Supply Chain Management- A Logistics Perspective, 9e Coyle TB TestBank

Supply Chain Management- A Logistics Perspective, 9e Coyle TB TestBank Supply Chain Management- A Logistics Perspective, 9e Coyle TBCoyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank CHAPTER 1 TEST QUESTIONS True-False 1. The first decade of the twenty-first century was a period of rapid change for organizations, especially businesses. ANSWER: True, Page 5 2. A key element in Wal-Mart’s ability to discount brand name products was an understanding of the criticality of efficiency in its logistics and supply chain system. ANSWER: True, Page 6 3. Globalization has had little effect on consumers. ANSWER: False, Page 7 4. Supply and demand has become less volatile as managers become more adept at controlling the elements. ANSWER: False, Page 8 5. Outsourcing is a fairly new concept. ANSWER: False, Page 9 6. SAB should examine their off-shore purchasing policy, even though the products are sourced from the U.S. ANSWER: True, Page 9 ANSWER: False, Page 9 ANSWER: False, Page 10 ANSWER: True, Page 10 ANSWER: False, Page 12 ANSWER: True, Page 15 It is expected that some or all of the BRIC countries (Brazil, Russia, India & china) will replace the so-called VISTA countries (Vietnam, Indonesia, S. Africa, Turkey and Argentina) as low cost producers of various products and services. 7. The world economy still favors the United States and European countries, even though China and India can participate in the global economy much more readily. 8. It is predicted that social networks such as Facebook and Twitter will influence supply chains because of their impact on customer demand and the speed of information transfers. 9. The U.S. transportation system was deregulated in the 1930s and 1940s in response to economic conditions and World War 2 10. Even though there are references to supply chain management in the 1980s, SCM did not capture the attention of senior-level management until the 1990s. 11. 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: False, Page 19 Multiple Choice 13. Most retailers are essentially supply chain companies since A. they dominate the consumer market. ANSWER: c, Page 6 14. Which of the below is not one of the external forces driving the rate of change and shaping our economic and political landscape? ANSWER: c, Page 7 15. Outsourcing involves a. moving company facilities away from the home office. b. hiring foreign nationals to manage parts of the business. ANSWER: c, Page 9 16. Some individuals describe the current consumer as the “click here” generation because ANSWER: b, Page 10 Supply chain managers no longer need to worry about suboptimization in light of today’s technology. 12. b. own their warehouses and trucks. c. they buy products produced by others. d. engage in off-shore sourcing. a. Government policy b. Technology c. Environmental concerns d. Globalization c. obtaining materials, parts, and products from other companies. d. building a factory in another country. a. we all have Internet access. b. we no longer wait for information to be “pushed out” to us. c. we buy so much merchandise on line. d. we take little time to make purchasing decisions. 17. The demographics of our society has changed because a. the “Baby Boom” generation is now turning 60. 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: b, Page 12 18. The Supply Chain Concept ANSWER: d, Page 15 19. Logistics, in its simplest form, ANSWER: b, Page 16 20. One of the major challenges of supply chain management is ANSWER: b, Page18 a. information b. products and services ANSWER: d, Page 18 b. of the increase in two-career families and single-parent households. c. of immigration. d. birth rates have changed. a. is very new and considered cutting edge technology. b. is highly dependent of computerization. c. is not always well understood by senior managers. d. developed from the previous Physical Distribution concept. a. is a military term, as it was developed originally to supply the battlefield. combines inbound logistics with the outbound logistics of physical distribution. b. c. is another term for transportation management. d. does not involve customer service or other related functions. a. forward buying. b. maintaining the visibility of inventory. c. building safety-stock inventory. d. Pushing inventory back to vendors. 21. Which of these flows only one way as illustrated in Figure 1-4? c. financials d. None of these answers Traditionally, information has been viewed as flowing in the opposite direction of products, that is, from the market/customer back to the wholesalers, manufacturers, and vendors. 22. 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: d, Page 21 ANSWER: d, page 23 a. complexity b. inventory deployment c. inventory carrying costs d. technology ANSWER: c, Page 25 25. Which of the following is not part of the Supply Chain network? ANSWER: b, Page 24 26. Complexity in the supply chain is caused by ANSWER: d, Page 24 27. Cost/Value refers to a. This is still true and has not changed. Computerization has greatly increased the flow of information from the source. b. c. The “Big Box” stores have developed their own sources. d. None of these answers One of the four supply chain flows in Figure 1 – 8 that has received increased attention from supply chain managers due to the growth in technology is: 23. x. Product flow y. Information flow z. Cash flow aa. Demand flow The challenge to develop and sustain an efficient and effective supply chain(s) requires organizations to address a number of issues. Which is not included? 24. a. plants b. stores c. terminals d. distribution centers a. the number of SKUs. b. locations of customers and suppliers. c. transportation requirements. d. All of these answers. 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank a. getting the best value for the money spent. ANSWER: c, Page 25 28. Performance measurement is important because a. it allows firms to rate competitors. b. without it, managers would not know how the global economy is doing. ANSWER: d, Page 27 29. A critical outcome of the supply chain is to deliver ANSWER: b, Page 27 Essay 30. What is the significance of Globalization in Supply Chain Management? ANSWER: Arguably, globalization is the most frequently cited change factor by business leaders, and it has replaced the post-World War II Cold War as the dominant driving force in world economics. The concept of the global marketplace or global economy has taken on new meaning for all enterprises (profit and nonprofit; small, medium, and large; products or services) and for individual consumers during the last two decades. Overall, globalization has led to a more competitively intense economic and geopolitical environment. This environment manifests itself in opportunities and threats, both economic and political. Some individuals have implied that there is no “geography” in the current global environment (figuratively speaking) or, perhaps more aptly, that time and distance have been compressed. (Pages 7 - 8) 31. What is Vendor Managed Inventory? ANSWER: Essentially, vendor-managed inventory (VMI) usually means that the b. U.S. firms competing in the global arena. c. the importance of cost and value at the very end of the supply chain. d. product variety. companies presently operating in the European Economic Community need to understand how its competitors are doing. c. lower-level metrics in an organization must connect directly to the high-level performance to achieve goals. d. a. profits. b. the right product to the right place. c. cost/value. d. on management’s expectations. 