APICS CSCP Practice Test - Questions Answers, Page 34

In a make-to-stock environment, the most appropriate measure of the availability of products to ship is the fill rate. Fill rate measures the percentage of customer orders that can be fulfilled from available inventory without delay. Key aspects include:

Customer Satisfaction: A high fill rate indicates that customers receive their orders promptly, leading to higher satisfaction levels.

Inventory Efficiency: It reflects the efficiency of inventory management practices and the ability to maintain adequate stock levels to meet demand.

Order Fulfillment: The fill rate directly impacts the order fulfillment process and is a critical metric for assessing the effectiveness of supply chain operations.

Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. J. (2016). Supply Chain Management: A Logistics Perspective. Cengage Learning.

Ballou, R. H. (2004). Business Logistics/Supply Chain Management. Pearson.

The key benefit of using technology in supply chain management is the ability to handle invoicing and payment processes online, which significantly improves the cash-to-cash cycle time. This enhancement brings several advantages:

Faster Transactions: Online invoicing and payment processing speed up financial transactions, reducing the time between paying for raw materials and receiving payment for finished goods.

Improved Cash Flow: Quicker cash flow improves liquidity and provides better working capital management.

Reduced Errors: Automated processes reduce the risk of human errors associated with manual invoicing and payments.

Enhanced Visibility: Real-time tracking and reporting of financial transactions provide better visibility and control over the supply chain finances.

Hugos, M. H. (2018). Essentials of Supply Chain Management. Wiley.

Jacobs, F. R., & Chase, R. B. (2018). Operations and Supply Chain Management. McGraw-Hill Education.

The Theory of Constraints (TOC) differs from traditional decision-making approaches by focusing more on timing rather than just cost when adjusting resources that limit business performance. Key points include:

Identification of Bottlenecks: TOC identifies and addresses the most critical bottlenecks that constrain the system's overall throughput.

Focus on Throughput: Emphasizing increasing throughput rather than just cost reduction ensures that the entire system's performance improves.

Timing and Synchronization: TOC places significant emphasis on the timing and synchronization of processes to ensure that bottlenecks are effectively managed and do not impede overall production flow.

Continuous Improvement: By continually identifying and addressing constraints, TOC fosters a culture of continuous improvement and operational efficiency.

Goldratt, E. M., & Cox, J. (2004). The Goal: A Process of Ongoing Improvement. North River Press.

Dettmer, H. W. (1997). Goldratt's Theory of Constraints: A Systems Approach to Continuous Improvement. ASQ Quality Press.

Inventory turnover is a key performance metric in supply chain management that compares the cost of goods sold (COGS) during a period to the average inventory cost for the same period. It measures how many times a company's inventory is sold and replaced over a period.

Calculation: Inventory Turnover = COGS / Average Inventory

Importance: High inventory turnover indicates efficient inventory management, suggesting that goods are sold quickly and not sitting in storage.

Average Inventory: Calculated as (Beginning Inventory + Ending Inventory) / 2.

Application: Helps in assessing the liquidity of inventory, efficiency in managing stock, and effectiveness in sales strategies.

'Principles of Inventory Management: When You Are Down to Four, Order More' by John A. Muckstadt

APICS Dictionary

The Six Sigma approach to quality focuses on reducing variability in processes to increase customer satisfaction. The primary goal is to achieve near perfection by identifying and eliminating defects and reducing process variation.

Reducing Variability: Six Sigma employs statistical tools to analyze processes and identify sources of variability.

DMAIC Process: Define, Measure, Analyze, Improve, Control - a structured approach used in Six Sigma to improve processes.

Customer Satisfaction: By ensuring consistent and predictable process outcomes, Six Sigma enhances product quality and reliability, leading to higher customer satisfaction.

'The Six Sigma Handbook' by Thomas Pyzdek and Paul Keller

ASQ (American Society for Quality) Six Sigma Resources

A significant benefit of using radio frequency identification (RFID) instead of barcoding is the ability to read multiple items simultaneously. RFID technology provides several advantages over traditional barcoding:

Multiple Item Reading: RFID can scan multiple tags at once without line-of-sight, speeding up inventory processes.

Automation: Enhances automation in inventory tracking and management.

Data Storage: RFID tags can store more data than barcodes.

Durability: RFID tags are more durable and can withstand harsh environments.

'RFID for Dummies' by Patrick J. Sweeney II

GS1 RFID Guidelines

One of the drawbacks to using ISO 26000 is that it only provides guidance and cannot be certified as can other ISO standards. ISO 26000 offers guidance on social responsibility but is not intended for certification purposes.

Guidance Standard: ISO 26000 is designed to assist organizations in contributing to sustainable development beyond legal compliance.

Non-Certifiable: Unlike ISO standards like ISO 9001 or ISO 14001, ISO 26000 cannot be used for certification, limiting its application for companies seeking formal recognition.

Focus Areas: It covers areas such as organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement.

'ISO 26000: The Business Guide to the New Standard on Social Responsibility' by Lars Moratis and Timo Cochius

International Organization for Standardization (ISO) Resources

The purpose of a supply chain metrics dashboard is to monitor supply network performance. It provides real-time data and key performance indicators (KPIs) to help manage and optimize the supply chain.

Supply Network Performance: Includes metrics related to inventory levels, order fulfillment, supplier performance, logistics, and more.

Real-Time Monitoring: Enables supply chain managers to quickly identify issues, track performance against goals, and make data-driven decisions.

Comprehensive View: A dashboard consolidates data from various sources to provide a holistic view of the supply chain.

'Supply Chain Management: Strategy, Planning, and Operation' by Sunil Chopra and Peter Meindl

APICS Dictionary

In a make-or-buy decision, when the product is modular and the company is dependent on external knowledge and capacity, outsourcing is often considered necessary. Key considerations include:

Modularity: Modular products are composed of distinct components that can be independently produced and then assembled. This structure makes it easier to outsource production without compromising the overall product design.

Knowledge Dependency: When specific expertise or technology is required that the company does not possess, outsourcing becomes necessary to leverage external knowledge and capabilities.

Capacity Constraints: If the company lacks the internal capacity to produce the product in-house, outsourcing becomes a viable solution to meet demand without investing in additional resources.

Focus on Core Competencies: Outsourcing non-core activities allows the company to focus on its core competencies and strategic activities, improving overall efficiency and competitiveness.

McIvor, R. (2005). The Outsourcing Process: Strategies for Evaluation and Management. Cambridge University Press.

Arnold, J. R. T., Chapman, S. N., & Clive, L. M. (2008). Introduction to Materials Management. Pearson.