PICS CSCP2018LS Document ID 0000-1620-21903-0002357B Automatically sign me into this document in the future. (Do not select this when using a public computer)Module 1: Supply Chain Design Book 1 Version 4.0 APICS CSCP EXAM CONTENT MANUAL (ECM) Introduction Section \: Develop the Supply Chain Strategy Chapter 4: Inputs to Supply Chain Strategy.. Topic 1: Business Model ‘Topic 2: External Inputs. Chapter 2: Supply Chains and Supply Chain Strategy... Topic 1: Supply Chains and Supply Chain Management, Topic 2: Objectives of Supply Chain Management Strategy Topic 3: Supply Chain Strategy . Topic 4: Supply Chain Maturity. Topic 5: Misalignments or Gaps in Strategy. Chapter 3: Tools and Techniques. Topic 1: Macro- and Microeconomic Considerations.. Topic 2: Accounting and Financial Reporting Information Topic 3: Strategic Analysis Too! {CP Version 4,2, 2018 EatonAPICS Certified Supply Chain Professional™ (CSCP) Learning System ‘This product is based on the APICS CSCP Exam Content Manual (ECM) developed by APICS. Although the text is based on the body of knowledge tested by the APICS CSCP exam, program developers do not have access to the exam questions. Therefore, reading the text does not guarantee a passing score, ‘The references in this manual have been selected solely on the basis oftheir educational value to the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials, that may be offered or recommended by the authors or publishers of books and publications listed in this module. Every effort has been made to ensure that al information is current and correct. However, laws and regulations are constantly changing. Therefore, this product is distributed with the understanding that the publisher and authors are not offering legal or professional services, Acknowledgments \We would like to thank the following dedicated subject matter experts who shared their time, experience, and insights during the intial development and subsequent updates of the CSCP Leeming System: Greg P. aligair Dave Jankowski, CFPIM, CSCP Ho Dong Rhee, CSCP Coleste Ayers, CFPIM, CSCP Julie Jenson, CPIM, CSGP David Rivers, CFPIM, CIRM, CSCP Curtis Brewer, CFPIM, CIRM, CSCP_ Honey Johnson, CFPIM, CIRM, Maryanne Ross, CFPIM, CIRM, CSCP Jashobrata Bose, CSCP G.PAM., CSCP Kimber Ruetf, CPIM, CIRM, CSCP, ‘AI Bukey, CFPIM, CIRM, CSCP Rajesh Kamat, CSCP CPM. Jestis Campos Cortés, CPIM, CIRM, Prakash Kanagalekar, CPIM, Frank Sabin, Ph.D., CSCP SCP, PLS,C.P.M., CPSM, esce Ignacio Sénchez-Chiappe PMP.PRINGE2, GQIA, CEI, CPF, Jack Kerr, PIM, CSCP, C.P.M. Carolyn Sly, CPIM, CSCP, C.PM. Oe CaM Jose Lara Leal Smith, CPIM, CIRM, CSCP, ACPF, Lue Chalmet, Ph.D, CFPIM,CSCP Paul S. Lim, CPA, CSCP, CPIM, coop Prashant Choudhary, CSCP PMP Pam Somers, CPIM, CIRM, CSCP David N Dadich, CSCP, LSS Blackbelt Mike Loughman, CSCP Chad Strickin Prasanta K. Dash, SCP, PMP Giuseppe Lovecchio, CFPIM, Shashank Tilak, CPIM, CSCP ‘Sudtripto De, CSCP csce Ken Titmuss, CFPIM, CSCP, SCOR, ‘Amaud Deshais, CPIM, CIRM, CSCP, _Thiagu Mathan, CSCP PF, PLS, CS&OP, GODP, CSCA, CPM, CPSM coo ‘Alan Downs, CPIM, CSCP Huan-Jau (Arthur) Tseng, CFPIM, Ralph G. Fariello, CFPIM, CIRM, CSCP Richard Merritt, CFPIM, CSCP, esce Laura E. Gram, CSCP CPM, Dave Turbide, CFPIM, CIRM Janice M. Gullo, CFPIM, CSCP Staven J, Miler, CSCP Sudeep Valmiki, CSCP Amit Kumar Gupta, BE, CSCP Aan MitkonCFPIM, CRM, Roseman Van Treck, CPM, CRM, Debra Hansford, CFPIM, CIRM, scp eae CIRM. SCP. Paulo Mondolfo, CPIM, CSCP Wout Verwoerd, CFPIM, CIRM, CSCP, Marwa Hassan Aburahma, MCIPS, Peter W. Murray, CIRM Ce SCP, SCORP, CMILT Mike Oktent, Ph.D., CIRM, CSCP Robert Vokurke, Ph.0., CFPIM, CIRM, Joni Holeman, CFPIM, CIRM, CSCP Roberto (Jake) Ordonez, CSCP, CSCP, C.P.M. COA, CTL, PLS, MPS, SCProl Eddie J. Whitfield, CPIM, CIRM, CSCP Kasthuri Rengan Ponnambalam, Vivek Wikhe, CSCP Erie P. Jack, Ph.D., CFPIM, CSCP Rajesh Kumar Jagadeeswaran, CPIM, cscP scr Biair Willams, Jonah, CFPIM, CSCP Gautam Chand Pradhan, CPIM, cscP. © 2018 APIS Version 4.2, 2028 Eston Ags esos @ rmsoneeAPICS CSCP Exam Content Manual Version 4.0 Visit apies.org/eomerrata for APICS CSCP Exam Content Manual errata. The references in this manual have been selected solely on the basis of their educational value to, the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials that may be offered or recommended by the authors or publishers of books and publications listed in this manual. ©2016 APICS 8430 West Bryn Mawr Avenue, Suite 1000 Chicago, IL 60631-3439 USA Phone: 1-800-444-2742 or +1-773-867-1777 Fax: 1-773-639-3000 'No portion of this document may be reproduced under any circumstances. CSCP is a registered trademark of APICS. Stock #09031-V40 09031.V40Table of Contents Letter to Candidates... Introduction ‘About the APICS CSCP Examination Question Format Taking the Test. Interpreting Test Scores ‘Studying for the APICS CSCP Exam. APICS CSOP References Terminology . Additional Resources for APICS CSCP Candidates. APICS CSOP Learning System .. APICS CSCP Instructor-Led Review Courses APICS Educational Programs... APICS Certified in Production and Inventory Management (CPIM) Basics of Supply Chain Management (BSCM) Review Course and Examination... a @Obe BEY BORK WE APICS CSOP Certification Maintenance: Continuing Professional Development. The Importance of Certification Maintenance... APICS Code of Ethics APICS Certified Supply Chain Professional (CSCP) ‘Scope of the Subject Matter. APICS CSCP Content .. Content Outline Key Terminology. ‘Supplemental Glossary Bibliography. SESmaiso aaa ‘Sample Questions. ‘Answers to Sample Questions. 8 SCP Exam Content Manual iLetter to Candidates Dear Candidate: (On behalf of APICS and the members of the Certified Supply Chain Professional (CSCP) ‘Subcommittee, | want to thank you for your interest in the APICS CSCP program. APICS is. the global leader and premier source of the body of knowledge in operations management, including production, inventory, supply chain, purchasing, and logistics. Since 1957, individuals and companies have relied on PICS for its superior training, internationally recognized certifications, comprehensive resources, and worldwide network of accomplished industry professionals. The APICS CSCP program is primarily intended for professionals in supply chain management and is designed to test the candidate's knowledge of and ability to apply the supply chain management body of knowledge to streamline operations. It is the most widely recognized educational program for operations and supply chain management professionals around the globe. Since its launch in 2006, ‘more than 16,000 professionals in 79 countries have earned the CSCP designation. By earning the APICS CSCP credential, candidates have demonstrated their mastery of supply chain management best practices and have distinguished themselves as an industry expert with specialized, high-level knowledge and skills. The APICS CSCP program will help you advance your career while giving you validated foundational knowledge to assist in improving your company’s competitive position and profitability. The program takes