Logistics & Supply Chain Management

PART A (Descriptive Type) = 16

PART B (Case Study) = 2
PART C (Multiple Choice) = 80

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PART A
Descriptive Type Question

Question 1: Describe the evolution of Logistics and Supply Chain Management since 1960s and explain if
it should also include the Demand Chain Management.

Question 2(A): Define logistics. Discuss and elaborate various components of logistics management.

Question 2(B): Describe the concept of total cost analysis and logistics.

Question 3: What is the justification of Strategic Logistics and Supply Chain Management and bring out
its implications for management.

Question 4: Describe the critical issues in Logistics and Supply Chain Management in the Indian context
and highlight the imperatives of a comprehensive approach in the industry.

Question 5: Draw up in detail the physical components of a comprehensive Logistics and Supply Chain
management explaining their scope and importance in India.

Question 6: What are the important metrics for performance measurement of a firm and how they can
be used for bringing out continuous improvement in the operations of the company?

Question 7: How does Logistics and Supply Chain Management help deliver enhanced value to end
consumer on a continued basis?

Question 8: How does LSCM facilitate effective Enterprise Resource Planning and Control?

Question 9: Describe the components of emerging concepts in customer service and explain the possible
measures of customer service performance.

Question 10(A): What is supply chain management? What are the various flows in a supply chain?

Question 10(B): What are the functions and contributions of supply chain management?

Question 11(A): What is meant by customer service? What are its futures?

Question 11(B): What are different elements of customer service costs? Explain its fundamental trade-
offs.

Question 12(A): Discuss the role of information in overall performance of logistics and supply chain
management.

Question 12(B): What are various components of logistics information system architecture? How does
LIS facilitate improvement in logistics decision making?

Question 13(A): What is inventory? Discuss various elements of inventory costs.

Question 13(B): Define the concept and objectives of MRP and DRP.

Question 14(A): Discuss the nature and scope of storage, warehouse and distribution centers.

Question 14(B): Discuss the various functions of a warehouse from the logistics and supply chain
perspective.

Question 15(A): Describe the role of transportation in the success of logistics and supply chain.

Question 15(B): What are the issues that should be considered by a logistics manager in selecting a
mode of transport?

Question 16(A): Describe the functions of packaging in LSCM perspective.

Question 16(B): What are the objectives and principles of material handling?


PART B
Case Study 1
1. NEW MINDSET
The prevalent logistics mindset must move from one of complexity and cost efficiencies
to one of revenue and margin enhancement. The imperative of providing logistics
services represent a great and untapped area for providing increased value to the
purchasing. When customers purchase, they buy more than a product. They also buy a
bundle of services provided by the supplier. This includes components like pricing
flexibility, promotion/ deal or other discounts, credit and other payment terms,
merchandising support, after-sales support and delivery or logistics support Customers'
requirements for logistics se rvices, however, vary by customer or product. The one-
size-fits-all approach to logistics service often leads to average service which may be
over- servicing some customers while under-servicing others!
In a large pharmaceutical firm, all orders were processed as emergencies although 85
% of them were for replenishments as the firm thought that all its customers needed
short delivery. This way it was over-servicing some customers and its costs were
higher. The suppliers' challenge was to improve service to some and reduce its level for
others and thus reduce the overall cost that, in ultimate analysis, help both the
customers and suppliers.
Exercises
(a) Describe the bundle of services that must accompany a tangible product in order to
achieve higher customer satisfaction.
(b) Justify that every industry is operating in service sector and cannot do without
improving its service satisfaction to end consumers.


Case Study 2
Maruti Udyog - Indian ethos and Japanese ways
Maruti Udyog Ltd (MUL) the leading manufacturer of cars in India is a leader in supplier
relationship management. Its turnover was Rs. 12481 Cr. And its profit before tax, was
1750 Cr. In 2005 - 06. It sold 561822 vehicles in 2005 - 06 and captured a market share
of over 55%. It deals with about 7100 components for its 11 major models. 70% of its
suppliers buy numbers are located within 100 km radius of its Gurgaon plant. They meet
more than 80% of Maruti's requirement by value.
Maruti has 220 approved vendors who supply the major component. The top 80
vendors supply 86% by value of their purchases. The rest of the vendors supplie only
14%. It has also signed joint ventures with a large number of its vendors. Of the 86%
components supplied by vendors, joint ventures supply only 34%; the rest of the 52 %
by value is supplied by other vendors. These 80 vendors are considered strategic
partners. Only 20 to 30 of them are Maruti joint ventures.
With strategic partners, Maruti has a number of programs. Their emphasis is on vendor
productivity and quality. Maruti take a major role in improving vendor productivity. It
organizes Junkai VA or cost workshops with its vendors on an ongoing basis. Junkai is
a Japanese word which basically means "visiting ". It has three components called G-
Genmab, Gembutsu, and Genjitsu.
Gemba means taking a look to see what is happening at the site. Gembutsu means
examine the affected piece to understand what exactly the defect is. Genjitsu means
discussing under what conditions this has happened - something like a brainstorming
session. Typically a team from Meerut along with the supplier team visit the supplier's
shop floor has look around noting down points. They then have brainstorming sessions
at the Meerut office. At the end of the brainstorming they come out with various points
relating to improvements in productivity, quality and cost.
Meerut also has constituted a group called Maruti center for excellence. This is a team
which continuously goes to suppliers to upgrade team. It audits the workings of its
suppliers and comes out with a spider chart. The spider chart has 22 points. Each
vendor is evaluated in these 22 points. Additional business is promised on the next new
model to vendor who scores over 605 on the spider chart. Every vendor really tries to
make sure that he goes above this mark.
Apart from this it has also started second tier improvement in a very big way. This was
the latest initiative it took up a year ago. The result has been that the second tier
vendors quality has also gone up. It has also started "green initiatives" accordingly all
packing has been converted into reusable packing. It recently introduced a practice to
check the pollution levels of all the trucks getting into Maruti; if pollution levels were not
right, then the trucks were sent back. This made its vendors understand that Maruti
cared about the environment.
Further, it follows the Kaizen theme which means to make it smaller, fewer lighter
shorter and beautiful. It follows this theme in its plant and has been continuously
teaching this practice to its vendors. It conserves the usage of material of yield
improvement. Moreover along with CII and USAID it has started a program to help its
suppliers get ISO 14000 certification. It has also started a program on ELV compliance.
Though this is not required in India, the idea is that by the time the requirement comes
to india, Maruti's vendors will all be sufficiently equipped to take care of it. It also has a
vendor finance cost reduction program. It has lined up with banks to see that the loans
of its suppliers are transferred to lower interest rates. Through these initiatives Maruti
has become more agile and leaner.
In 2005 - 06, Maruti trained around 16 vendors and ultimately the savings of man hours
per day come to 1580 man hours which has resulted in a saving of over 1cr. Rupees
per annum. It was able to reduse component costs by 29% on the alto alone from 2001
to 2005.
Questions:
Q-1: What is supplier relationship management?
Q-2: What was Maruti's objective on supplier relationship?
Q-3: Discuss the kind of relationship Maruti adopted with its vendors.
Q-4: What are the methods adopted by Maruti to achieve supplier relastionship?


PART C
Multiple Choice Question Set 1
1. Logistics stands for
(a) Whatever is logical and reasonable
(b) Movement of materials to destinations
(c) Putting together conclusions logically
(d) Moving, supplying and warehousing materials and information in an enterprise
2. Supply Chain Management (SCM) covers
(a) Management of suppliers and vendors
(b) Management of inventories, warehousing, transportation and documentation relating
to all supplies
(c) Management of demand and supplies at minimum costs but greater customer
satisfaction
(d) Warehousing management
3. Logistics aims at
(a) Management of synchronized flow of materials and services through materials
management,
manufacturing management and marketing functions with greater satisfaction to end
consumer
(b) Management of suppliers through efficient purchasing
(c) Management of raw, intermediate and finished materials
(d) Coordinated flow of finished goods to first level of customers
4. SCM is
(a) Internally focused
(b) Focused on faster movement of materials and services across the whole supply
chain for the end consumer
(c) Focused on suppliers and internal operations of the firm
(d) Focused on maintaining contacts with suppliers, transporters, warehousing and
retailing firms
5. SCM is essentially
(a) A technological capability across firms
(b) A process of managing business across firms
(c) A problem of attitudes and behaviour with business partners
(d) All of the above
6. SCM is
(a) Subset of Enterprise of Resources Planning (ERP)
(b) Complementary to ERP
(c) Management of supply chain as well as demand chain
(d) Management of subvendors, vendors, manufacturing, wholesalers/ distributors and
retailers for greater satisfaction of end consumer
7. SCM implies
(a) Efficient management of various components from first level of suppliers to first level
of customers
(b) Integration across firms covering suppliers, manufacturing and customers
(c) Closer coordination among supply, production and distribution functions
(d) Integration among vendors, internal operations, manufacturing and distribution of the
firm
8. SCM signifies
(a) Time compression across the supply chain
(b) Transfer of technology across the supply chain
(c) Effort to cope with increased expectations of customers
(d) All of the above
9. SCM is geared to
(a) Accomplishing strategic intent rather than strategic fit
(b) Managing value system across the fir
(c) Both of the above
(d) None of the above
10. SCM stands for
(a) Dynamic, interactive and flexible approach with all the business partners along the
supply chain
(b) Sophisticated and creative tools for improving levels of customer satisfaction
(c) Both of the above
(d) None of the above
11. Real life inventory management is more complex because
(a) Demand rate is not known nor it is constant
(b) Lead time of suppliers is not known nor it is constant
(c) Both of the above
(d) None of the above
12. In the emerging fierce competition, retailers are becoming more powerful but
(a) They do not want to hold more than the barest minimum inventory
(b) Items should be in presentation form only
(c) Vendors to manage inventories for them
(d) All of the above
13. Inventory management under SCM aims for
(a) Economic order quantity for inventory control
(b) Full truck loads for shipment
(c) Continuous replenishment of items sold
(d) None of the above
14. Concept of distribution centres under SCM is
(a) An old concept of regional warehouses with a new name
(b) Intended to reduce storage points in the distribution system
(c) Designed to reduce variability in demand
(d) In an extension of manufacturing and logistics downstream to save on costs and
improve customer satisfaction
15. Distribution centres help to customise the products and services
(a) At the downstream stage
(b) At the midstream stage
(c) At the upstream stage
(d) None of the above
16. SCM starts with
(a) Overall forecast of demand for different product lines from the marketing research
group under marketing department
(b) Signals of demand as modified by the demand management call
(c) Both of the above
(d) None of the above
17. SCM is
(a) Stockpiling of inventories
(b) Pushing products in to the market
(c) Responding haltingly to changing customer demands
(d) None of the above
18. Transportation Management under SCM involves
(a) Transport planning
(b) Vehicle routing and scheduling
(c) Delivery execution and shipment tracking
(d) All of the above
19. Transportation Management is
(a) A small and insignificant part of SCM
(b) Too specialised and should be managed separately
(c) Does not affect customer service
(d) Forms a major component of costs and should be synchronised to enhance
customer satisfaction
20. SCM is
(a) Linking with the corporate missions of the firm
(b) Teaching benefits of supply chain within the firm
(c) Preaching it to the customers, suppliers, carriers and logisitics providers
(d) All of the above
21. Transportation Management under SCM should target
(a) Continuous replenishment of products sold to end consumer
(b) Selective outsourcing to facilitate coupling and docking downstream
(c) Both of the above
(d) None of the above
22. Manufacturing under SCM should be linked to
(a) Producing as per economic batches of production
(b) Producing at the rate permitted by the bottleneck stage
(c) Producing in synchronization with the demand of end customers
(d) None of the above
23. Manufacturing under SCM should be
(a) Lean and free of waste
(b) Flexible, quick and responsive
(c) In sync with demand
(d) All of the above
24. Excellence in distribution operations
(a) Is value adding to supply chain
(b) Improves accuracy of order fulfillment, quality in products and services
(c) Both of the above
(d) None of the above
25. Increasingly customers are demanding
(a) Quality, price and credit terms
(b) Prompt delivery and other post sale services
(c) Both of the above
(d) None of the above
26. Competition is currently revolving around
(a) Products only
(b) Bundle of services around of services around the product
(c) The entire supply chain right up to the end consumer
(d) None of the above
27. SCM should aim to accomplish
(a) Better aligned service offerings to end consumers, winning their loyalty and giving
them no reason to switch
(b) Higher market penetration, greater product availability and attractive appearance
(c) Both of the above
(d) None of the above
28. Customer service implies
(a) Management of customer service after sales
(a) Management of customer service during and after sales
(b) Effective customer contact management before, during and after sales
(c) None of the above
29. Satisfied customers benefit firms as
(a) They help increase market share including word-of-mouth recommendations to new
buyers and reduce costs of marketing and sales
(b) They make it possible to charge premium prices over competitiors
(c) Both of the above
(d) None of the above
30. Customer service support is driven by
(a) Changing customer expectations, proliferation of products and new technologies
(b) Changing channels of customer support delivery
(c) Both of the above
(d) None of the above
31. Principle of postponement plays a significant role in reducing costs of SCM.
Postponement is greatly facilitated by
(a) Modular design of products
(b) Modular design of process
(c) Both of the above
(d) None of the above
32. SCM implies
(a) Providing uniform and consistent services to all customers, big or small
(b) Differential levels of services for different category of customers
(c) Both of the above
(d) None of the above
33. Integrated demand and supply chain management can deliver higher benefits if
(a) Core process of demand chain and supply chain are integrated
(b) Support infrastructure that facilitates integration of demand chain and supply chain is
put in place
(c) Both of the above
(d) None of the above
34. Integration across the firms in the Supply Chain Management is achieved by
installing
(a) Online Information Technology systems
(b) Online financial transactions and fund transfers
(c) Human resources and other administrative activities
(d) All of the above
35. SCM in this century is moving towards
(a) Flexibility and velocity of materials and processes
(b) Integrating demand planning with supply chain
(c) Synchronising network of processes across several firms with absolute precision
(d) None of the above
36. Efficient Consumer Response (ECR) stands for fulfilling consumer expectations
(a) Better
(b) Faster
(c) At lower cost
(d) All of the above
37. Roots of ECR can be traced
(a) Adopting Just-in-Time and Total Quality Management philosophy
(b) Close collaboration, networking and sharing of business information with partners in
the
SCM
(c) Both of the above
(d) None of the above
38. ECR has been greatly facilitated by enabling technologies like
(a) Electronic Data interchange, bar coding and data base maintenance
(b) Electronic fund transfer and other financial transactions
(c) Both of the above
(d) None of the above
39. ECR stands for
(a) New products and processes
(b) New attitudes and behaviour
(c) Both of the above
(d) None of the above
40. ECR aims for
(a) Removing negatives in supply chain and building off its strengths
(b) Focusing on demand generation
(c) True partnership across the firms in the supply chain
(d) All of the above


