SCM 502 ACTUAL STUDY GUIDE QUESTIONS AND
ANSWERS SET A+
✔✔Expternal partners benefits explained. - ✔✔Speed-Outside partners will have facility,
employees, and machines already in place. Plus, they likely have suppliers and logistics
firms already under contract. Your company would have to go through months if not
years of planning to open up a new facility Expertise- Not only is their firm up and
operating, their firm has been in business for years. They likely know what they are
doing. They have encountered problems, and have hopefully fixed them. Your company
would have many mistakes ahead of them before they could achieve a contractor’s
level of competency. Resource Utilization- Their use of people, materials, and machines
will likely be more efficient than the output of what your company would be able to
achieve in the first few months/years. In addition, if they manufacture for multiple
companies, they will likely have more buying power with suppliers. Focus on Core
Competencies- Every Company has different strengths. Sometimes utilizing outside
partners allows your company to focus on its strengths and it allows the contractor to do
what it does best, manufacture products.
✔✔Risks of External Partners - ✔✔Quality control- how concerned are they about the
general quality level of products that will ultimately carry your name, not theirs?
Intellectual property- will this company protect the secrets that make your products
better/unique? Business practices- is your business partner a legal and ethical entity?
Ethics? Loss of strategic flexibility- outsourcing causes loss of flexibility in some cases.
✔✔Offshoring - ✔✔Strategy where a company moves manufacturing out of its home
country to another country
✔✔Outsourcing (and both) - ✔✔When a company contracts an outside firm to perform
services, operations, or business processes that could be or were previously performed
in-house.
, ✔✔Contract manufacturers - ✔✔A company that produces goods on behalf of another
organization. Example: Apple designs numerous digital devices but they outsource
manufacturing to companies like Fox-conn and Pegatron.
✔✔Near-Sourcing - ✔✔While this term does not have a consistent definition in the world
of supply chain management, it often refers to a type of offshoring or outsourcing where
the location of the manufacturing facility is relatively close to the location of the
consumer. Typically, it refers to a shift in strategy, where a company used to
manufacture goods very far away.
✔✔C-TPAT Customs-Trade Partnership Against Terrorism - ✔✔A voluntary program
developed by US customs and Border Protection for companies importing goods into
the US. The program requires member organizations to report a significant level of
detail related to supply chain partners and actions for each imported shipment. In
exchange for providing this information, member companies are allowed opportunities
for speedier and more hassle-free custom clearance. Example: Post 9/11 Border patrol
wanted to collect more data about shipments.
✔✔3PL Third-party Logistics Company - ✔✔A contractor that performs one or more
logistics functions for their client in an effort to facilitate effective and efficient movement
in the supply chain. The third-party contractor can neither be the buyer nor the seller of
the items being moved. Explained: Any company that helps perform one or more
logistics functions, offer services that may fall outside the realm of logistics;
✔✔Freight forwarder - ✔✔A contractor that helps companies organize the efficient and
effective shipment of goods from one point in the supply chain to another. Freight
forwarders do not actually transport the goods, instead they negotiate and arrange for
one more logistics companies to prepare, secure, store, track, and move the cargo.
Example: If you didn’t know how to move your cargo you would make use of this.
✔✔Incoterms. What are they? - ✔✔Series of commercial terms as 3 letter acronymc to
facilitate communication in transactions.
✔✔Shipping Documents ‚Äì Why are they needed? - ✔✔Needed for transportation
(proof, origination, destination, contract between parties), Financial (expectation of
payment when goods cross hands. Proof goods were received according to terms and
money can be paid), International Shipments (crossing borders means customs look to
documentation)
✔✔Commercial invoice - ✔✔Vital document that provides a reasonable summation of
the items being shipped, parties involved, values, and other information important to
SCM and customs.
✔✔Packing List - ✔✔Describes all the items in a box, including dimensions and weight.
Could even tell location of items in container. Prices are not provided.
ANSWERS SET A+
✔✔Expternal partners benefits explained. - ✔✔Speed-Outside partners will have facility,
employees, and machines already in place. Plus, they likely have suppliers and logistics
firms already under contract. Your company would have to go through months if not
years of planning to open up a new facility Expertise- Not only is their firm up and
operating, their firm has been in business for years. They likely know what they are
doing. They have encountered problems, and have hopefully fixed them. Your company
would have many mistakes ahead of them before they could achieve a contractor’s
level of competency. Resource Utilization- Their use of people, materials, and machines
will likely be more efficient than the output of what your company would be able to
achieve in the first few months/years. In addition, if they manufacture for multiple
companies, they will likely have more buying power with suppliers. Focus on Core
Competencies- Every Company has different strengths. Sometimes utilizing outside
partners allows your company to focus on its strengths and it allows the contractor to do
what it does best, manufacture products.
✔✔Risks of External Partners - ✔✔Quality control- how concerned are they about the
general quality level of products that will ultimately carry your name, not theirs?
Intellectual property- will this company protect the secrets that make your products
better/unique? Business practices- is your business partner a legal and ethical entity?
Ethics? Loss of strategic flexibility- outsourcing causes loss of flexibility in some cases.
✔✔Offshoring - ✔✔Strategy where a company moves manufacturing out of its home
country to another country
✔✔Outsourcing (and both) - ✔✔When a company contracts an outside firm to perform
services, operations, or business processes that could be or were previously performed
in-house.
, ✔✔Contract manufacturers - ✔✔A company that produces goods on behalf of another
organization. Example: Apple designs numerous digital devices but they outsource
manufacturing to companies like Fox-conn and Pegatron.
✔✔Near-Sourcing - ✔✔While this term does not have a consistent definition in the world
of supply chain management, it often refers to a type of offshoring or outsourcing where
the location of the manufacturing facility is relatively close to the location of the
consumer. Typically, it refers to a shift in strategy, where a company used to
manufacture goods very far away.
✔✔C-TPAT Customs-Trade Partnership Against Terrorism - ✔✔A voluntary program
developed by US customs and Border Protection for companies importing goods into
the US. The program requires member organizations to report a significant level of
detail related to supply chain partners and actions for each imported shipment. In
exchange for providing this information, member companies are allowed opportunities
for speedier and more hassle-free custom clearance. Example: Post 9/11 Border patrol
wanted to collect more data about shipments.
✔✔3PL Third-party Logistics Company - ✔✔A contractor that performs one or more
logistics functions for their client in an effort to facilitate effective and efficient movement
in the supply chain. The third-party contractor can neither be the buyer nor the seller of
the items being moved. Explained: Any company that helps perform one or more
logistics functions, offer services that may fall outside the realm of logistics;
✔✔Freight forwarder - ✔✔A contractor that helps companies organize the efficient and
effective shipment of goods from one point in the supply chain to another. Freight
forwarders do not actually transport the goods, instead they negotiate and arrange for
one more logistics companies to prepare, secure, store, track, and move the cargo.
Example: If you didn’t know how to move your cargo you would make use of this.
✔✔Incoterms. What are they? - ✔✔Series of commercial terms as 3 letter acronymc to
facilitate communication in transactions.
✔✔Shipping Documents ‚Äì Why are they needed? - ✔✔Needed for transportation
(proof, origination, destination, contract between parties), Financial (expectation of
payment when goods cross hands. Proof goods were received according to terms and
money can be paid), International Shipments (crossing borders means customs look to
documentation)
✔✔Commercial invoice - ✔✔Vital document that provides a reasonable summation of
the items being shipped, parties involved, values, and other information important to
SCM and customs.
✔✔Packing List - ✔✔Describes all the items in a box, including dimensions and weight.
Could even tell location of items in container. Prices are not provided.