a broad view of the field, extending beyond intemal operations to encompass all the steps throughout the supply chain—from the supplier, to the company, to the end consumer and the reverse flow of products and materials for the purpose of managing returns, refurbishing, or recycling, The program provides you with the knowledge to effectively manage the integration of these activities to maximize a company's value chain. This APICS CSCP Exam Content Manual provides you with an overview of the program, an outline ofits body of knowledge, key terminology, and references. The outline is, divided into three diagnostic areas, and the relative emphasis of each of the areas is indicated by a percentage figure. A sample of ten questions is also provided which demonstrate the type of questions you will encounter on the exam. The APICS CSCP Exam Content Manual should not be the only reference you use to prepare for the CSCP exam; however, it should be the first. We wish you success in your pursuit of the CSCP designation. an h. Kativrmd. ‘Ann K. Gatewood, CFPIM, CIRM, CSCP CSCP Subcommittee Chair SCP Exam Content Manual 1Introduction This exam content manual provides guidance for individuals preparing for the certification ‘examination. The objective of this manual is to outline the APICS CSCP tested body of knowledge. The main section of this manual begins with a statement about the scope of the subject ‘matter, followed by a descriptive outline of the content. Key terminology and a bibliography of references are provided. The section concludes with sample questions simitar to those that appear on the examination, the correct answers for the sample questions, and brief explanations of why they are correct. ‘The recommended procedure for mastering the subject matter is to: ‘© Teview the content outline, which defines the scope of the material * study each topic, using the suggested references. At the end of each major section is a list of the references that apply to the topies in that section. The first number indicates the sequence number for the reference in the bibliography section, and the numbers in parentheses indicate the chapters within that reference. Candidates should understand the definitions of key terminology and the application of the outlined tools and techniques. Sufficient references are given that provide different approaches to the material covered in each diagnostic area and different styles of presenting the information. Reading periodicals, such as APICS magazine and the APICS Supply Chain Management Now ‘enewsletter, will help you keep uptodate ‘about changes in the industry. About the APICS CSCP Examination The APICS CSCP exam consists of 150 ‘multiple-choice questions of which 20 are pre- test questions that do not contribute to the total score, but are necessary for research purposes. Candidates should answer all exam questions. There is a 3 ¥4 -hour time limit for the exam. For more information about testing and registration policies and procedures, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or 41-773-867-1777, Students who successfully complete the CSCP ‘examination may be eligible to receive up to three semester hours of either undergraduate or graduate college credit recommendations from the New York State Regents Research Fund, National College Credit Recommendation Service, based on an academic evaluation of student learning, ‘outcomes. Detailed information about the ‘outcomes and credit recommendations is available at nationaloors.org. Transcripts are available through APICS. Question Format All of the questions on the CSCP examination are intended to test one's understanding of the CSCP body of knowledge. In addition, itis helpful to understand the various formats of questions on the examination. The following three examples illustrate the types of multiple choice questions found on the examination: For Example 1, choose the response that best ‘completes the statement, Example 4: The 80-20 rule is an application of: A. statistical process contro! B. defect measurement ©. root cause analysis D. Pareto analysis (The correct answer is D.)For Example 2, choose the response that best answers the question. Example 2: Which of the following is used as a key performance indicator (KPI) to measure variability of demand through the supply chain? A. bullwhip effect B. fillrate inventory turns D. internal failure (The correct answer is A.) For Example 3, evaluate the statements and provide the most appropriate response. The ‘answer is not one person's opinion; itis the ‘accepted choice according to the APICS body of knowledge. Example 3: The most significant advantage of strategic sourcing is: ‘A. finding suppliers who can provide materials at lowest cost. B. using technology to select low-cost, high-quality sources of materials. ©. developing long-term supplier relationships. D. having a process for recurring transactions with single suppliers. (The correct answer is C.) Taking the Test ‘The test is designed to evaluate a candidate's, knowledge of the subject matter. Therefore, the key to success is a thorough understanding of the subject matter. All questions are based on the current CSGP body of knowledge as defined in the exam content manual. When you start your exam, read the directions. carefully. Be sure you understand the directions before you begin to answer any questions. Read each question carefully and thoroughly. If a question includes stimulus material such asa table, graph, or situation, be sure to study it before you answer the question. Avoid assuming information not given, as well as assuming you know what is being asked without reading the question completely, or “second guessing” the question. Every effort has been made to avoid misleading wording and to provide sufficient information for each question. Choose the best answer from the choices given. Care has been taken to avoid misleading choices. Do not look for hidden tricks or exceptions to the norm, For each question, one and only one of the four choices represents the correct answer. Once you begin the test, approach the questions in order, but do not waste time on those that are unfamiliar or seem difficult to you. Go on to the other questions and return to the difficult ones later if you have time. If you have some knowledge about a particular question, you may be able to eliminate one or more choices as incorrect. Your score on the test will be based on the number of questions you answer correctly, with no penalty for incorrect answers; therefore, itis to your advantage to guess rather than not answer a question. Avoid changing an answer unless you are absolutely certain you marked the wrong answer. Interpreting Test Scores ‘Sooring is based on your correct responses. There is no penalty for incorrect answers. The omission of an answer will be counted the ‘same as an incorrect answer, The APICS CSCP scaled score range is 200- 350. The minimum passing score is 300. ‘You will receive your final exam score along, with diagnostic information on your performance. Studying for the APICS CSCP Exam APICS offers a number of resources to help individuals prepare for the APICS CSCP ‘examination. (SCP Exam Content Manual 3APICS CSCP References Bibliography. The APICS CSCP Examination ‘Subcommittee has identified a number of references for the APICS CSCP examination. These are listed in the Bibliography section of this manual. All the references contain excellent material that will assist in test preparation. For additional information on the APICS CSCP references, visit the APICS website at apics.org/esop, or call APICS. Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777. A candidate may discover that the material ‘covered in the chapters of one reference duplicates material covered in another reference. Both sources are included as references to allow candidates some discretion in selecting test preparation materials that they find accessible and understandable. In deciding ifa single reference is sufficient, candidates should assess their own level of knowledge against both the descriptive examination specifications and the detailed topic list contained in the content outline. If there are any areas of weakness, the candidate should consult another reference as part of the test preparation process. Content outline. The content outline provided in this document should be considered a primary resource for exam preparation. It provides an overview of the major topics included in the exam, as well as a list of the concepts that are relevant to that topic. APICS Dictionary. The APICS Dictionary, 14th edition, is an essential reference to the exam content manual and exams. Within the profession, terminology varies among industries, companies, and the academic ‘community. The examination uses standard terminology as defined in the APICS Dictionary and the Supplemental Glossary section in this manual. Recognizing the terms and understanding their definitions are essential Terminology In studying for the APICS CSCP certification exam, candidates may discover multiple terms used to denote the same technique. An example of this is lateral integration versus horizontal integration. APICS has attempted to provide consistency with preferred terminology. However, synonyms are often used by authors in the various references used to compile the body of knowledge. Candidates are encouraged to be familiar with all terms and concepts listed within the outline and key terminology section, using the APICS Dictionary as the primary guide for definitions. The Supplemental Glossary, included in this manual, provides needed additional information identified by the exam committee. Additional Resources for APICS CSCP Candidates In addition to the cited references, it may be helpful for you to pursue chapter-sponsored courses, college courses, APICS workshops, self-study courses, or courses offered by the APICS network of authorized education providers (AEPs) as a means of learning the body of knowledge tested in the certification program. A wide variety of courses and materials is available. As with any investment, you should research various courses before choosing one. APICS CSCP Learning System The APICS CSCP Learning System is a ‘comprehensive professional development and certification preparation program. This self directed program combines print material and online interactive tools. This system is also offered in instructor-led formats. The APICS CSCP Learning System does not “teach the test” and in many areas reviews concepts but does not teach concepts. The APICS CSCP Learning System provides a thorough review of the subject matter, but it should not be used without the most current PICS CSCP Exam Content Manual as a means to direct the candidate's study. Therewill likely be some content in the APICS CSCP Learning System not covered by the exam; conversely, there will ikely be some content in the exam not covered by the learning system. Thus, itis essential for candidates to use the current exam content manual in their studies. APICS CSCP Instructor-Led Review Courses The instructor-led format combines the APICS CSCP Learning System print and online components with the leadership of a qualified instructor; peer collaboration; company networking; and a structured, set schedule to keep participants on track. Learn more about APICS recognized instructors at apics.org/ recognizedinstructors or find local APICS partners that provide APICS CSCP courses at aplos.org/finder. For courses in North ‘America, visit the Partner and Event Finder on the APICS website at apios.org/finder or call ‘PICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867- 1777 to obtain contact information for your local chapter. For courses outside North America, visit apios.org/international to locate the nearest partner. APICS Educational Programs In addition to the annual APICS International Conference & Expo, APICS offers a vatiety of, ‘educational programs. For a list of APICS learning opportunities and information on course availability, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777. APICS Certified in Production and Inventory Management (CPIM) Basics of Supply Chain Management (BSCM) Review Course and Examination The APICS CPIM BSCM module introduces terminology, approaches, and techniques for ‘managing the internal supply chain in a manufacturing organization. For that reason, the references and the review course may be valuable resources for APICS CSCP candidates who are nat familiar with the production and inventory management environment Additionally, individuals who are not experienced with certification examinations using the multiple-choice format of items typically find it beneficial to take the BSCM examination, For a complet list of AICS resources, visi the APICS website at apios.org or call APICS Customer Service at 800-444-2742 or +1- 773-867-1777. APICS CSCP Certification Maintenance: Continuing Professional Development The Importance of Certification Maintenance The growing number of individuals choosing to pursue professional development through the APIS CSCP program indicates a strong, awareness that continuing education and skills development are essential to meeting the information and technological challenges in today's rapidly evolving workplace and global marketplace. Professional development ‘opens doors to individual career opportunities and organizational success. Although APICS CSCP recognition and maintenance are voluntaty programs, they ‘equally demonstrate one's commitment to achieving the highest level of professional development and standards of excellence. The APICS CSCP certification maintenance program upholds both the objectives of the APICS CSCP program and the APICS vision to promote lifelong leaming. This flexible program recognizes that individuals are at various levels in their careers, come from ‘many industries, have different educational needs and career goals, and have varying access to continuing education. Thus, requirements for maintaining certification can be met through multiple sources and a variety of professional development activities intended