Supply Chain & Logistics Management Questions & Answers:

1. What are the functions of supply chain management?

Supply chain management (SCM) is the coordination and management of all activities
involved in the production and delivery of goods and services to customers. The
functions of supply chain management include:

1. Planning and forecasting: This involves predicting customer demand for a product
and planning the supply chain accordingly. It also involves identifying the resources
required to produce and deliver the product.
2. Sourcing: This function involves identifying and selecting suppliers who can provide
the required resources, materials, and services for the production process.
3. Production: This function involves managing the actual production process, including
the procurement of raw materials, manufacturing, and quality control.
4. Inventory management: This involves managing the level of inventory in the supply
chain, ensuring that the right amount of inventory is available at the right time to
meet customer demand.
5. Logistics and distribution: This function involves managing the transportation and
delivery of goods to customers, ensuring that products are delivered on time and in
good condition.

Overall, supply chain management aims to improve the efficiency and effectiveness of the
supply chain, reduce costs, and improve customer satisfaction.
2. Concept / Components and functions of Physical Distribution.
Physical distribution refers to the process of delivering products from the manufacturer or
supplier to the end consumer. It involves several components and functions that work
together to ensure timely and efficient delivery of goods.

The components of physical distribution include:

1. Transportation: This involves selecting the appropriate mode of transportation, such

as trucks, trains, ships, or planes, to move the products from the manufacturer to the
end consumer.
2. Warehousing: This component involves the storage of products in a warehouse until
they are ready to be shipped to the end consumer. This includes inventory
management, order picking, and packing.
3. Order processing: This function involves the coordination of orders between the
manufacturer, distributor, and end consumer. It includes order placement, order
processing, and order tracking.
4. Packaging: This component involves the proper packaging of products to ensure they
are protected during transportation and delivery.
5. Material handling: This function involves the movement of products within a
warehouse or distribution center, including loading and unloading of products.

The functions of physical distribution include:

1. Customer service: This function involves meeting customer expectations by delivering

products on time, in the right quantity and quality, and with proper packaging.
 2. Transportation management: This function involves selecting the appropriate mode
of transportation, optimizing the transportation routes, and managing transportation
costs.
3. Inventory management: This function involves managing inventory levels to ensure
that products are available when needed while minimizing inventory holding costs.
4. Warehousing management: This function involves managing the storage and
movement of products within a warehouse, including inventory management and
order processing.
5. Packaging and material handling management: This function involves managing the
packaging and material handling processes to ensure that products are protected
during transportation and delivery.

Overall, physical distribution plays a critical role in the supply chain by ensuring that
products are delivered to the end consumer in a timely, efficient, and cost-effective
manner.

3. Meaning of Integrated Service Provider.

~ Integrated Service Provider refers to a company or organisation that provides a

complete suite of services to its clients. It could be a single entity offering multiple
services or a consortium of companies collaborating to offer a comprehensive solution.
An integrated service provider understands the needs of its clients and offers a range of
services to cater to their requirements.

The services provided by an integrated service provider could include IT services,

engineering, architecture, project management, procurement, logistics, finance,
marketing, and others. These services are seamlessly integrated, allowing clients to
receive a customised, one-stop-shop solution.

By offering a complete package of services, an integrated service provider facilitates

streamlined operations, increased efficiency, reduced costs, and improved customer
satisfaction. Such providers often work with large organisations, governments, and
other institutions that require sophisticated and complex services. An integrated service
provider enables clients to focus on their core business while leaving the management
of peripheral services to the experts.

4. Meaning of Supply Chain Integration.

Supply chain integration refers to the coordination and collaboration of all the activities
and functions involved in the production and delivery of products or services to
customers. It involves the integration of various supply chain partners, including
suppliers, manufacturers, distributors, and retailers, to ensure that the supply chain
operates smoothly and efficiently.

The goal of supply chain integration is to optimize the flow of goods, information, and
funds across the entire supply chain to achieve better coordination, faster response times,
lower costs, and higher customer satisfaction. This can be achieved through various levels
of integration, including:
 - Internal integration: This involves the integration of all the internal functions
within a company, such as marketing, production, and logistics, to ensure that
they work together towards a common goal.
- External integration: This involves the integration of all the external partners
in the supply chain, such as suppliers, manufacturers, distributors, and
retailers, to ensure that they work together seamlessly.
- Vertical integration: This involves the integration of all the levels of the supply
chain, from raw materials suppliers to end customers, to achieve greater
control and coordination.
- Horizontal integration: This involves the integration of all the functions at the
same level of the supply chain, such as all the distributors or retailers, to
achieve better coordination and collaboration.

Overall, supply chain integration is essential for businesses to compete in today's

global economy. It helps to create a more efficient and effective supply chain that
can respond quickly to changes in customer demand, reduce costs, and improve
overall performance.

5. How marketing channels adds value in the system

Marketing channels are a crucial component in creating value for the customers. Here
are some of the ways that marketing channels add value in the system:

1. Increased availability of products - Marketing channels make it possible for

businesses to extend their reach and make their products or services available in
various locations. For instance, a company can sell its products online, which can be
accessed from anywhere in the world. This way, customers are not limited to a
specific store location or availability.
2. Better customer service - Marketing channels allow businesses to provide better
customer service. Customers can obtain product information, get answers to their
questions, or receive support from the brand's website, email, social media pages,
live chat, or phone calls.
3. Cost-efficient distribution - With the help of marketing channels, businesses can
distribute products or services more efficiently, which significantly lowers costs.
Companies can use a combination of online and offline marketing channels to
reach their target market without incurring significant distribution costs.
4. Improved customer experience - Marketing channels help businesses to create a
seamless customer buying experience. Customers can buy products or services
through various channels that suit their convenience, such as a company's website,
mobile app, or physical store. Moreover, businesses can personalize the customer
experience on each channel, making it more customized and memorable.
In conclusion, marketing channels add value to systems by extending the reach of
businesses, ensuring availability of products and services, providing better
customer service, improving the distribution process, and enhancing the overall
customer experience.
6. Explain various types of marketing channel.

