d. increases overall economies of scale.
8. In a supply chain:
a. the supplier company is smaller than the buyer company.
b. the supplier company is bigger than the buyer company.
c. the supplier company and the buyer company are generally of
the same size.
√d. none of the above
9. Titan Industries did the following:
a. integrated several functions into a unified Supply Chain &
Logistics Organization.
b. introduced a demand forecasting system that included sales
officers, redistribution stockists and product managers.
√c. both a & b
d. none of the above
10.In multi-sourcing, the volumes of business for the suppliers are
intentionally kept:
a. large
√b. small
c. equal
d. none of the above
11.Compared to the traditional Purchasing function this function is
different in Supply Chains with regard to the suppliers as follows:
a. The type of agreement is different.
b. The type of interaction is different.
c. The type of control is different.
√d. All of the above.