to help prepare for the challenges ahead and maintain a professional edge by: (SOP Exam Content Manual 5© preserving the currency of hard- earned certification credentials expanding your knowledge of the latest industry practices. * expanding your knowledge of the latest industry practices reinforcing, skills exploring new technology solutions reinforcing skills improving job performance demonstrating commitment to excellence ‘+ increasing competitive advantage To promote professional growth and lifelong, learning, APICS CSCP designees must ‘complete the certification maintenance program every five years. Complete details on how to maintain your APICS CSCP designation will be mailed to candidates upon successful completion of the certification requirements. For information, visit aplos.org/careers- education-professionaldevelopment/ certification/maintenance. APICS Code of Ethics When you start an examination, you will be asked to pledge to abide by the APICS Code of Ethics. Once certified, you pledge to continue ‘your education to increase your contribution to the supply chain management profession. After achieving the APICS CSCP designation, you pledge also to share your knowledge with others by participating in APICS research and ‘educational activities at local, district, national, and international levels. APICS Code of Ethics © Maintain exemplary standards of professional conduct; ‘+ Not misrepresent your qualifications, experience, or education to APICS or others you serve in a professional capacity; ‘* Respect and not violate the United States Copyright of all APICS materials, including but not limited to courseware, magazine articles and 6 @APIcs other APICS publications, APICS conference presentations, and CPIM, CSCP and SCOR-P examination resources. In this same spirit, you ‘must not violate the copyright of other organizations and individuals in your professional capacity; ‘© Not engage in or sanction any exploitation of one’s membership, ‘company, or profession; * Encourage and cooperate in the interchange of knowledge and techniques for the mutual benefit of the profession; ‘* Inyyour professional capacity, respect the fundamental rights and dignity of all individuals. You must demonstrate sensitivity to cultural, individual, and role differences, including those due to age, gender, race, ethnicity, national origin, religion, sexual orientation, disability, language, and socio-economic status; * _Inyour professional capacity, not engage in behavior that is harassing or demeaning to others based on factors including, but not limited to, age, gender, race, ethnicity, national origin, religion, sexual orientation, disability, language, or socio-economic status; ‘* Adhere to this Code of Conduct and its application to your professional work. Lack of awareness or misunderstanding of an ethical standard is not itself a defense to a charge of unethical cond © Contact the Ethics Committee when uncertain whether a particular situation of course of action violates the Code of Conduct; and '* Not to become the subject of public disrepute, contempt, or scandal that affects your image or goodwill Failure to abide by APICS Code of Ethics policy may result in sanctions up to and including decertification.APICS Certified Supply Chain Professional (CSCP) CSCP Subcommittee ‘Ann K, Gatewood, CFPIM, CIRM, CSCP (Chair) Gatewood Associates, LLC Nishat Ahmed, CPIM, CIRM, CSCP, CPM, M.C. Dean, Inc. Vinod Lall, Ph.D.,. CSCP Minnesota State University—Moorhead Robert Pinchot, CPIM, CSCP DuPont Eduardo A. Shelley, CFPIM, CIRM, CSCP Savite Tecnologia y Procesos ‘Susan A. Vowels, MBA, CSCP Washington College Scope of the Subject Matter Please read the introductory material in this ‘manual for essential information about the examination, APICS CSOP covers concepts, strategies, processes, tools, and technologies applied to ‘managing the end-to-end forward and backward flow of materials, information, and value in a supply chain. The subject matter is organized into three content area ‘Supply Chain Design This section addresses the concepts and strategies used for developing a supply chain strategy that aligns with business goals and corporate strategy, basic strategy tools, and techniques for implementation. It includes designing a supply chain for the flow of product, information and cash, the use of the SCOR® model, project management, and information technology. ‘Supply Chain Planning and Execution This section addresses the processes required to supply chain partners, reverse logistics procure and deliver goods and services, Including the scheduling and logistics of executing the plan, It includes the ‘management of demand and supply, relationship with, and waste management. ‘Supply Chain Improvement and Best Practices This section covers managing and balancing, supply and demand through measuring, analyzing, and improving supply chain processes. It addresses compliance with standards and regulations, the importance of sustainable best practices and social responsibility, and the assessment and mitigation of risk within the supply chain. ‘The successful candidate will be able to recognize and analyze specific supply chain situations and opportunities and select the appropriate approaches, tools, techniques, and technologies. The candidate will be able to define the actions necessary to implement, selected solutions. This includes an understanding of and the ability to manage: + the alignment of supply chain processes and capabilities with strategic business goals *+ organizational roles and infrastructures in the supply chain + material, information, and financial flows ‘+ intra- and inter-organizational relationships + the selection and use of technologies to enable effective processes management. In addition, the candidate preparing for the Certified Supply Chain Professional (CSCP) certification must have a fundamental understanding of the following key business concepts: + Business acumen (qualitative skills, math, statistics) + Ethical considerations (morals, character, habits) + Leadership (SCP Exam Content Manual 7APICS CSCP Content Three content areas have been designed to organize the APICS CSCP domain. The relative importance of these topics will vary among industries, but the figures given below show the percentage designated for each section on the exam, Diagnostic | Main topic | Percentage part. of exam T ‘Supply Chain 23% Design T ‘Supply Chain Planning and Execution 23% 7 ‘Supply Chain 34% Improvement and Best Practices Content Outline | Supply Chain Design ‘Supply chain design is an integral part of enabling an organization to compete and be profitable in today's dynamic business environment. The supply chain strategy should align with the organization's business strategy and plan, support the value proposition, and leverage core capabilites. Designing the supply chain builds upon the supply chain strategy through identifying business and customer requirements, identifying the desired future state, and then developing an actionable plan to close the gaps to reach the desired future supply chain design. ‘A. Develop the Supply Chain Strategy The supply chain strategy for companies with high performing supply chains should closely align with and enable the overall business strategy of the company. Achieving appropriate alignment requires an understanding of the forms of competitive advantage being pursued. It also requires an understanding of the organizational strategy, priorities and capabilities. Important processes include: + Aligning with the business strategy ‘* Creating the supply chain strategy BenPIcs, Knowledge and skills in this area include: 1. Inputs to supply chain strategy a. Business model Business strategy Business pian Value proposition Core capabilities Cost structure 3. Revenue model b. Competition cMarket conditions 4. Global perspectives OseNE 2. Resolving misalignment or gaps 3. Tools and techniques a, Macro and micro economic considerations b. Analysis of financial statements c. Strengths, weaknesses, opportunities and threats (SWOT) analysis d. Market research e. Network modeling and operations research f. Balanced score card (BSC) B. Design the Supply Chain Supply Chain Design involves making decisions on how to structure the supply chain ‘that supports and aligns with the organiza- tion's business strategy. This involves: making decisions on suppliers; location and capacity of plant, warehouses and distribution centers; and, distribution channels to move products to ‘customers. How information and data are managed, communicated, and the technology ‘employed is also planned. Sound project. management and effective communication is required. Important processes include: © Identifying customer and business. requirements. Identifying future state Performing gap analysis between current and future state * Developing action plan to close gapsKnowledge and skills in this area include: 1 Supply chain considerations a Flow of inventory, funds and information Network configurations Inventory location and level Product design ‘Supply chain technology ‘SCOR® model Fulfillment strategies considering market requirements 1. Responsiveness 2. Efficiency New product development requirement changes ‘Supply chain strategy ‘Supply chain network design ‘Supply chain network optimization Business considerations. Financial modeling Market research Product lifecycle stages Reverse supply chain Specialized supply chains (MRO, humanitarian and disaster relief) Collaboration with supply chain partners Project management considerations a. b. ©. a. e. Project initiation Project planning and design Project execution Project monitoring and controlling Project closure ‘Communication considerations a b. ©. 4. e. Identify purpose of communication Identity target audience(s) Identify communication channel(s) Create message(s) Ensure understanding/gather feedback Close the loop Information technology considerations a b. Role of technology in supply chain, management Information system architecture c._Use of information technology in the supply chain d. Comprehensive supply chain ‘management system fe. Need for timely and accurate data Electronic business considerations 1. Virtual organization enablement 2. Internet-enabled supply chains 3. E-commerce considerations 4, Business-to-business and business-to-consumer 6. Key technology applications a. Enterprise resources planning (ERP) systems. b. Advanced planning and scheduling (APS) systems . Supply chain event management (SCEM) d. Warehouse management systems (ws) e. Transportation management systems (TMS) 7. Data acquisition and management a. Data acquisition and ‘communications tools b. Interface devices c. Data communications methods d. Databases hierarchical/ relational/network e. Acquisition and use of data {Automatic identification technologies References: 1; 2 (chapters 11, 12, 13) 3 (chapters 1,2, 3, 4, 5, 6, 7); 4 (chapters 1, 2,11, 12, 14, 15, 16);5 (chapters 1, 2, 3, 4, 10}; 6 (chapters 1, 2, 6, 7, 8, 9); 8 (chapters 1, 3,5,6, 10, 11, 14, 15); 12 (SCP Exam Content Manual 9II. Supply Chain Planning and Execution ‘Supply Chain Planning isthe set of processes related to the estimation of future client ‘demand and its balance with capacity and supply, both from production and from suppliers. This planning can encompass one ‘or several trading partners, from the end ‘consumer to the raw material producer, including reverse logistics. Supply Chain Execution comprises the processes, such as procurement, manufacturing warehousing and transportation, required to control and give Visibility of the goods moving through the supply chain. Many of the knowledge and skill sets listed in each of the sections apply to both inbound and outbound processes. ‘A. Procure and Deliver Goods and Services. Procurement and delivery of goods and/or services operationalizes the supply chain design through the development and deployment of coordinated long-term and short-term planning for sourcing, acquisition, controlling, delivery, invoicing, and payment of goods and/or services. Important processes include: * Performing sales and operations planning (S&OP) * Developing supply chain personnet's knowledge, skills and abilities Developing supply chain infrastructure Performing short-term planning and scheduling Identifying logistical requirements Developing logistical capabilities to support delivery of goods and services ‘+ Executing the plans Knowledge and skills in this area include: 4. Currency considerations and funds flow Impact of currency selection Exchange rates effects Payment terms Invoicing considerations Cash-to-cash cycle time passe 10 @APICS Regulatory requirements a. Incoterms b. Customs 1. Importing considerations 2. Exporting considerations Bills of lading 4. Security regulation considerations Trade considerations a, Free trade zones b. Trading blocs Demand management a. Components of demand management 1. Planning demand 2. Communicating demand 3. Influencing demand 4. Prioritizing demand b. Demand prioritization 1. Time fences 2. Allocation of supply 3. Measures of customer service levels ©. Forecasting demand 1. Principles of demand forecasting Qualitative methods Quantitative methods Combination methods Measutes of forecast error Demand management over the product's lifecycle oeaen d. Demand management functional responsibilities and interfaces. 1. Product development 2. Marketing 3. Sales 4. Operations . Operations planning and control 1. Implementation of sales and ‘operations planning (S&OP) 2. Controlling priorities 3. Materials and inventory 4, Capacity managementSupply management a b. ce. d e. f & Total cost of ownership Make-versus-buy analysis Range of buyer-supplier relationships. Developing supply plans Supplier relationship management (SRM) Contracting Expediting Inventory management Inventory planning. 