Solution and Answer Guide: Wisner/Tan/Leong 9798214057705; 7th Edition; Chapter 1: Principles Supply Chain Management Balanced Approach
Solution and Answer Guide
WISNER/TAN/LEONG 9798214057705; 7 TH EDITION ; CHAPTER 1: PRINCIPLES SUPPLY CHAIN
MANAGEMENT BALANCED APPROACH
TABLE OF CONTENTS
Discussion Questions....................................................................................................1
CASES............................................................................................................................7
Supply Chain Management—The Big Picture..............................................................7
Appendix 1.1 The Beer Game.......................................................................................8
Questions and Exercises...............................................................................................8
DISCUSSION QUESTIONS
1. Define the term supply chain management in your own words and list its most important activities. (LO1)
Answer: The Supply-Chain Council’s definition of supply chain management is “[m]anaging supply
and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and
inventory tracking, order entry and order management, distribution across all channels, and delivery to
the customer.”
These are also the most important activities; however, integration of key supply chain processes might
also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain
management? What aspects would they most likely concentrate on? (LO1)
Answer: Yes, any organization can implement at least some of the important concepts. A good place
to start is the rationalization or reduction of the supply base. Small businesses might also want to
concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop, and list the important supply chain members.
(LO2)
Answer: This will vary from student to student, but should include, for instance, parts suppliers,
bicycle suppliers, and other suppliers (e.g., helmet suppliers) and services (e.g., repair services) as 1 st-
tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain. (LO2)
Answer: Yes. Every repair item the firm stocks has potentially a different supply chain associated
with it.
5. What is a cold chain? Why did it become so important in 2020? (LO1)
Answer: An alliance of companies that can monitor and protect the temperature of perishable
products in order to maintain quality and safety from the point of origin through distribution to the
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, final consumer. Cold chains became a popular news item in 2020 as COVID vaccines began to be
distributed globally by Pfizer and Moderna. The two vaccines must be stored and transported at sub-
zero temperatures.
6. How did the global pandemic impact supply chain management? (LO1)
Answer: In general, it made things more difficult, particularly for global supply chains—some
companies went bankrupt, retailers stopped buying regularly, ports shut down unexpectedly, and many
purchases shifted to online as people stayed home. Companies had to react quickly to the changes.
Some companies started buying domestically and carrying more inventory.
7. What roles do collaboration and trust play in the practice of supply chain management? (LO2)
Answer: This is essential for process integration. Sharing information and determining joint
strategies is part of the integration/collaboration process, and to do this, trust must be present between
the customer/focal firm/supplier.
8. Why do firms not just become more vertically integrated (e.g., buy out suppliers and customers), instead of
trying to manage their supply chains? (LO2)
Answer: This could cause a loss of focus and keep managers/employees from doing their core
competencies, resulting in loss of performance.
9. What types of organizations would benefit the most from practicing supply chain management? What sorts
of improvements could be expected? (LO2)
Answer: Firms with many suppliers, many complex products, large inventories, and many customers
(in other words, firms with many supply chains). Gains would be lower purchasing costs, lower
carrying costs, better product quality, and better customer service.
10. What are the benefits of supply chain management? (LO2)
Answer: Reduction of the bullwhip effect, better buyer/supplier relationships, better quality, lower
costs, better customer service, higher demand, and more profits.
11. Can nonprofit, educational, or government organizations benefit from supply chain management? How?
(LO3)
Answer: Yes. All services and organizations can benefit in terms of at least better customer service,
better inventory management, and cheaper purchase prices.
12. What does the term third-tier supplier mean? What about third-tier customer? What about the focal firm?
Provide examples. (LO3)
Answer: First-tier suppliers are the focal firm’s direct suppliers. 2nd-tier suppliers are the focal firm’s
suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’ suppliers’ suppliers.
Company A sells wood to Company B. Company B sells furniture to Company C. Company C sells
the furniture to Wal-Mart. Company A is Wal-Mart’s 3rd-tier supplier. Similarly, the focal firm’s
customers’ customers’ customers are their 3rd-tier customers. The focal firm just refers to the firm in
question, or in the topic of discussion.
13. What is the bullwhip effect and what causes it? How would you try to reduce the bullwhip effect? (LO5)
Answer: The magnification of safety stock and erratic buying behavior as customers along the supply
chain forecast demand and add safety stock to their forecasts and production schedules causes the
bullwhip effect. As we move further back up the supply chain, then, more and more of the output is in
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, the form of safety stocks. Reducing the need to forecast (by agreeing on a future purchase quantity or
using CPFR) is one way to reduce the bullwhip effect.
14. When did the idea and term supply chain management first begin to be thought about and discussed?
Which two operations management practices became the origin of supply chain management? (LO3)
Answer: The general idea of supply chain management had been discussed for many years prior to
the chain of events shown in Figure 1.2. Back in 1915, Arch W. Shaw of the Harvard Business School
wrote the textbook Some Problems in Market Distribution, considered by many to be the first on the
topic of what we now refer to as supply chain management. The text included discussions of how best
to purchase raw materials, transport products, locate facilities, and analyze productivity and waste.
According to C. John Langley, Jr., professor of supply chain management at the Georgia Institute of
Technology, “The idea that companies ought to work together and coordinate activities has always
been around, but ask people today what one of the biggest problems with supply chains are today, and
they say companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first widely recorded uses
of the term supply chain management came about in a paper published in 1982. Intense global
competition beginning in the 1980s (and continuing today) provided an incentive for U.S.
manufacturers to offer lower-cost, higher-quality products along with higher levels of customer
service. Manufacturers utilized just-in-time (JIT) and total quality management (TQM) strategies to
improve quality, manufacturing efficiency, and delivery times. In a JIT manufacturing environment
with little inventory to cushion scheduling and/or production problems, firms began to realize the
potential benefits and importance of strategic and cooperative supplier-buyer-customer relationships.
The concept of these partnerships or alliances emerged as manufacturers experimented with JIT and
TQM. These were the origins of SCM.
15. Do you think supply chain management is simply the latest trend in management thinking and will likely
die out in a few years? Why or why not? (LO5)
Answer: This answer will vary because it was not specifically discussed; however, considering that
the ideas of SCM have been around for many, many years makes one think that the practice is here to
stay.
16. How has technology impacted supply chain management? (LO5)
Answer: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply chain partners
through the Internet has enabled firms to integrate stocking, logistics, materials acquisition, shipping,
and other functions to create a more proactive and effective style of business management and
customer responsiveness.
17. What are the four foundation elements of supply chain management? Describe some activities within each
element. (LO2)
Answer: The four elements are supply (supply base reduction, supplier alliances, SRM, global
sourcing, ethical and sustainable sourcing), operations (demand management, CPFR, inventory
management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics management, CRM,
network design, RFID, global supply chains, sustainability, service response logistics), and integration
(barriers to integration, risk and security management, performance measurement, green supply
chains).
18. Is the use of a large number of suppliers a good idea? Why? (LO2)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, Answer: This somewhat depends. Certainly, SCM suggests fewer suppliers and longer-term
relationships; however there can always be exceptions to this rule. Purchasing a widely available
common product like soap or tissue paper might be better done with a large number of suppliers
competing for this business. But this works against ever creating trusting and lasting supply chain
partnerships. In most cases though, use of a few key suppliers for an item is considered a good idea,
since it means larger supply quantities, leading to lower prices and better service.
19. Do you think the proper way to choose a supplier is to always find the one that will give you the lowest
price? When might this not be a good idea? (LO2)
Answer: Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as in
buying some MRO items. But when quality and service matter, price should only be one of the
purchase criteria.
20. What is supplier management? What are some of the activities of supplier management? (LO2)
Answer: Simply put, this means encouraging or helping the firm’s suppliers to perform in some
desired fashion, and there are a number of ways to do this. This involves assessing suppliers’ current
capabilities and then deciding if and how they need to improve them. Thus, one of the key activities in
supplier management is supplier evaluation, or determining the current capabilities of suppliers.
21. What is the difference between supply chain management and logistics? (LO2)
Answer: Logistics involves only the transportation and distribution functions. SCM includes logistics
as well as production, supply management, and integration of processes.
22. What is demand management, and why is this an important part of supply chain management? (LO2)
Answer: Demand management is when management tries to match demand to available capacity,
either by improving production scheduling, curtailing demand, using a back-order system, or
increasing capacity. In a recent survey of supply chain managers, stockouts were considered the most
pressing issue in the use of demand management activities, followed closely by excess inventories and
long lead times.
23. What is the difference between an MRP system and an ERP system? (LO4)
Answer: MRP systems are the older materials management system software applications, and are
used for essentially basic assembly and purchase decisions. ERP systems came about a number of
years later and tied all of a company’s geographically distant units together by having one central
database to track system inventories.
24. What role do information systems play in supply chain management? Give some examples. (LO2)
Answer: Information systems play very important roles in most supply chains. They give supply
chain members information visibility, tracking capabilities, and quick communication capabilities.
25. Briefly describe the terms lean production and Six Sigma systems. (LO5)
Answer: Lean refers to low waste and inventories and used to be referred to as JIT. Six Sigma
originated at Motorola and refers to a quality management philosophy.
26. What are 3PLs, and what role do they play in SCM? (LO4)
Answer: Third-party logistics service providers. These allow firms to concentrate more on their
capabilities while allowing 3PLs to perform logistics activities like delivery and storage.
