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Question 150 - CSCP discussion

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Which of the following outcomes occurs when direct shipping is used instead of a distribution network?

A.
Outbound transportation cost is reduced.
Answers
A.
Outbound transportation cost is reduced.
B.
Inventory velocity is reduced.
Answers
B.
Inventory velocity is reduced.
C.
Order-fill rates are reduced.
Answers
C.
Order-fill rates are reduced.
D.
Inventory obsolescence is reduced.
Answers
D.
Inventory obsolescence is reduced.
Suggested answer: D

Explanation:

Direct shipping from the manufacturer to the customer, bypassing distribution centers or warehouses, reduces inventory obsolescence. This is because products spend less time in storage and are delivered more quickly to customers, minimizing the risk of inventory becoming outdated or unsellable. Direct shipping can also improve inventory velocity, as products are moved directly to their end destination without intermediate storage, thus reducing the time they spend in the supply chain.

Reference:

'The Handbook of Logistics and Distribution Management' by Alan Rushton, Phil Croucher, and Peter Baker

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

asked 16/09/2024
Elefánti Gábor
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