1. Locations of inventory 2. Levels of inventory Inventory control ‘L. Order quantity determinations 2. Ordering systems 3. Safety stock and safety lead time 4. Organization of storage locations 5. Methods of tracking inventory 6. Methods for assessing inventory accuracy Warehouse management b. Warehousing objectives and considerations Warehouse capacity forecasting and planning Manual and automated material handling processes Tradeoffs between warehousing and transportation processes Logistics and freight management a b. Flow of goods and information Use of logistics service providers 1. Contract considerations. 2. Contract rules Transportation objectives and considerations Modes of transportation and considerations for selection Transportation capacity forecasting and planning Expediting processes Delivery patterns. B. Manage the Relationship with Supply Chain Partners Understanding the market and the critical roles played by both the upstream and downstream supply chain partners are important to the success of the Supply Chain. Tailoring, aligning and managing the relationships with the supply chain partners will enhance the performance of the entire ‘supply chain. Important processes include: © Managing relationships with customers, ‘© Managing relationships with suppliers Knowledge and skills in this area include: 1. Segmentation a. Market. b. Customers and suppliers ©. Other supply chain partners 2. Customer relationship management (CRM) and supplier relationship management (SRM) ‘a. Customer and supplier selection b. Customer and supplier relationship types Negotiation Terms and conditions Contracts and enforceability Performance management Technology usage mmpeao C, Manage Reverse Logistics inoluding Return, Recall, and End of Life Managing reverse logistics and reverse supply chains involves understanding that product returns, repair, remanufacturing, end of life, and related topics are organic elements in the overall supply chain management execution process. Its also important to understand how reverse supply chains allow opportunities for cost avoidance and revenue generation while enabling compliance with regulations, regarding waste and hazardous materials. Important processes include: SCP Exam Content Manual 12‘© Identifying requirement of reverse ‘communication of these findings can logistics contribute to performance improvement. ‘+ Designing reverse strategy Important processes include: ‘+ Implementing reverse strategy eidcateae perience tas '* Analyzing performance Reverse supply chains require knowledge and * Improving performance skills associated with forward supply chains. re rae ea el ae tee Knowledge and skill inthis area include: 1. Reverse logistics 1. Supply chain metrics a, Activities supported a. Customer-focused metrics b. Design for reverse logistics b. Financial metrics ©. Benefits and costs ©. Operational metrics 2. Waste considerations 2. Sales and operations planning (S&OP) a. Waste hierarchy a, Reviewing performance b. Waste exchange . Evaluating demand levels ©. Hazardous waste . Evaluating supply capability d. Reconciling demand, supply, and References: 4; 2 (chapters 3, 4, 7, 8, 9, 10, financial plans 11, 14, 15); 4 (chapters 4, 6, 8, 10, 12, 16, 18); 6 (chapters 2, 5, 7);8 (chapters 4, 8, 9, 3. Continuous improvement philosophies 10, 12, 13); 12 a. Lean b. Six Sigma IIL Supply Chain Improvement and Best Practices Total quality management (TQM) 4d. Theory of constraints (TOC) Changing market requirements, new technologies, geopolitical shifts, weather- 4. Measuring and communicating related factors, and changes in availability performance of resources require supply chains to be a. Dashboards constantly evolving. Supply chains must be b. Scorecards continually improving by gathering key ©. SCOR® performance measures performance data, analyzing current 1. Planning demand and supply performance, and creating and 2. Sourcing goods and services implementing improvement plans. The 3. Producing goods and services ‘supply chain should ensure compliance 4. Delivering goods and services with existing standards, regulations, and 5. Planning for and processing apply sustainable best practices. Instead of returns only reacting to risk events, companies 4. Operational measures need to model, anticipate, and prevent e. Financial measures risk. 5. Measuring customer service levels, ‘A. Measure, Analyze, and Improve the Supply Cale Chain b. Lead time monitoring c. Order-status reporting Enhancing the competitiveness of a supply chain requires an understanding of the, 6. Change management techniques and tools of continuous a. Prepare for change improvement and the appropriate application b. Plan for change of each. It also requires an understanding of c. Execute change how to measure the performance and d. Monitor change capabilities of the supply chain and how the 12 @APICS‘Comply with Standards, Regulations, and ‘Sustainable Best Practices. ‘Managing globally dispersed sources of supply and demand requires an understanding of the standards and regulations of the jurisdictions in which goods and funds flow. In addition, designing and operating a supply chain requires an understanding of the concepts of, sustainable business practices and how to adapt and apply them to a specific supply chain. Important processes include: + Identifying applicable standards, regulations, sustainable best practices ‘+ Performing gap analysis for compliance * Developing and implementing an action plan Knowledge and skills in this area include: 1. International standards and regulatory ‘compliance a. import/export considerations b. Intellectual property rights ©. Licensing compliance 1. Software 2. Technology d. Global accounting standards e. Country specific accounting regulations Country and local labor laws. International labor considerations 2. Corporate social responsibility considerations a. Triple bottom fine 1. Short and long term economic performance 2. Environmental performance 3. Social performance b. United Nations Global Compact Global Reporting initiative (GRI) d. The Organization for Economic Cooperation and Development (OECD) Guidelines for multinational enterprises e. Social Accountability International ‘$4800 Guidelines f. Conflict Minerals 3. Social, environmental, safety, and quality accreditations and certifications a. ISO 14001 - environmental management systems b. 180 26000 - guidance for social responsibility c. $AB000 certification - social accountability d. ANSIZ.10 - occupational safety and health management systems e. 180 9004 certification ~ quality management systems C. Manage Risk in the Supply Chain Risk is inherent in supply chains and companies may go out of business due toa ‘major risk event. Instead of only responding to risk events, companies must be able to ‘model, anticipate and prevent risk events. {An understanding of the techniques to identify, mitigate, and manage risks is important for supply chain management and overall business success. Important processes include: ‘© Identifying the risks ‘© Assessing and classifying the risks '* Developing risk mitigation and ‘management pian ‘© Executing risk mitigation plan and ‘management plan Knowledge and skills in this atea include: 1. Risk identification a. Recognition and identification of different forms of risk b._ Risk of loss of tangible and intangible assets 2. Risk assessment and