Solution Manual For
Principles of Supply Chain Management: A Balanced Approach, 6th
Edition by Joel Wisner, Keah-Choon Tan, G. Keong Leong
Solution and Answer Guide
Joel Wisner, Keah-Choon Tan, G. Keong Leong, Principles of Supply Chain Management: A Balanced
Approach, Chapter 01: Answers to Questions/Problems
Table of Contents
PR
Discussion Questions .......................................................................................................... 1
Cases ................................................................................................................................ 7
Learning Objectives ................................................................................................................................... 7
Answers to Questions ................................................................................................................................ 7
Appendix 1.1 The Beer Game .............................................................................................. 8
O
Questions and Exercises ............................................................................................................................ 8
FD
Discussion Questions
1. Define the term supply chain management in your own words and list its most important
activities.
Answers:
O
The Supply-Chain Council’s definition of supply chain management is ―managing 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
C
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 would they most likely concentrate on?
Answers:
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.
Answers:
, This will vary from student to student, but should include, for instance, parts suppliers, bicycle
suppliers, and other suppliers (i.e., helmet suppliers) and services (i.e., repair services) as first-
tier suppliers and bicycle owners as first-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain.
Answers:
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?
Answers:
A cold chain is an alliance of companies that can monitor and protect the temperature of
perishable products to maintain quality and safety from the point of origin through distribution to
the final consumer. Cold chains became a popular news item in 2020 as COVID-19 vaccines
began to be distributed globally by Pfizer and Moderna. The two vaccines must be stored and
transported at sub-zero temperatures.
6. How has the recent global pandemic impacted supply chain management?
PR
Answers:
In general, it made things more difficult, particularly for global supply chains—companies have
gone bankrupt, retailers have stopped buying regularly, ports have shut down unexpectedly, and
many purchases have gone online as people stayed home. Companies have had to react quickly
to the changes.
7. What roles do ―collaboration‖ and ―trust‖ play in the practice of supply chain management?
O
Answers:
This is essential for process integration. Sharing information and determining joint strategies is
part of the process of integration and collaboration, and to do this, trust must be present
between the customer, focal firm, and supplier.
FD
8. Why don’t firms just become more vertically integrated (for example buy out suppliers and
customers), instead of trying to manage their supply chains?
Answers:
This could cause a loss of focus and keep managers and employees from doing their core
competencies, resulting in loss of performance.
O
9. What types of organizations would benefit the most from practicing supply chain management?
What sorts of improvements could be expected?
C
Answers:
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?
Answers:
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?
Answers:
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.
Answers:
First-tier suppliers are the focal firm’s direct suppliers. Second-tier suppliers are the focal firm’s
suppliers’ direct suppliers. Third-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 third-tier supplier. Similarly, the focal firm’s
customers’ customers’ customers are their third-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?
PR
Answers:
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 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.
O
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?
FD
Answers:
The general idea of supply chain management had been discussed for many years prior to the
chain of events shown in Figure 1.1. 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
O
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.‖
C
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, production problems, or
both 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 die out in a few years? Why or why not?
Answers:
, 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?
Answers:
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.
Answers:
The four elements are supply (supply base reduction, supplier alliances, SRM, global sourcing,
ethical and sustainable sourcing), operations (demand management, CPFR, inventory
PR
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?
Answers:
O
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 many suppliers competing for this
business. But this works against ever creating trusting and lasting supply chain partnerships. In
FD
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?
Answers:
O
Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as in buying
some MRO (maintenance, repair, and operations) items. But when quality and service matter,
price should only be one of the purchase criteria.
C
20. What is supplier management? What are some of the activities of supplier management?
Answers:
Simply put, it means encouraging or helping the firm’s suppliers to perform in some desired
fashion, and there are a few 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?
Answers:
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?
Answers:
Principles of Supply Chain Management: A Balanced Approach, 6th
Edition by Joel Wisner, Keah-Choon Tan, G. Keong Leong
Solution and Answer Guide
Joel Wisner, Keah-Choon Tan, G. Keong Leong, Principles of Supply Chain Management: A Balanced
Approach, Chapter 01: Answers to Questions/Problems
Table of Contents
PR
Discussion Questions .......................................................................................................... 1
Cases ................................................................................................................................ 7
Learning Objectives ................................................................................................................................... 7
Answers to Questions ................................................................................................................................ 7
Appendix 1.1 The Beer Game .............................................................................................. 8
O
Questions and Exercises ............................................................................................................................ 8
FD
Discussion Questions
1. Define the term supply chain management in your own words and list its most important
activities.
Answers:
O
The Supply-Chain Council’s definition of supply chain management is ―managing 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
C
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 would they most likely concentrate on?
Answers:
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.
Answers:
, This will vary from student to student, but should include, for instance, parts suppliers, bicycle
suppliers, and other suppliers (i.e., helmet suppliers) and services (i.e., repair services) as first-
tier suppliers and bicycle owners as first-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain.
Answers:
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?
Answers:
A cold chain is an alliance of companies that can monitor and protect the temperature of
perishable products to maintain quality and safety from the point of origin through distribution to
the final consumer. Cold chains became a popular news item in 2020 as COVID-19 vaccines
began to be distributed globally by Pfizer and Moderna. The two vaccines must be stored and
transported at sub-zero temperatures.
6. How has the recent global pandemic impacted supply chain management?
PR
Answers:
In general, it made things more difficult, particularly for global supply chains—companies have
gone bankrupt, retailers have stopped buying regularly, ports have shut down unexpectedly, and
many purchases have gone online as people stayed home. Companies have had to react quickly
to the changes.
7. What roles do ―collaboration‖ and ―trust‖ play in the practice of supply chain management?
O
Answers:
This is essential for process integration. Sharing information and determining joint strategies is
part of the process of integration and collaboration, and to do this, trust must be present
between the customer, focal firm, and supplier.
FD
8. Why don’t firms just become more vertically integrated (for example buy out suppliers and
customers), instead of trying to manage their supply chains?
Answers:
This could cause a loss of focus and keep managers and employees from doing their core
competencies, resulting in loss of performance.
O
9. What types of organizations would benefit the most from practicing supply chain management?
What sorts of improvements could be expected?
C
Answers:
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?
Answers:
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?
Answers:
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.
Answers:
First-tier suppliers are the focal firm’s direct suppliers. Second-tier suppliers are the focal firm’s
suppliers’ direct suppliers. Third-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 third-tier supplier. Similarly, the focal firm’s
customers’ customers’ customers are their third-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?
PR
Answers:
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 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.
O
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?
FD
Answers:
The general idea of supply chain management had been discussed for many years prior to the
chain of events shown in Figure 1.1. 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
O
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.‖
C
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, production problems, or
both 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 die out in a few years? Why or why not?
Answers:
, 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?
Answers:
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.
Answers:
The four elements are supply (supply base reduction, supplier alliances, SRM, global sourcing,
ethical and sustainable sourcing), operations (demand management, CPFR, inventory
PR
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?
Answers:
O
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 many suppliers competing for this
business. But this works against ever creating trusting and lasting supply chain partnerships. In
FD
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?
Answers:
O
Absolutely not. Low price is sometimes fine, if quality or service is not an issue, as in buying
some MRO (maintenance, repair, and operations) items. But when quality and service matter,
price should only be one of the purchase criteria.
C
20. What is supplier management? What are some of the activities of supplier management?
Answers:
Simply put, it means encouraging or helping the firm’s suppliers to perform in some desired
fashion, and there are a few 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?
Answers:
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?
Answers:
