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Question 274 - CSCP discussion

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One of the key benefits of adopting a lean supply chain philosophy is the reduction of inventories that allow:

A.
decreased obsolescence.
Answers
A.
decreased obsolescence.
B.
freeing up working capital for investment.
Answers
B.
freeing up working capital for investment.
C.
reduced material handling surcharges.
Answers
C.
reduced material handling surcharges.
D.
lower transaction costs.
Answers
D.
lower transaction costs.
Suggested answer: B

Explanation:

One of the key benefits of adopting a lean supply chain philosophy is the reduction of inventories that allow freeing up working capital for investment. Here's why:

Inventory Reduction: Lean supply chain practices focus on minimizing excess inventory, which reduces the capital tied up in stock.

Improved Cash Flow: With less capital tied up in inventory, companies have more cash available for other investments, such as new product development, technology upgrades, or expansion.

Increased Efficiency: Lean principles enhance overall efficiency by streamlining processes, reducing waste, and optimizing resource utilization.

Competitive Advantage: Access to additional working capital enables companies to invest in strategic initiatives that drive growth and improve competitiveness.

Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill.

Womack, J. P., & Jones, D. T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press.

asked 16/09/2024
Khoi Le
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