classification ‘a. Classification and prioritization 3. Risk response a. Mitigating and managing supply cchain risks b. Implementing risk mitigation and management plan SOP Exam Content Manual 134, Security and regulatory concerns a. Import and export requirements ‘compliance b. Benefits and costs of participating in security partnerships c. Benefits and costs of meeting sustainability regulations d. Product traceability and configuration management 5. Risk standards a. ISO 31000 ~ Risk management principles and guidelines b. 15034010 - Risk management ~ risk assessment techniques c. 180 Guide 73 ~ Risk management ~ vocabulary components References: 1; 2 (chapters 4, 5, 14, 16) 4 (chapters 1, 13, 18); 5 (chapter 11) 7 (chapters 2, 4, 5, 6, 7, 8, 9, 10, 13 8 (chapters 2, 10) 9; 10; 11; 12 Key Terminology {An understanding ofthe following list of terms is recommended. The lists intended to be thorough but not exhaustive. The candidate is also expected to be familiar with the definitions of terms identified in the content Cutline. Definitions of these terms can be found in the APICS Dictionary, 14th edition. A active tag advanced planning and scheduling (APS) alliance development anticipation inventories assemble-to-order automatic identification and data capture aoc) automatic identification system (AIS) available-to-promise (ATP) B balanced scorecard blanket purchase order buffer business intelligence business-to-business commerce (B2B) business-to-consumer sales (B2C) business process management (BPM) 14 @APICS c capable-to-promise (CTP) cash-to-cash cycle time collaborative planning, forecasting, and replenishment (CPFR) configuration management systom consortia trade exchanges (CTX) content management applications continuous replenishment cost of goads sold (COGS) cost of quality oross-docking cross selling customer relationship management (CRM) customer service ratio oycle time D database management system (DBMS) data warehouse define, measure, analyze, improve, control (OMAIC) process demand forecasting demand management demand planning demand pull demand shaping design for maintainability design for manufacturability design for manufacture and assembly (OFMA) design for quality design for remanufacture design for service design for six sigma design for the environment (DFE) design for the supply chain distribution inventory distribution requirements planning (DRP) E economic value added electronic commerce (e-commerce) electronic data interchange (EDI) electronic document electronic product codes (EPCs) ‘end-of-life management enterprise resources planning (ERP) environmentally responsible business environmentally responsible manufacturing environmentally sensitive engineeringF fill rate fourth-party-logistics (4PL) free trade zone (FTZ) G Global Reporting Initiative (GRI) global strategy localization H harmonized system classification codes horizontal marketplace 1 Incoterms, independent demand information system architecture innovative product interpiant demand inventory accuracy inventory optimization software inventory turnover inventory valuation inventory velocity inventory visibility 'S0 14000 Series Standards 'S0 26000 1S0 31000 J joint replenishment system joint venture K kaizen kaizen event kanban keiretsu key performance indicator (KPI) L landed cost legacy systems level of service level strategy lifecycle analysis line haul costs M make-to-order make-to-stock market demand market research market share master production schedule (MPS) ‘material requirements planning (MRP) mix forecast modular design strategy modular system multicountry strategy muttisourcing ° obsolescence ordering cost order losers order qualifiers order winners. outsourcing Pp Pareto analysis, partnership. passive tag peline inventory plan-do-check-action (PDCA) planning horizon portal private trading exchange (PTX) product differentiation pproduct family product life cycle management (PLM) project management pull system push system Q quality function deployment (QFD) quick response program (QRP) R radio frequency identification (RFID) rapid replenishment return on assets (ROA) return on investment (RO!) reverse auction reverse logistics reverse supply chain risk pooling risk register SCP Exam Content Manual 15s safety lead time safety stock sales and operations panning (S&0P) seasonality semipassive tag service industry ‘single-source supplier sole-source supplier sourcing spend management ‘stockkeeping unit (SKU) stratege alliance strategie planning strategic Sourcing ‘subcontracting. supplier ceritication supplier relationship management (SRM) supply chain event management (SCEM) supply chain management ‘supply chain risk ‘Supply Chain Operations Reference Model (ScOR®) supply chain resilience supply chain visibility iu tactical buying tariff third-party logistics (3PL) time fence total cost of ownership (TCO) trade bloc trading bioc transportation management system (TMS) triple bottom line (TBL) u universality v value-added value-added network (VAN) value chain value stream value stream mapping vendor-managed inventory (VMI) Virtual trading exchange w warehouse management system (WMS) waste web services 16 @APICS Supplemental Glossary ‘The following concepts, not found in the APICS Dictionary, 14th edition, will be helpful in preparing for the CSCP examination. ANSIZ.10 voluntary consensus standard on ‘occupational health and safety management systems. It uses recognized management system principles in order to be compatible with quality and environmental management system standards such as the ISO 9000 and 10 14000 series. Business Management Continuity Management System (CMS) Part of the overall management systems that establishes, implements, operates, monitors, reviews, maintains and improves the organizational capability of continuing to deliver products or services at acceptable predefined levels following a disruptive incident. It is based upon identifying potential threats to an organization and the impacts to business operations those threats, if realized, ‘might cause, and which provides a framework for building organizational resilience with the capability of an effective response that safeguards the interests of its key stakeholders, reputation, brand and value- creating activities. Business Rules The rules for an organization that define or constrain some aspect of business, such as policies or procedures and are meant to provide guidance. Conflict Minerals Minerals mined in conditions of armed conflict. and human rights abuses, and are sold or traded by armed groups. Customer Order Cycle Time syn: with order fulfillment cycle time. Days Sales Outstanding ‘A measure of the average number of days that ‘a company takes to collect revenue after a sale has been made calculated by the total accounts receivable/average daily sales rate.Days of Supply In addition to the definition in the APICS Dictionary, the following definition is provid as a financial measure itis the value of all inventory in the supply chain/ the average dally cost of goods sold rate. Design for X (DFX) A design should