27. What is logistics? What is the objective of logistics? (LO4)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
Solution and Answer Guide
WISNER/TAN/LEONG 9798214057705; 7 TH EDITION ; CHAPTER 1: PRINCIPLES SUPPLY CHAIN
MANAGEMENT BALANCED APPROACH
TABLE OF CONTENTS
Discussion Questions....................................................................................................1
CASES............................................................................................................................7
Supply Chain Management—The Big Picture..............................................................7
Appendix 1.1 The Beer Game.......................................................................................8
Questions and Exercises...............................................................................................8
DISCUSSION QUESTIONS
1. Define the term supply chain management in your own words and list its most important activities. (LO1)
Answer: The Supply-Chain Council’s definition of supply chain management is “[m]anaging supply
and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and
inventory tracking, order entry and order management, distribution across all channels, and delivery to
the customer.”
These are also the most important activities; however, integration of key supply chain processes might
also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain
management? What aspects would they most likely concentrate on? (LO1)
Answer: Yes, any organization can implement at least some of the important concepts. A good place
to start is the rationalization or reduction of the supply base. Small businesses might also want to
concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop, and list the important supply chain members.
(LO2)
Answer: This will vary from student to student, but should include, for instance, parts suppliers,
bicycle suppliers, and other suppliers (e.g., helmet suppliers) and services (e.g., repair services) as 1 st-
tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain. (LO2)
Answer: Yes. Every repair item the firm stocks has potentially a different supply chain associated
with it.
5. What is a cold chain? Why did it become so important in 2020? (LO1)
Answer: An alliance of companies that can monitor and protect the temperature of perishable
products in order to maintain quality and safety from the point of origin through distribution to the
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, final consumer. Cold chains became a popular news item in 2020 as COVID vaccines began to be
distributed globally by Pfizer and Moderna. The two vaccines must be stored and transported at sub-
zero temperatures.
6. How did the global pandemic impact supply chain management? (LO1)
Answer: In general, it made things more difficult, particularly for global supply chains—some
companies went bankrupt, retailers stopped buying regularly, ports shut down unexpectedly, and many
purchases shifted to online as people stayed home. Companies had to react quickly to the changes.
Some companies started buying domestically and carrying more inventory.
7. What roles do collaboration and trust play in the practice of supply chain management? (LO2)
Answer: This is essential for process integration. Sharing information and determining joint
strategies is part of the integration/collaboration process, and to do this, trust must be present between
the customer/focal firm/supplier.
8. Why do firms not just become more vertically integrated (e.g., buy out suppliers and customers), instead of
trying to manage their supply chains? (LO2)
Answer: This could cause a loss of focus and keep managers/employees from doing their core
competencies, resulting in loss of performance.
9. What types of organizations would benefit the most from practicing supply chain management? What sorts
of improvements could be expected? (LO2)
Answer: Firms with many suppliers, many complex products, large inventories, and many customers
(in other words, firms with many supply chains). Gains would be lower purchasing costs, lower
carrying costs, better product quality, and better customer service.
10. What are the benefits of supply chain management? (LO2)
Answer: Reduction of the bullwhip effect, better buyer/supplier relationships, better quality, lower
costs, better customer service, higher demand, and more profits.
11. Can nonprofit, educational, or government organizations benefit from supply chain management? How?
(LO3)
Answer: Yes. All services and organizations can benefit in terms of at least better customer service,
better inventory management, and cheaper purchase prices.
12. What does the term third-tier supplier mean? What about third-tier customer? What about the focal firm?
Provide examples. (LO3)
Answer: First-tier suppliers are the focal firm’s direct suppliers. 2nd-tier suppliers are the focal firm’s
suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’ suppliers’ suppliers.
Company A sells wood to Company B. Company B sells furniture to Company C. Company C sells
the furniture to Wal-Mart. Company A is Wal-Mart’s 3rd-tier supplier. Similarly, the focal firm’s
customers’ customers’ customers are their 3rd-tier customers. The focal firm just refers to the firm in
question, or in the topic of discussion.
13. What is the bullwhip effect and what causes it? How would you try to reduce the bullwhip effect? (LO5)
Answer: The magnification of safety stock and erratic buying behavior as customers along the supply
chain forecast demand and add safety stock to their forecasts and production schedules causes the
bullwhip effect. As we move further back up the supply chain, then, more and more of the output is in
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, the form of safety stocks. Reducing the need to forecast (by agreeing on a future purchase quantity or
using CPFR) is one way to reduce the bullwhip effect.