Multiple Choice Question Set 2
1. Which of the following is not a characteristic of logistics?
(a) It ensures a smooth flow of all types of goods.
(b) It has the ability to meet customer expectations and requirements
(c) It offers the best possible customer service at any cost
(d) It deals with movement and storage of goods in appropriate quantities
2. All of the following are the objectives of logistics except:
(a) To make available the right quantity of material at right quality at right time at the
right place in a right condition at right price
(b) To offer best possible customer service for competitive advantage
(c) To promote the product through the logistic channels
(d) To minimize total logistics costs
3. The logistic costs in India is _________ percentage of GDP
(a) 20%
(b) 13%
(c) 18%
(d) 7%
4. Which of the following does not provide a way to create competitive advantage?
(a) Low cost
(b) Low flexibility
(c) Superior customer service
(d) Value added services
5. All of the following are primary activities in a value chain except:
(a) Inbound logistics
(b) Operations
(c) Technology development
(d) Service
6. Which of the following is not a desired flow in a supply chain?
(a) Forward flow of value
(b) Flow of goods in both the direction
(c) Backward flow of cash
(d) Flow of information in both the directions
7. Which of the following is not a feature of customer service?
(a) It is reactive process
(b) Ensure a tradeoff between cost and service
(c) Creates a competitive advantage
(d) Brings about harmonious relationship with supply chain members
8. All of the following are post transactional customer service elements except:
(a) Installation, warranty, repairs, etc.
(b) Customer claim, complaints and returns
(c) Stock out level
(d) Temporary replacement of products
9. Freight charges depend on all of the following except:
(a) Nature of the product
(b) Value of the product
(c) Distance to be covered
(d) Volume/quantity to be shipped
10. A Carrier performance measure does not include:
(a) Speed
(b) Claim settlement ratio
(c) Area of warehouse owned
(d) Frequency
11. Physical distribution in terms of logistics is known as:
(a) Inbound logistics
(b) Outbound logistics
(c) In plant logistics
(d) Reverse logistics
12. which of the following is not a feature of supply chain?
(a) Supply chain is a network of entities
(b) The more the number of stages in a supply chain the more will be its complexity
(c) Supply chain efficiency and effectiveness are the same
(d) Supply chain profit should be shared equitably by all the chain members
13. supply chain conflicts can be reduced by all of the following except;
(a) Use of power by the dominant partner
(b) Involvement by investment
(c) Information sharing
(d) Transfer of technology and skills
14. which of the following is not a key output of the logistic system?
(a) Creating competitive advantage
(b) Time and place utility
(c) Creating proprietary asset
(d) Increased cash flow
15. Logistics stand for
(a) Whatever is logical and reasonable
(b) Movement of material to destinations
(c) Putting together conclusions logically
(d) Moving supplying and warehousing material and information in an enterprise
16. Supply chain management covers:
(a) Management of suppliers and vendors
(b) Management of inventories, warehousing, transportation and documentation relating
to all suppliers
(c) Management of demand and supplies at minimum cost but grater customer
satisfaction
(d) Warehousing management
17. Transportation management is:
(a) A small and significant part of SCM
(b) Too specialized and should be managed separately
(c) Does not affect customer service
(d) Forms a major component of costs and should be synchronized to enhance
customer satisfaction
18. A fourth party logistics provider is:
(a) An organization that provides transportation
(b) An organization that provides warehousing facility
(c) An organization that manages inventory and information
(d) An organization that provides comprehensive supply chain solution
19. Which of the following does not fit into the feature of customer service?
(a) Providing customer service a tany cost
(b) Strategic processes that provides value added services
(c) Creates competitive advantage in the market place
(d) It reflects corporate vision
20. The internal web of an organization that allows only the internal users to access and
share data is called:
(a) Intranet
(b) EDI
(c) Extranet
(d) Internet
21. Which of the following is not an inventory related cost?
(a) Receivables
(b) Ordering cost
(c) Carrying cost
(d) Stock out cost
22. Which of the following is not an assumption of basic EOQ model?
(a) Annual demand, carrying cost and ordering cost can be estimated and is constant
(b) Half of order quantity is considered as safety stock
(c) Stock out has no effect
(d) Quantity discount does not exist
23. Inventory analysis based on the annual consumption value is called:
(a) ABC analysis
(b) VED analysis
(c) FSN analysis
(d) XYZ analysis
24. All are inputs to MRP system except:
(a) Bill of materials
(b) Inventory status file
(c) Master production schedule
(d) ABC analysis file
25. All are features of Distribution Resources Planning except:
(a) DRP deals with finished goods inventory
(b) DRP operates in an independent demand situation
(c) DRP is an explosion process
(d) Inputs to DRP is the distribution networks
26. Which of the following is not associated with JIT system?
(a) Waste elimination
(b) Mass production
(c) Single piece flow
(d) Pull system
27. All are economic function of warehouse except:
(a) Stock pilling
(b) Receiving
(c) Breaking bulk
(d) Consolidation
28. The changes levied by a municipal corporation
(a) Sales tax
(b) VAT
(c) Octroi
(d) Excise
29. Mode of economic surface transportation for bulk solid material over a long distance
is:
(a) Rail
(b) Road
(c) Ropeways
(d) Conveyors
30. Inter model transportation system arising out of the coordination between roadways
and railways are known as:
(a) Piggyback
(b) Fishy back
(c) Train - ship
(d) Express cargo
31. All are principles of material handling except:
(a) First principle
(b) Mechanization principle
(c) Flexibility principle
(d) Energy principle
32. Which of the following is not true for Air Way Bill?
(a) Receipt of goods
(b) Contract for affreightment
(c) Negotiable document
(d) Issued by carrier
33. Which of the following is not a carrier selection determinant?
(a) Transportation cost
(b) Transit time
(c) Reliability
(d) Vehicle cost
34. A bonded warehouse is:
(a) An open stockyard with high walls and other security measures for extra protection
of goods stored
(b) A war house in the premises of airport where goods imported by air are kept
(c) A warehouse where goods on which customs or excise duties have not been paid
are kept
(d) A govt. warehouse used for storing confiscated goods
35. LCL stands for:
(a) Less than normal cargo load
(b) Less than container load
(c) Low cargo load
(d) Less costlier load
36. Penalty charged by a carrier for not clearing a consignment from their warehouse
during the allowable time limit is known as:
(a) Damage
(b) Demurrage
(c) Liquidated damages
(d) Penal charges
37. certificate of origin is issued by;
(a) Bank in the exporting country
(b) Manufacturer
(c) Chamber of commerce
(d) The carrier
38. Which of the following is not an advantage of containerization?
(a) Reduces damages
(b) Increases investment on handling
(c) Reduces packaging
(d) Reduces loss
39. All are related to bullwhip effect except:
(a) It is the amplification of demand variation as one moves upstream in the supply
chain
(b) Forecast errors and lead time variability add to bullwhip effect
(c) The phenomena was first noted by Wal-Mart
(d) The effect can be reduced by information sharing, vendor managed inventory, etc.
40. All are functions of order processing except:
(a) Order planning
(b) Order handling
(c) Order delivery
(d) Order pending