1.Direct channel: This refers to a marketing channel where the producer sells directly to
the consumer. For instance, a farmer selling his produce directly to customers at a local
farmers' market.
2. Retailer channel: This type of channel involves the producer selling their goods to
retailers who then sell to the final consumer. For example, a shoe manufacturer selling
their shoes to sports stores for retail.
3. Wholesaler channel: In this channel, a producer sells their product to a wholesaler
who, in turn, sells to the retailer. For instance, a book publisher selling to a distribution
company who will then sell to various bookstores.
4. E-commerce channel: As online shopping becomes increasingly prevalent, e-
commerce channels are gaining traction. This is where goods are sold directly to
consumers through an online platform such as Amazon.
5. Agent or broker channel: In this type of channel, agents or brokers are used to sell
the products of the manufacturer. For instance, a real estate agent selling houses on
behalf of a developer.
6. Dual distribution channel: This occurs when the supplier uses more than one
marketing channel to reach their customers. For example, a company may have its own
stores as well as selling through retailers.
7. International distribution channel: This is used when a company is looking to sell
products in overseas markets. It involves finding a channel partner in the foreign market
or using an international distributor.

7. Types of Logistics Management.

Inbound Logistics - Inbound logistics is the way materials and other goods are brought
into a company. This process includes the steps to order, receive, store, transport and
manage incoming supplies. Inbound logistics focuses on the supply part of the supply-
demand equation.

Outbound Logistics - Outbound logistics focuses on the demand side of the supply-
demand equation. The process involves storing and moving goods to the customer or
end user. The steps include order fulfillment, packing, shipping, delivery and customer
service related to delivery.

Reverse Logistics - Reverse logistics is a type of supply chain management that moves
goods from customers back to the sellers or manufacturers. Once a customer receives a
product, processes such as returns or recycling require reverse logistics. It starts at the
end consumer, moving backward through the supply chain to the distributor or from
the distributor to the manufacturer. Reverse logistics can also include processes where
the end consumer is responsible for the final disposal of the product, including
recycling, refurbishing or resale.
Third party Logistics - A 3PL (third-party logistics) provider offers outsourced logistics
services, which encompass anything that involves management of one or more facets of
procurement and fulfilment activities. In business, 3PL has a broad meaning that applies
to any service contract that involves storing or shipping items. A 3PL service may be a
single provider, such as transportation or warehouse storage, or it can be a systemwide
bundle of services capable of handling supply chain management.

Fourth party logistics - Fourth-party logistics, also known as 4PL, is an operational

model in which a business outsources its entire supply chain management and logistics
to one external service provider.

8. Concept of Hub & Spoke Model, Milk run model.

~ Hub & Spoke Model:

The hub and spoke model of distribution is a transportation strategy that involves the
use of a central hub, where shipments are consolidated before they are transferred to
their destinations. The hub is a central location where goods are stored and sorted
before being sent to different spokes.
This system is used as a way to reduce transportation costs by consolidating multiple
shipments into one, while also reducing the amount of handling and processing
required at each point of the distribution network. The hub and spoke model is
commonly used by logistics companies for domestic and international transportation.
For example, FedEx uses the hub and spoke model for its package delivery service.
Packages are collected from different locations and are sorted at a central hub. After
sorting, they are sent to different distribution centre or spokes for final delivery to the
destination.

Milk Run Model:

The milk run model of distribution is a transportation strategy in which a single vehicle
makes multiple stops to pick up or drop off goods at different locations along a
predetermined route. The milk run model is commonly used in manufacturing and
supply chain management.
This model is ideal when a small number of items need to be transported with high
frequency between different locations. The milk run model helps reduce transportation
costs, reduces the amount of time required for delivery, and ensures timely delivery of
goods.
For example, a milk run delivery system can be employed in a manufacturing company
where small quantities of items are required at different departments throughout the
day. A truck can follow a specific route, picking up items from multiple locations and
delivering them to the destination. This reduces the need for individual deliveries and
the associated costs.
9. Difference between Procurement and Purchase.

Procurement and purchase are two different activities that are often used
interchangeably, but they have distinct differences in terms of value addition. Here are
five key differences:

1. Scope: Procurement is a broader term that encompasses the entire process of

acquiring goods or services, from identifying the need to contract negotiation and
final delivery. Purchase, on the other hand, is a narrower term that refers specifically
to the act of buying goods or services.
2. Strategic vs. Tactical: Procurement is a strategic function that focuses on creating
value and achieving business objectives through the acquisition of goods and
services. It involves supplier selection, contract management, and risk mitigation.
Purchase, on the other hand, is a tactical function that focuses on the transactional
aspect of buying goods and services.
3. Relationship Management: Procurement involves developing and managing long-
term relationships with suppliers to ensure a reliable supply of goods and services.
Purchase, on the other hand, is a one-time transactional activity and does not
necessarily involve relationship building.
4. Value addition: Procurement is focused on adding value to the organization through
strategic sourcing, negotiating contracts, and managing supplier relationships.
Purchase, on the other hand, adds value through efficient and effective transactional
activities, such as identifying the best price and terms for the goods or services being
purchased.
5. Long-term vs. Short-term: Procurement is focused on the long-term benefits to the
organization, such as cost savings, quality improvement, and risk reduction. Purchase,
on the other hand, is focused on the short-term benefits, such as immediate
availability of goods or services at the best price.
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10. Supplier Collaboration. (Additional ppt)