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank manufacturer will manage the inventory of its products (and possibly related products) at the retailer’s warehouse(s) and reorder as appropriate for customer fulfillment. The manufacturer may also have a representative at the designated retail warehouse locations to assure accurate and timely delivery. The retailer should experience lower costs associated with inbound logistics, and the manufacturer should be able to offset its additional cost with increased sales (fewer stockouts, more complete orders, etc.), because of the more accurate and timely information of product orders at the store level. (Page 11) 32. Explain how today’s consumers are empowered and how they impact Supply Chain Management. ANSWER: Today’s consumers are more enlightened and educated, and they are empowered more than ever by the information that they have at their disposal from the Internet and other sources. Their access to supply sources has expanded dramatically beyond their immediate locale by virtue of catalogs, the Internet, and other media. They have the opportunity to compare prices, quality, and service. Consequently, they demand competitive prices, high quality, tailored or customized products, convenience, flexibility, and responsiveness. They tend to have a low tolerance level for poor quality in products and services. Consumers also have increased buying power due to higher income levels. They demand the best quality at the best price and with the best service. These demands place increased challenges and pressure on the various supply chains for consumer products. (Page 12) 1-7 C l S l Ch i M t A L i ti P ti 9th EditiCoyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products, materials, services, information, and financials from the supplier’s suppliers through the various intermediate organizations or companies out to the customer’s customers, or a system of connected networks between the original vendors and the ultimate final consumer. The extended enterprise perspective of supply chain management represents a logical extension of the logistics concept, providing an opportunity to view the total system of interrelated companies for increased efficiency and effectiveness. (Page 17) 34. Discuss how globalization and consolidation in supply have increased complexity. ANSWER: Globalization and consolidation in supply chains have caused an increased complexity for organizations in terms of SKUs, customer and supplier locations, transportation requirements, trade regulations, taxes, and so forth. Companies need to take steps to simplify, as much as possible, the various aspects of their supply chains. For example, the number of SKUs has expanded for many companies, which exacerbates problems for inventory management and order fulfillment. Consequently, companies have been rationalizing SKUs to eliminate the slow movers and items that do not contribute to profitability. Locations also need to be analyzed to eliminate high-cost or duplicative operations. Customer service levels need to be rationalized, as do vendors or supplier alternatives. Layers of complexity develop and may seem necessary, but organizations need to continually evaluate those areas of complexity by evaluating processes, training people, and exploiting technology. (Pages 24 - 25) ANSWER: Most organizations have measures of performance or metrics in place to analyze and evaluate their efficiency and progress over different time periods. Sometimes, such measures are used for setting baseline performance objectives or expected outcomes, for instance, orders filled and shipped per day. Measurement is important, and at this juncture, it is important to recognize that lower-level metrics in an organization must connect directly to the high-level performance measures of the organization and the supply chain, which are usually net profit, return on investment, or assets and cash flow. In some instances, metrics are set that appear logical for the subunit of the organization but are suboptimal for the overall organization or supply chain. For example, the warehouse manager who is measured by the cost per cubic foot of units stored will be motivated to fill the warehouse to the ceiling. (Page 27) ANSWER: Transportation can be viewed as the glue that makes the supply chain model function. The critical outcomes of the supply chain are to deliver the right product, at the right time, in the right quantity and quality, at the right cost, and to the right destination. Describe the concept of an “integrated supply chain” that begins with the supplier’s supplier and ends with the final consumer. 33. 35. Discuss how Performance Measurement can affect Supply Chain Management. 36. What is the role of Transportation Management in connection with Supply Chains? 1-7 Coyle Supply Chain Management: A Logistics Perspective, 9th EditionCoy e Supp y C a a age e t: og st cs e spect ve, 9 d t o Chapter 1 Test Bank Transportation plays an important role in making these “rights” happen. Another aspect of the importance of transportation is related to some of the strategies that are being used by companies to remain competitive in today’s economy—for example, just-in-time inventory, lean logistics and manufacturing, and scheduled deliveries. The challenge has been exacerbated by economic changes among transportation providers; shortages of drivers, higher fuel costs, and changes in driver hours regulations have led to what some individuals have called a transportation crisis or the “perfect storm.” Transportation has gone from being a readily available commodity to potential users, especially in the 1990s, to today where transportation is scarce in some market areas. (Page 27) 1-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank CHAPTER 2 TEST QUESTIONS True-False 1. The utility created through the basic marketing activities is known as place utility. ANSWER: False, Page 40 2. Transportation is the physical movement or flow of goods. ANSWER: True, Page 42 3. During the 1990s and 2000s, logistics costs as a percentage of gross national product declined. ANSWER: True, Page 47 4. An aircraft manufacturer is a good example of an organization with a heavy inbound flow and a simple outbound flow. ANSWER: True, Page 63 5. Acme Battery distributes its batteries to warehouses, where they are stored until ordered by a retailer. The warehouses are located close by the retail markets served. This is the logistics channel approach to logistics. ANSWER: True, Page 66 6. In a logistics system, warehousing should be optimized at the expense of related logistics activities, such as transportation and procurement. ANSWER: False, Page 69 7. The mathematical calculation of the point of equality between systems under analysis is used for short-run/static analysis. ANSWER: False, Pages 61-62 8. To hold down distribution cost, the lowest cost carrier should always be used. ANSWER: False, Page 64 9. The inverse relationship that exists between the cost of lost sales and inventory costs is the inventory effect. ANSWER: True, Page 55 Multiple-Choice 10. Ensuring the availability of the right product, in the right quantity, and the right condition, at the right place, at the right time, for the right customer at the right cost, is which definition of logistics? a. Seven Rs b. Council of Logistics Management c. Society of Logistic Engineers 2-1Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: a, Page 37 inside Table 2.1 ANSWER: b, Pages 38-39 ANSWER: b, Page 38 ANSWER: a, Page 39 ANSWER: d, Page 39 15. The utility that is created by moving goods from production points to market points where demand exists is referred to as: d. supply chain logistics Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods- or service-producing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a timely manner. This is a 11. a. definition from an inventory perspective. b. general definition. c. definition offered by the Society of Logistics Engineers. d. a definition provided by the Council of Logistics Management. All four subdivisions of logistics have some common characteristics. Which of the below does not belong in the list: 12. a. transportation b. marketing c. scheduling d. forecasting 13. The value that is added to goods through a manufacturing or assembly process is: a. form utility b. place utility c. time utility d. possession utility Which of the answers below is an example of the creation of form utility by a logistics activity? 