14. When did the idea and term supply chain management first begin to be thought about and discussed?
Which two operations management practices became the origin of supply chain management? (LO3)
Answer: The general idea of supply chain management had been discussed for many years prior to
the chain of events shown in Figure 1.2. Back in 1915, Arch W. Shaw of the Harvard Business School
wrote the textbook Some Problems in Market Distribution, considered by many to be the first on the
topic of what we now refer to as supply chain management. The text included discussions of how best
to purchase raw materials, transport products, locate facilities, and analyze productivity and waste.
According to C. John Langley, Jr., professor of supply chain management at the Georgia Institute of
Technology, “The idea that companies ought to work together and coordinate activities has always
been around, but ask people today what one of the biggest problems with supply chains are today, and
they say companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first widely recorded uses
of the term supply chain management came about in a paper published in 1982. Intense global
competition beginning in the 1980s (and continuing today) provided an incentive for U.S.
manufacturers to offer lower-cost, higher-quality products along with higher levels of customer
service. Manufacturers utilized just-in-time (JIT) and total quality management (TQM) strategies to
improve quality, manufacturing efficiency, and delivery times. In a JIT manufacturing environment
with little inventory to cushion scheduling and/or production problems, firms began to realize the
potential benefits and importance of strategic and cooperative supplier-buyer-customer relationships.
The concept of these partnerships or alliances emerged as manufacturers experimented with JIT and
TQM. These were the origins of SCM.
15. Do you think supply chain management is simply the latest trend in management thinking and will likely
die out in a few years? Why or why not? (LO5)
Answer: This answer will vary because it was not specifically discussed; however, considering that
the ideas of SCM have been around for many, many years makes one think that the practice is here to
stay.
16. How has technology impacted supply chain management? (LO5)
Answer: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply chain partners
through the Internet has enabled firms to integrate stocking, logistics, materials acquisition, shipping,
and other functions to create a more proactive and effective style of business management and
customer responsiveness.
17. What are the four foundation elements of supply chain management? Describe some activities within each
element. (LO2)
Answer: The four elements are supply (supply base reduction, supplier alliances, SRM, global
sourcing, ethical and sustainable sourcing), operations (demand management, CPFR, inventory
management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics management, CRM,
network design, RFID, global supply chains, sustainability, service response logistics), and integration
(barriers to integration, risk and security management, performance measurement, green supply
chains).
18. Is the use of a large number of suppliers a good idea? Why? (LO2)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, Answer: This somewhat depends. Certainly, SCM suggests fewer suppliers and longer-term
relationships; however there can always be exceptions to this rule. Purchasing a widely available
common product like soap or tissue paper might be better done with a large number of suppliers
competing for this business. But this works against ever creating trusting and lasting supply chain
partnerships. In most cases though, use of a few key suppliers for an item is considered a good idea,
since it means larger supply quantities, leading to lower prices and better service.
19. Do you think the proper way to choose a supplier is to always find the one that will give you the lowest
price? When might this not be a good idea? (LO2)
Answer: Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as in
buying some MRO items. But when quality and service matter, price should only be one of the
purchase criteria.
20. What is supplier management? What are some of the activities of supplier management? (LO2)
Answer: Simply put, this means encouraging or helping the firm’s suppliers to perform in some
desired fashion, and there are a number of ways to do this. This involves assessing suppliers’ current
capabilities and then deciding if and how they need to improve them. Thus, one of the key activities in
supplier management is supplier evaluation, or determining the current capabilities of suppliers.
21. What is the difference between supply chain management and logistics? (LO2)
Answer: Logistics involves only the transportation and distribution functions. SCM includes logistics
as well as production, supply management, and integration of processes.
22. What is demand management, and why is this an important part of supply chain management? (LO2)
Answer: Demand management is when management tries to match demand to available capacity,
either by improving production scheduling, curtailing demand, using a back-order system, or
increasing capacity. In a recent survey of supply chain managers, stockouts were considered the most
pressing issue in the use of demand management activities, followed closely by excess inventories and
long lead times.
23. What is the difference between an MRP system and an ERP system? (LO4)
Answer: MRP systems are the older materials management system software applications, and are
used for essentially basic assembly and purchase decisions. ERP systems came about a number of
years later and tied all of a company’s geographically distant units together by having one central
database to track system inventories.
24. What role do information systems play in supply chain management? Give some examples. (LO2)
Answer: Information systems play very important roles in most supply chains. They give supply
chain members information visibility, tracking capabilities, and quick communication capabilities.
25. Briefly describe the terms lean production and Six Sigma systems. (LO5)
Answer: Lean refers to low waste and inventories and used to be referred to as JIT. Six Sigma
originated at Motorola and refers to a quality management philosophy.
26. What are 3PLs, and what role do they play in SCM? (LO4)
Answer: Third-party logistics service providers. These allow firms to concentrate more on their
capabilities while allowing 3PLs to perform logistics activities like delivery and storage.
27. What is logistics? What is the objective of logistics? (LO4)
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
