CIPS L4 D5 - LO1 VALUE-ADDING SUPPLY CHAIN RELATIONSHIPS (C4 - TEXTBOOK) questions and answers graded A+ 2024.2025

CIPS L4 D5 - LO1 VALUE-ADDING SUPPLY CHAIN RELATIONSHIPS (C4 - TEXTBOOK)List the primary & secondary activities in Porter's Value Chain Model (1.3, Figure 4.1) - correct answer 'VC' Model depicts primary and secondary activities of an organization through which value is created: Support Activities/Secondary: Firm Infrastructure Human Resource Management, Technology Development, Procurement Primary Activities: Inbound Logistics, Operations, Outbound Logistics, Sales & Marketing, Services Each lead to MARGIN According to the value chain model, how can procurement add value? (1.7) - correct answer Model suggests that procurement activities add value by supporting, or providing services, to primary value-adding activities of the org:~ -Proc function may have direct responsibility for inbound and/or outbound logistics/may manage outsourcing of those functions (eg through third party storage + logistics providers) - Proc supports value addition through operational & service activities by fulfilling the '5 rights of purchasing (- right goods, right quality, right place, right time, right price)# -It supports marketing + sales by providing product + delivery information, sourcing marketing services (eg advertising agency/printing services) or advising marketing staff on how to source reqs for themselves Explain the link between relationship processes and added value outcomes (1.16, (1.17) - correct answer Syllabus requires recognition of link between 'relationships as a process' and achievement of 'value added outcomes'. In most obvious interpretation of this: should be able to demonstrate how relationship processes (development of trust; partnering; performance management) contribute to achievement of added-value outcomes (better cost management, reduced waste activities, enhanced profitability, improved quality/service, supply chain innovation, sustainable proc) Outcome - what an org or proc function is aiming to achieve - and/or what it actually achieves Processes - means or steps by which desired outcomes are pursued, or which an org follows in order to ensure good practice Distinguish between the accounting perspective & marketing perspective in relation to added value (2.2-2.4) - correct answer Accounting perspective: added value = total revenue - total cost of all activities undertaken to develop + market a product/service. Expresses amount of economic value that has been added to org's resources: how efficiently they are being used + how effectively they are being leveraged From this POV - an org can add value by: inducing customers to pay more (providing additional features/services which attract a premium price) and/or reducing costs/increasing efficiency of processes Marketing perspective: adding value means enhancing offering to customers 'augmenting' the core product or service w/elements which customers value, + which differentiate the firm's offering/brand from competing offerings in customers' eyes (Kotler & Armstrong, 2003). Organisations can thus add value through enhancing product quality/design;VFM; delivery or availability; brand appeal; exclusivity; service levels + so on. Porter + others have emphasised that value is effectively 'in the eye of the customer' and organisations must seek to understand exactly what aspects of their offering customers will place value on. What are the 7 Wastes by Taiichi Ohno? (2.7, Table 4.1) - correct answer Key source of added value = reduction/elimination of waste activities + processes. Manufacturing guru introduced concept of 'seven wastes' - areas targetted in manufacturing operations in order to eliminate waste + improve efficiency of value stream. Over-Production Transportation Waiting Motion Over-Processing Inventory Defects/Corrections Distinguish between price analysis & cost analysis (2.11) - correct answer Price management involves managing input costs by ensuring org secures optimum price for routine/leverage procs (for which competitive purchase price - rather than whole-life VFM is priority). Price analysis: process of seeking to determine whether price offered is fair + appropriate for prices of goods. Right price in this sense may be one which is advantageous/reasonable compared to prices offered by other suppliers (competitive tenders/quotations); the prices previously paid by the buyer for the same goods/services; the market 'going rate'; and/or the price of any alternative/substitute goods