14. a. when lumber is cut and made into a chair b. when a firm's finance manager approves customer purchases on a credit basis when Dell combines components with software to produce a computer to a customer’s specifications c. d. the breaking bulk and repackaging at a distribution center 2-2Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 40 16. Logistics creates which utility through production forecasting, production scheduling and inventory control? ANSWER: b, Page 40 17. Time utility depends on ANSWER: d, Page 40 18. What is often the largest component of logistics costs? ANSWER: b, Page 42 19. Materials handling is concerned with ANSWER: d, Page 43 20. Marketers have begun to recognize the strategic value of place in the marketing mix, as well as the benefits resulting from high-quality logistical services. As a result, which has been recognized as the interface activity between marketing and logistics? a. form b. place c. time d. possession a. form utility b. quantity utility c. time utility d. possession utility a. when the carrier picks up the shipment. b. transportation companies delivering on time. c. proper forecasting. d. having the product available when the user wants it. a. inventory costs b. transportation costs c. shipper-related costs d. administrative costs a. inventory levels. b. breaking bulk. c. scheduling trade-offs. d. short-distance movement. 2-3Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: d, Page 52 21. It can be argued that ? is the second language of logistics and supply chain management. ANSWER: c, Page 53 22. What activity is described as the movement of goods into a warehouse, the placement of goods in a warehouse, and the movement of goods from storage to order picking areas and eventually to dock areas for transportation out of the warehouse? ANSWER: a, Page 43 23. A(n) _______ relationship exists between the cost of lost sales and inventory cost. ANSWER: c, Page 55 24. Water Cruisers is located in Jacksonville, Florida, and makes small yachts and luxury pontoon boats for customers on the East coast of the United States. Each boat requires thousands of parts purchased from over 1,000 vendors. A number of boats are in production at any one time, so a large number of parts constantly arrive and are stored. Once a boat is finished, it is sailed up the coast to a convenient port for customer delivery. Which type of logistics system does Water Cruisers use? a. product b. promotion c. price d. customer service a. quality b. manufacturing c. finance d. sales a. materials handling b. physical distribution c. business logistics d. order fulfillment a. reverse b. proportional c. inverse d. non linear a. balanced system b. heavy inbound c. heavy outbound 2-4Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 63 ANSWER: c, Page 56 26. When a specific point in time, or level of production, is chosen and costs are developed for the various logistics cost centers, it is called ANSWER: b, Page 60 ANSWER: b, Pages 61-62 28. What are fixed spatial points where goods stop for storage or processing? a. nodes ANSWER: a, Page 65 29. An important sustainability issue that has received much more scrutiny in recent years is the: a. focus on adequate inventory levels d. reverse system The product’s dollar value typically affects the cost of logistics activities. Which is not one of these costs? 25. a. warehousing costs b. transportation costs c. promotion costs d. packaging costs a. least cost analysis. b. short run analysis. c. cost center analysis. d. link node analysis. A ______ analysis examines a logistics system over a long time period or range of output. 27. a. cost center analysis b. dynamic c. link node analysis d. least cost analysis b. links c. cost centers d. fulfillment centers b. reduction in packaging waste by using alternate materials c. effort to move warehouse storage closer to consumers 2-5Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 43 30. What technology has helped make the physical inventory-taking process more efficient and effective? a. advances in forecasting ANSWER: d, Page 44 Essay 31. What is the primary challenge of logistics? ANSWER: The challenge is to manage the entire logistics system in such a way that order fulfillment meets and perhaps exceeds customer expectations. At the same time, the competitive marketplace demands efficiency—controlling transportation, inventory, and other logistics-related costs. Cost and service tradeoffs must be considered when evaluating customer service levels and the associated total cost of logistics, but both goals—efficiency and effectiveness—are important to an organization in today’s competitive environment. (Page 36) 32. What is the definition of logistics which the authors choose and what group had formulated it? ANSWER: The definition offered by the Council of Supply Chain Management Professionals is: “That part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption in order to meet customer requirements.” (Page 37) 33. The text mentions four subdivisions of logistics. Pick one, define and discuss. ANSWER: Business logistics: That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, service, and related information from point of origin to point of consumption in order to meet customer requirements. • Military logistics: The design and integration of all aspects of support for the operational capability of the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, and efficiency. • Event logistics: The network of activities, facilities, and personnel required to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event. d. emphasis on materials handling and warehouse design b. transportation management systems c. just-in-time inventory d. scanning of bar-coded RFID tags 2-6 C l S l Ch i M t A L i ti P ti 9th EditiCoyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 2 Test Bank • Service logistics: The acquisition, scheduling, and management of the facilities, assets, personnel, and materials to support and sustain a service operation or business. (Page 38) 34. There are five principal types of economic utility that add value to a product or service. Name four of the five and pick one to discuss in more detail. ANSWER: The five principal types of economic utility are form, time, place, quantity, and possession. Generally, production activities are credited with providing form utility; logistics activities with time, place, and quantity utilities; and marketing activities with possession utility. (Page 39) 35. The logistics definitions discussed indicate 14 activities for which the logistics manager might be responsible. Name at least eight and briefly discuss any two in detail. ANSWER: • Transportation • Warehousing and storage • Industrial packaging • Materials handling • Inventory control • Order fulfillment • Inventory forecasting • Production planning and scheduling • Procurement • Customer service • Facility location • Return goods handling • Parts and service support • Salvage and scrap disposal (Pages 41- 42) 36. The micro perspective of logistics examines the relationships between logistics and other functional areas in an organization. What are these other functions? Select one and discuss how it interacts with logistics. ANSWER: The micro perspective of logistics examines the relationships between logistics and other functional areas in an organization – including marketing, manufacturing or operations, finance and accounting. Logistics, by its nature, focuses on processes that cut across traditional functional boundaries, particularly in today’s environment with its emphasis on the supply chain. Consequently, logistics interfaces in many important ways with other functional areas since the logistics-related flows, as well as supply chain flows, tend to be horizontal in an organization, cutting across other functions. (Page 49) 37. What are the 4 “Ps” of marketing? Select one, and discuss how it interfaces with 2-7 Coyle Supply Chain Management: A Logistics Perspective, 9th EditionCoy e Supp y C a a age e t: og st cs e spect ve, 9 d t o Chapter 2 Test Bank logistics. ANSWER: Logistics has an important relationship with marketing. The rationale for this strong relationship is that physical distribution, or the outbound side of an organization’s logistics system, plays an important role in the sale of a product. In some instances, physical distribution and order fulfillment may be the key variables in the continuing sales of products; that is, the ability to provide the product at the right time to the right place in the right quantities and the right cost might be the critical element in making a sale. (Pages 50- 52) 38. What is ROA? Discuss how it can impact logistics. ANSWER: Finance has become increasingly important to logistics and supply chain management during the last decade. The impact that logistics and supply chain management can have upon return on assets (ROA) or return on investment (ROI) is very significant. Logistics can positively impact ROA in several ways. First, inventory is both a current asset on the balance sheet and a variable expense on the income statement. Reducing inventory levels reduces the asset base as well as the corresponding variable expenses, thus having a positive impact on ROA. Second, transportation and warehousing costs can also influence ROA. If an organization owns its warehouses and transportation fleet, they are fixed assets on the balance sheet. If these assets are reduced or eliminated, ROA may increase. Similarly, if an organization utilizes third parties for warehousing and transportation, variable expenses will be incurred, which impact the profit margin. Finally, the focus on customer service can increase revenue. As long as the incremental increase in revenue is larger than the incremental increase in the cost of customer service, ROA will increase. (Page 53) 39. There are a number of product-related factors that can affect the cost and importance of logistics. Identify the factors, and pick one to discuss further. ANSWER: Among the more significant product-related factors that affect the cost and importance of logistics are dollar value, density, susceptibility to damage, and the need for special handling. (Page 56) 40. Spatial relationship is extremely significant to logistics. Discuss why this is true. ANSWER: “Spatial relationships” refers to the location of fixed points in the logistics system with respect to demand and supply points. Spatial relationships are very important to transportation costs, since these costs tend to increase with distance. The distance factor or spatial relationships might affect logistics costs in ways other than transportation costs. For example, a firm located far from one or more of its markets might need to use a market-oriented warehouse to make customer deliveries in a satisfactory time period. Therefore, distance can add to warehousing and inventory carrying costs. (Pages 59-60) 2-8Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank CHAPTER 3 TEST QUESTIONS True-False ANSWER: False, Page 77 2. The third era of globalization is said to have begun around the year 2000. The significant characteristic of this era is that it is being powered by individuals and smaller organizations in contrast to the countries of the first era and the large companies of the second era. ANSWER: True, Page 78 3. The supply chain should manage four important flows, namely, materials and products, information, financials, and demand. ANSWER: True, Page 79 4. Operating globally has become harder to accomplish for individuals and small companies. ANSWER: False, Page 81 5. The terms of a demise charter transfers full control of the chartered vessel to the charterer. ANSWER: True, Page 94 6. Customs Trade Partnership Against Terrorism (C-TPAT) is a mandatory program in which importers must participate. ANSWER: False, Page 89 7. The North American Free Trade Agreement has removed all trade barriers between the U.S., Canada, and Mexico. ANSWER: False, Page 90 8. A maquiladora plant can be located anywhere in South America. ANSWER: False, Pages 91-92 9. Ocean transportation offsets slower service with lower rates than other modes. ANSWER: True, Page 93 10. A firm using air transportation cannot use the same packaging for international shipping as for domestic shipping because many cargo aircraft are not pressurized. ANSWER: False, Page 95 11. A Foreign Freight Forwarder is unregulated by the government. ANSWER: False, Page 96 12. Export Trading Companies and Export Management Companies are essentially the same. ANSWER: False, Pages 97-98 1. Globalization is not considered to be one of the external factors driving change in logistics. 3-1Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank 13. An importer can store goods in a bonded warehouse for up to three years without paying duty. ANSWER: True, Page 99 ANSWER: False, Page 86 Multiple-Choice 15. Globalization was initially driven by countries ANSWER: c, Page 77 16. A critical ingredient for the Third Era of globalization is: ANSWER: b, Page 78 17. The Supply Chain should a. manage all aspects of transportation, selecting the least cost when possible. b. seek to maximize profits. c. use the same techniques internationally that it uses domestically. d. manage materials and products, information, financials, and demand. ANSWER: d, Page 79 18. In his book “The Wealth of Nations”, Adam Smith stated that economies and companies could improve their wealth by a. allowing specialization of tasks. b. ensuring that logistics is used to gain advantage in the marketplace. Soft issues such as social and cultural concerns should not present a challenge for supply chain managers, whose role is to focus on the physical side of supply chain execution. 14. a. seeking new territories. b. outside the U.S. seeking to establish plants in the U.S. c. seeking materials and goods not available in their own land. d. sponsoring trading missions. the global emphasis on tailoring products and marketing strategies to meet perceived local needs a. technological advances, especially in information technology and communications b. c. the global emphasis on profits and efficiency d. the global emphasis on the marketing mix and marketing functions 3-2Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank c. becoming multi-national. d. moving production off shore. ANSWER: a, Page 81 19. A demand-driven system is also known as a. a supply chain. b. a pull system. c. a marketing system. d. a multi-echelon system. ANSWER: b, Page 87 20. A maquiladora plant is a. a new type of flower. b. an entity created under NAFTA c. a U.S. plant performing manufacturing, processing, or assembly activity in Mexico. d. a factory owned by the Maquiladora Corporation. ANSWER: c, Pages 91-92 21. Focused production is a. a strategic decision to make only what the market desires. b. used by those firms not sure of the market demands. c. a strategy in which a given plant produces one or two items of the company’s total product line. d.` a trend in the electronics industry with manufacturing in China. ANSWER: c, Page 93 22. Which are the major modes of international transportation? ANSWER: a, Page 93 23. Which is a major category of ocean shipping? a. water and air b. water and rail c. rail and motor d. rail and air 3-3Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank ANSWER: d, Page 94 24. Which category of ocean shipping offers set schedules over specified sea routes? ANSWER: a, Page 94 a. passenger travel b. common carriers c. exempt carriers d. charter vessels a. liner service b. charter vessels c. private vessels d. demise charter vessels 3-4Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank 25. Which is the main advantage of international air transport? ANSWER: c, Page 95 26. Which condition must be present before motor carriers and rail carriers can be used for international shipments? a. shipments must be in volume and in bulk b. the shipment must be between adjacent countries c. no customs barriers can be imposed d the shipment cannot pass through adjacent countries ANSWER: b, Page 96 27. These are designated by the U.S. secretary of the treasury for the purpose of storing, repacking, sorting or cleaning imported merchandise entered for warehousing without paying import duties while the goods are in storage. ANSWER: a, Page 99 28. Gemini products wishes to enter foreign markets but lacks the resources to do so. They evaluate their alternatives and approach Overseas Traders, LLC, a company that specializes in the foreign distribution of products of the type which Gemini manufacturers. Overseas purchases $50,000 of Gemini's products for sale on the international market. Overseas is which type of global logistics channel intermediary? ANSWER: c, Page 98 29. The global logistics channel intermediary that supervises the movement of goods through customs and ensures that the documentation accompanying a shipment is complete and accurate a. freight rates b. flexibility c. transit times d. accessibility a. Bonded warehouses b. Hold-on-dock storage c. In-transit storage areas d. Transit sheds a. NVOCC b. export packer c. export trading company d. customs house broker 3-5Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank is known as ANSWER: c, Page 98 30. Which type of global logistics channel intermediary enables goods to move through customs more easily by consolidating small shipments into more economical sizes? ANSWER: d, Page 97 31. Goods can be stored in a bonded warehouse ANSWER: a., Page 99 ANSWER: c, Page 79 a. a foreign freight forwarder. b. an export packer. c. a customs house broker. d. a foreign trade specialist. a. customs house broker b. NVOCC c. export trader d. foreign freight forwarder a. for up to 3 years. b. until next year. c. Indefinitely. d. until the next shipment of the same product arrives. 32. The biggest and best known example of a regional trade agreement (RTA) is the: a. World Trade Organization (WTO) b. General Agreement on Tariffs and Trade (GATT) c. European Union (EU) d. Customs Trade Partnership Against Terrorism (C-TPAT) America’s ports are a key component of its global commerce. U.S. ports also play a vital role for the cruise industry. Which of these is not one of the top three departure ports for the cruise industry? 33. a. Port Canaveral, Florida b. Cape Liberty, New Jersey c. Miami, Florida 3-6 C l S l Ch i M t A L i ti P ti 9th EditiCoyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test Bank ANSWER: b, Page 89 ANSWER: b, Page 92 Essay 35. What are the three phases of globalization? Pick one and discuss. ANSWER: Globalization was initially driven by countries (1400–1800) seeking materials and goods not available in their own land, but they also had imperialistic objectives of enhancing their economic and political power. The second era of globalization (1800–2000) was driven by companies seeking goods and materials, labor, economies of scale, and markets. This era produced multinational companies with global reach and enormous economic market power. In the second phase of globalization, companies headquartered in developed countries like the United States, Western Europe, and Japan had an advantage in terms of infrastructure, educational systems, and capital markets. It has been suggested that the world was, figuratively speaking, tilted in favor of the developed countries. The economic advantage was such that the citizenry of the less-developed countries tended to migrate to the more developed countries, especially the United States. The well-educated and skillful immigrants added to the advantages enjoyed by the developed countries. The third era of globalization is said to have begun around the year 2000. The significant characteristic of this era is that it is being powered by individuals and smaller organizations in contrast to the countries of the first era and the large companies of the second era. The critical ingredients for this new era have been the technological advances, especially in information technology and communications, that have connected the “four corners of the globe.” Thus, with the enabling of more broad-based participation in the global economy without some of the massive infrastructure previously required, the world has indeed become flat. (Pages 77-78) 36. Discuss how companies and economies can increase their wealth. ANSWER: Adam Smith who is credited with providing the economic rationale for capitalism in his famous book, Wealth of Nations, stated that division of labor or labor specialization is limited by the extent of the market or volume of demand. In other words, economies and companies could improve their wealth by allowing specialization of tasks. The automobile assembly line is a good example of specialization wherein each individual performs a small task relative to the total d. Ft. Lauderdale, Florida As market forces continue to exert pressure on companies to improve profitability, the quest for lower-cost manufacturing has been a factor in the relocation of manufacturing from Mexico to ________ ? 34. a. South America b. Asia c. Russia d. Canada 3-7 Coyle Supply Chain Management: A Logistics Perspective, 9th EditionCoy e Supp y C a a age e t: og st cs e spect ve, 9 d t o Chapter 3 Test Bank product, but the output per individual is higher than if individuals each assembled a complete car. Smith’s caveat, which is relevant here, indicates that the advantage is true as long as you can sell the increased volume that is produced. An important role of logistics is to help extend the market area of countries or companies through improved efficiency to lower the landed cost in new market areas. This logic is even more apropos for supply chains. It can be argued that supply chains help to establish the limits of what is competitively possible in the market. In other words, the cost and value at the end of the supply chain determine a firm’s ability to compete in a global marketplace. (Page 81) 37. Discuss how our trading partners have changed in relation to their amount of trade with the U.S. ANSWER: Table 3.1 presents trade data (total of imports and exports) for the top 10 U.S. trading partners. China is now our second largest trading partner, supplanting Mexico, which historically has been number two. The trade volume with China was 22.2 percent of the total of the top 10 for 2010, and it increased its trade volume by 25 percent from 2009 to 2010. In 2000, China was number four on the top-10 list following Canada, Mexico, and Japan, and its trade volume with the United States has nearly quintupled since that time ($457 billion vs. $94 billion). The total value of trade with these top 10 trading partners increased by 22.63 percent from 2009 to 2010, and since 2000 it has increased by about 288 percent in total value. Both of these percentage increases are reflective of the growing interdependence and the trade relationships with other countries. India does not appear in the top 10 countries listed in Table 3.1. India’s strength has been in the area of information technology services, which tends to understate its importance for global supply chains. In 2005, 59 percent of U.S. corporate spending (offshore) for information technology services was spent in India. Interestingly, China, which is known for manufacturing various types of products, is attracting U.S. companies to establish research centers. Microsoft and Intel established research centers in Beijing in 1998, Google in 2005, and Rohm & Haas and Dupont in Shanghai in 2006. The combined populations of China and India, which are in excess of two billion people, make them attractive as markets and as sources of imports. Consequently, it seems safe to conclude that global supply chain connections to both China and India will continue to grow. (Pages 82-83) 38. From a customer service perspective, global markets and strategy have four important characteristics. Name them and select one to discuss. ANSWER: First, companies attempt to standardize to reduce complexity, but they recognize that global markets need some customization. Second, global competition reduces the product life cycle since products can be copied or reengineered quickly by competitors. Third, traditional organizational structures and related business models frequently change since companies get more involved in outsourced manufacturing and some logistical activities such as transportation, warehousing, and order fulfillment. Fourth, globalization introduces more volatility and complexity. It is much more likely that supply chains will experience challenges with weather, terrorism, strikes, 3-8 Coyle Supply Chain Management: A Logistics Perspective, 9th Edition h kChapter 3 Test Bank and other disruptions. The need for flexibility and responsiveness is a requisite for customer service through the supply chain. (Pages 85-87) 39. Discuss the impact of 9/11 on international logistics. ANSWER: Global commerce between the United States and the rest of the world came to a halt on September 11, 2001, when terrorists attacked the United States. Air transportation into and out of the United States and even some domestic flights were suspended. Ocean vessels loaded with containers and other freighter ships were prevented from unloading or loading in the major ports. Many had to anchor off the coast for days, waiting to come into the assigned port. Fresh fruits and vegetables rotted, and needed materials did not arrive on time. It was a frightening period but a time when we saw firsthand how global and interdependent with the rest of the world we had become. Before the events of September 11, 2001, ships would frequently clear U.S. ports in a matter of hours. That scenario has changed because of security measures that have been introduced. More cargo inspections, much more paperwork, and a longer time to clear U.S. borders are now a reality. Ships may be stopped and inspected and cargo inspected and checked. Some ships and items are given very close scrutiny because of their country of origin. Given the importance of global trade to the United States, a delicate balance exists between security and the efficient flow of global commerce. If security is too tight it could impede the flow of needed goods or materials, causing delays and decreased efficiency. Ports and border gateways can become congested because of security measures. Consequently, clearance time has increased from hours to days in some instances. (Pages 87-88) 40. Define and discuss NAFTA. ANSWER: The North American Free Trade Agreement was signed by leaders of Canada, the United States, and Mexico in 1993 and was ratified by Congress in early 1994. NAFTA establishes free trade between these three countries and provides the way the agreement is to be interpreted. NAFTA states that the objectives of these three countries is based on the principles of an unimpeded flow of goods, most favored nation (MFN) status, and a commitment to enhance the cross-border movement of goods and services. MFN status provides the lowest duties or customs fees, if any, and simplifies the paperwork required to move goods between the partner countries. Even though the U.S.-Canada Free Trade Agreement has been in effect for some time, certain trade barriers still remain. For example, many U.S. companies do not recognize certain French-English requirements for packaging and ingredient labeling. The supply chain constraints will eventually be eliminated as NAFTA experience grows. Computerized customs information systems are currently operating in the United States and Canada, with Mexico a few years behind. The electronic transfer of information for NAFTA shipments into Mexico will speed the border crossing and improve logistics service. 3-9 Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 3 Test BankChapter 3 Test Bank In the long run, the goal of NAFTA is to create a better trading environment; but in the short run, it has created some confusion due to the recordkeeping required to prove the origin of the product to obtain favorable tariff treatment. NAFTA’s goals involve making the needed structural changes to operate a borderless logistics network in North America. Information systems, procedures, language, labels, and documentation are being redesigned. As new markets and supply sources develop, new transportation and storage facilities as well as intermediaries will need to be developed. (Page 90) 41. There are four modes used for international shipments. Name them, and discuss one mode’s role in international logistics. ANSWER: Global transportation is usually much more complex than domestic U.S. transportation. The distances involved are greater, and the number of parties involved is typically more extensive. Because of the large expanses of water separating most regions of the world, the major modes of global transport are ocean and air. Land modes also carry freight between contiguous countries, particularly in Europe, where land routes are short. (Page 93) 42. Define the difference between an Export Management Company and an Export Trading Company. Explain why a firm would want to use either. ANSWER: Often, a firm wishes to sell its products in a foreign market but lacks the resources to conduct the foreign business itself. An export management company (EMC) can supply the expertise such firms need to operate in foreign environments. EMCs act as agents for domestic firms in the international arena. Their primary function is to obtain orders for their clients’ products by selecting appropriate markets, distribution channels, and promotional campaigns. An export trading company (ETC) exports goods and services. The ETC locates overseas buyers and handles most of the export arrangements, including documentation, inland and overseas transportation, and the meeting of foreign government requirements. The ETC may or may not take title to the goods. (Pages 97-98) 3-10Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank CHAPTER 4 TEST QUESTIONS True-False ANSWER: True, Page 108 ANSWER: False, Page 109 ANSWER: False, Page 109 ANSWER: True, Page 111 ANSWER: False, Page 113 ANSWER: False, Page 114 7. Collaboration is usually defined as a “business practice that encourages individual organizations to share information and resources for the benefit of all”. ANSWER: True, Page 115 8. A Third Party Logistics firm is defined as a company that owns trucks and warehouses so as to offer integrated services. ANSWER: False, Page 119 ANSWER: True, Page 119 ANSWER: False, Page 120 Many organizations have directed significant attention toward working more closely with supply chain partners, including not only customers and suppliers but also various types of logistics suppliers 1. 2. A horizontal relationship refers to firms on the same level in the supply chain. The range of relationships with 3PLs ranges from being a vendor to being a vertical supplier. 3. The first stage in the process model for forming and sustaining supply chain relationships involves the process by which a manufacturer becomes fully aware of its logistics and supply chain needs. 4. Drivers and facilitators are internal issues that an organization must address before seeking a 3PL. 5. Once a 3PL provider is chosen, it is not necessary for an organization to seek continuous improvements as the 3PL will handle that function. 6. Outsourcing and contract logistics are terms sometimes used to describe third-party logistics. 9. A financial based 3PL is a firm that takes a financial interest in an organization in order to underwrite the outsourcing of that firm’s logistics. 10. 11. The most frequently outsourced function is freight bill payment. 4-1Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank ANSWER: False, Page 123 ANSWER: False, Page 124 Multiple-Choice ANSWER: d, Page 108 14. Whether the relationship may or may not be with a provider of logistics services, today’s supply chain relationships are most effective when collaboration occurs among the ____________ who are involved. ANSWER: a, Page 115 15. Vertical collaboration refers to ANSWER: a., Page 116 16. Horizontal collaboration refers to a relationship that is ___________ and/or ____________. a. 3PLs to 3PLs and/or service provider to service provider ANSWER: b, Page 117 17. Full collaboration is the dynamic combination of The “IT gap” refers to the difference between the internal IT capabilities of 3PL users and the IT expertise of the 3PL providers. 12. 13. Many organizations are working more closely with a. customers. b. customers and suppliers. c. third-party logistics firms. d. customers, suppliers, and various types of logistics suppliers. a. participants b. third party logistics providers c. customers d. suppliers a. collaboration among buyers and sellers in the supply chain. b. collaboration among carriers and shippers. c. collaboration that moves up the supply chain. d. collaboration with competitors. b. buyer to buyer and/or seller to seller c. flat across the chain and/or involving partners equal in size d. collaboration with horizontal and/or vertical competitors 4-2Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank a. buyers, sellers, retailers, and 3PLs. ANSWER: c, Page 117 18. A third-party logistics firm may be defined as a. an outsource service. d. an external supplier that performs or manages all or part of a company’s logistics functions. ANSWER: d, Page 119 19. The least-frequently used IT-based services by customers of 3PLs are: ANSWER: d, Page 124 20. While available evidence supports the fact that the president or CEO and the finance executive are often involved with the identification of the need for logistic services, ANSWER: b, Page 127 21. Approximately two-thirds of 3PL customers think their providers supply ANSWER: a, Page 127 Essay b. buyers, sellers, retailers, 3PLs, and appropriate government agencies. c. both vertical and horizontal collaboration. d. buyers and sellers only. b. a firm that owns trucks and warehouses. c. a firm that owns trucks and warehouses and provides computer support. a. transportation management (execution) b. warehouse/distribution management c. global trade management and transport sourcing d. strategic and customer-related a. customers are demanding a change. executives from other areas in the company are also aware of such needs but to a lesser degree. b. c. a 4PL will suggest greater collaboration. d. off shore sourcing will point to greater need. a. tactical or operational services. b. strategic or integrative services. c. trucking and warehouse services. d. a firm that can supply a competency that is not core to the firm. 4-3Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank 22. Generally, there are two types of logistics relationships. Name both, and pick one to discuss in more detail. ANSWER: The first is what may be termed vertical relationships, which refers to the traditional linkages between firms in the supply chain such as retailers, distributors, manufacturers, and parts and materials suppliers. These firms relate to one another in the ways that buyers and sellers do in all industries, and significant attention is directed toward making sure these relationships help to achieve individual firm and supply chain objectives. The second type of logistics relationship is horizontal in nature and includes those business agreements between firms that have “parallel” or cooperating positions in the logistics process. To be precise, a horizontal relationship may be thought of as a service agreement between two or more provider firms based on trust, cooperation, shared risk and investments, and following mutually agreeable goals. Each firm is expected to contribute to the specific logistics services in which it specializes, and each exercises control of those tasks while striving to integrate its services with those of the other logistics providers. (Page 109) 23. Define what a “transactional” relationship is, and discuss how this occurs in logistics. ANSWER: The range of relationship types extends from that of a vendor to that of a strategic alliance. In the context of the more traditional “vertical” context, a vendor is represented simply by a seller or provider of a product or service, such that there is little or no integration or collaboration with the buyer or purchaser. In essence, the relationship with a vendor is “transactional,” and parties to a vendor relationship are said to be at “arm’s length” (i.e., at a significant distance). While this form of relationship suggests a relatively low or nonexistent level of involvement between the parties, there are certain types of transactions for which this option is desirable. One-time or even multiple purchases of standard products and/or services, for example, may suggest that an “arm’s length” relationship would be appropriate. (Pages 109-110) 24. There are six steps in the process model for forming and sustaining supply chain relationships. Name five of the six, and choose two to discuss in more detail. ANSWER: Step 1: Perform Strategic Assessment, Step 2: Decision to Form Relationship, Step 3: Evaluate Alternatives, Step 4: Select Partner(s), Step 5: Structure Operating Model, and Step 6: Implementation and Continuous Improvement. (Pages 111 – 114) 25. Define “Drivers” and “Facilitators,” and name three of the primary factors ascribed to them. ANSWER: Drivers are defined as “compelling reasons to partner”. Drivers are strategic factors that may result in a competitive advantage and may help to determine the appropriate type of business relationship. Although other factors may certainly be 4-4Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank considered, the primary drivers include the following: • Asset/cost efficiency • Customer service • Marketing advantage • Profit stability/growth Facilitators are defined as “supportive corporate environmental factors that enhance partnership growth and development.” As such, they are the factors that, if present, can help to ensure the success of the relationship. Included among the main types of facilitators are the following: • Corporate compatibility • Management philosophy and techniques • Mutuality of commitment to relationship formation • Symmetry on key factors such as relative size, financial strength, and so on In addition, a number of additional factors have been identified as keys to successful relationships. Included are factors such as: exclusivity, shared competitors, physical proximity, prior history of working with a partner or the partner, and a shared high-value end user. (Page 113) 26. What is collaboration? Name the three types, and discuss one of them in more detail. ANSWER: Most simply, collaboration occurs when companies work together for mutual benefit. Since it is difficult to imagine very many logistics or supply chain improvements that involve only one firm, the need for effective relationships is obvious. Collaboration goes well beyond vague expressions of partnership and aligned interests. It means that companies leverage each other on an operational basis so that together they perform better than they did separately. • Vertical collaboration refers to collaboration typically among buyers and sellers in the supply chain. This refers to the traditional linkages between firms in the supply chain such as retailers, distributors, manufacturers, and parts and materials suppliers. Transactions between buyers and sellers can be automated, and efficiencies can be significantly improved. Companies can share plans and provide mutual visibility that causes them to change behavior. A contemporary example of vertical collaboration is collaborative planning, forecasting, and replenishment, (CPFR),an approach that helps buyers and sellers to better align supply and demand by directly sharing critical information such as sales forecasts. • Horizontal collaboration refers to a relationship that is buyer to buyer and/or seller to seller, and in some cases even between competitors (including providers of logistics services). Essentially, this type of collaboration refers to business arrangements between firms that have parallel or cooperating positions in the logistics or supply chain process. Horizontal collaboration can help find and eliminate hidden costs in the supply chain that 4-5Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank everyone pays for by allowing joint product design, sourcing, manufacturing, and logistics. • Full collaboration is the dynamic combination of both vertical and horizontal collaboration. Only with full collaboration do dramatic efficiency gains begin to occur. With full collaboration, it is intended that benefits accrue to all members of the collaboration. The development of agreed-upon methods for sharing gains and losses is essential to the success of the collaboration. (Pages 115-117) 27. Define Third Party Logistics and list some of the participants in this sector. ANSWER: Essentially, a third-party logistics firm may be defined as an external supplier that performs all or part of a company’s logistics functions. This definition is purposely broad and is intended to encompass suppliers of services such as transportation, warehousing, distribution, financial services, and so on. There are other desirable characteristics of a “true” 3PL. Among these, multiple logistics activities are included, those that are included are “integrated” or managed together, and they provide “solutions” to logistics/supply chain problems. Recently, there have been significant increases in the number of firms offering such services, and this trend is expected to continue. While many of these firms are small, niche players, the industry has a number of large firms as well. Examples of the latter include UPS Supply Chain Solutions, FedEx Supply Chain Services, IBM Global Business Services, Ryder, DHL-Exel, Menlo Logistics, Penske Logistics, Schneider Logistics, Caterpillar Logistics, UTi Worldwide, Inc., Panalpina, and Agility, Inc. Depending on the firm and its positioning in the industry, the terms contract logistics and outsourcing are sometimes used in place of third-party logistics. While some industry executives take care to distinguish among terms such as these, each of these terms refers broadly to the use of external suppliers of logistics services. Except for the suggestion that the term contract logistics generally includes some form of contract, or formal agreement, this text does not suggest any unique definitional differences between these terms. Although most customers who use 3PLs choose to have some formal contract to define the terms of the agreement, it is interesting to note that a small number of companies choose not to have formal contracts with their suppliers of logistics services. (Page 119) 28. There are at least five types of third-party logistics firms. Name them, and select two to discuss in more detail. ANSWER: Included are transportation-based, warehouse/distribution-based, forwarderbased, financial-based, and information-based firms. (Pages 119-120) 29. What are some of the types of activities often outsourced? ANSWER: The logistics services most frequently outsourced are those that are more operational, transactional, and repetitive in nature. Looking at the results over all of the regions studied, the most frequently outsourced services include domestic transportation 4-6 C l S l Ch i M t A L i ti P ti 9th EditiCoyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 4 Test Bank (83%), international transportation, (75%), warehousing (74%), customs brokerage (58%), and forwarding (53%). The less frequently outsourced logistics services tend to be customer-related, involve the use of information technology, and are more strategic in nature. (Page 123) 30. In a recent survey, respondents reported experiencing a number of problems with their relationships with 3PLS. What were some of them? Choose two, and discuss how you feel this would impact the relationship. ANSWER: Their responses tended to focus on several key areas of concern as follows: • Service-level commitments not realized • Time and effort spent on logistics not reduced • Cost reductions not realized • Cost “creep” and price increases once relationship has commenced • Unsatisfactory transition during implementation stage • Inability to form meaningful and trusting relationships • Lack of ongoing improvements and achievements in offerings • Lack of strategic management and/or consultative/knowledge-based skills • Lack of global capabilities Overall, it suggests a need to meet service-level and cost objectives and to avoid unnecessary increases in price to the customer once the relationship has commenced. Also, it appears that some 3PLs need to improve in the areas of strategic management, technology, and knowledge-based skills. These suggest expectations by the customers that currently are not being met. Finally, some users of 3PL services feel that the time and effort spent on logistics have not decreased and that their control over the outsourced function may have lessened. (Pages 129-130) 31. Define and discuss the term “4PL.” ANSWER: Although the concept has been around for some time, the “fourth-party logistics” (4PL) provider is becoming more evident in the business world. Essentially a supply chain integrator, a 4PL may be thought of as a firm that “assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.” Some of the types of services that may be provided by a 4PL include managing multiple 3PLs (lead logistics provider), taking on more risk than 3PLs, providing advanced IT services, providing strategic consultancy, and “control tower” services (Page 130) 4-7Coyle Supply Chain Management: A Logistics Perspective, 9th Edition Chapter 5 Test Bank CHAPTER 5 TEST QUESTIONS True-False ANSWER: False, Page 141 2. A metric is complex to define, usually involves a calculation or a combination of measurements, and is often in the form of a ratio. ANSWER: True, Page 141 3. A metric