be manufacturable, maintainable, cost effective, high quality and so on. Design for X refers to the use of a formal methodology to optimize a specific aspect of a design. For example, the characteristics that make a design easy to assemble (Design for Assembly) have been systematically codified. The design team can review the design concept in the light of these rules and methods. DFX or DX stands for "design for excellence’, "Design for Excellence", or Design For Excellence Downside Supply Chain Adaptability A discrete measurement of the reduction in quantities ordered sustainable at 30 days prior to delivery with no inventory or cost penalties. E-Business Electronic business, or e-business is conducting business processes on an electronic network, typically the internet. See: ecommerce. Functional Product: Functional products are ‘mature products that tend to have a low profit, margin and a predictable demand. Global Trade Management: The management and optimization of shipments across international borders including: ensuring ‘compliance with all international regulations. and documentation, streamlining and accelerating the movement of goods, while minimizing the global supply chain costs within and outside of the organization. Globally Harmonized System of Classification. and Labeling of Chemicals (GHS) {An International standard, created by the United Nations Economic Commission for Europe (UNECE), for classifying chemicals according to their health, physical and ‘environmental hazards. GHS is a system that defines and classifies the hazards of chemical products, and communicates health and safety information on labels and material safety data sheets. Harmonized Tariff Schedule (HTS) Each country has its own Harmonized Tariff ‘Schedule (HTS), the mechanism by which international tariffs are standardized. Importers and Exporters must classify all ‘goods moved across international borders. using the Harmonized System of the country of import, International Financial Reporting Standards (IFRS) International Financial Reporting Standards. (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external. 's073 Provides the definitions of generic terms related to risk management. It aims to encourage a mutual and consistent understanding of, and a coherent approach to, the description of activities relating to the management of risk, and the use of uniform risk management terminology in processes and frameworks dealing with the management of risk. Iso 9001, An international standard that specifies requirements for a Quality Management ‘System (QMS) where an organization: 8) Needs to demonstrate its ability to consistently provide product that meets (SCP Exam Content Manual 17customer and applicable statutory and regulatory requirements and b) Aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements. 1so 22301. ‘An international standard that specifies requirements for setting up and managing an effective Business Continuity Management System (BCMS). 180 28000 ‘An International Standard that specifies the requirements for a security management system, including those aspects critical to security assurance of the supply ch Order Fulfillment Cycle Time The time requited to fulfil an order from the time the order is placed by the customer to. the time the order is delivered to the customer's desired location. This metric is usually reported as an average cycle time of all orders fulfilled during a time period, Overall Value at Risk The sum of the probability of risk events times the monetary impact of the events which can impact any core supply chain functions (e.g. Pian, Source, Make, Deliver and Return) or key dependencies. Payment Terms Conditions surrounding payment for a sale, providing a time frame in which a customer can pay without late penalties or additional fees, Perfect Order Fulfillment ‘A measure of an organization's ability to deliver "perfect" orders to a customer. A perfect order is an order with no defects in any aspect including but not limited to the right quantity of the right product at the right, place at the right time with all required documentation. Other elements may be added to the definition of perfect based on customer 418 @APICS requirements. This metric is usually represented by a percentage and is calculated by the ratio of perfect orders during a given time period to the total number of orders completed during the same time perio. Return on Supply Chain Fixed Assets ‘The return an organization receives on its invested capital in supply chain fixed assets, This includes the fixed assets used to Plan, ‘Source, Make, Deliver and Return. ([Supply Chain Revenue] ~ [COGS] - [Supply Chain Management Costs) / [Supply Chain Fixed Assets] Return on Working Capital Ameasure of profit on the amount of cash consumed calculated as After tax operating income/net working capita. Risk Appetite Amount and type of risk that an organization is willing to pursue or retain. Risk Management The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate event or to ‘maximize the realization of opportunities. Risk Tolerance Organization's or stakeholder’s readiness to bear the risk after risk treatment in order to achieve its objectives ‘$A8000 ‘A widely recognized international standard for managing human rights in the workplace. It provides an auditable framework for assuring. that social accountability is being stewarded by an organization. ‘Stakeholder Relationship Management ‘Addressing and managing the competing priorities, needs and concerns of internal and external stakeholders in a proactive and sustained manner resulting in decreased cost and enhanced stakeholder acceptance or buy’‘Supplier's/Customer's/Products' Risk Rating The numerical risk rating for supplier, ‘customer or product. Normalized and used for ‘comparison purposes. ‘Supply Chain Continuity Strategic and tactical capability, pre-approved by management, of an organization to plan for land respond to conditions, situations, and events in order to continue supply chain operations at an acceptable predefined level. ‘Supply Chain Cycle Time The time it would take to fil a customer order if inventory levels were zero. Sum of the longest lead times for each stage in the supply chain, ‘The Organization for Economic Cooperation and Development (OECD) Guidelines for Muttinational Enterprises: Aset of recommendations on responsible business conduct addressed by governments to Multinational Enterprises (MNEs) operating in or from adhering countries that encourage ‘and maximize the positive impact MNEs can make to sustainable development and enduring social progress. Total Cost to Serve The sum of the supply chain cost to deliver products and services to customers. Total Cost to Serve includes the cost to plan the supply chain, cost to source materials, products, goods, merchandize and services, cost to produce, manufacture, remanufacture, refurbish, repair and maintain goods and services if applicable, cost to manage orders, customer inquiries and returns, and cost to deliver products and services at the agreed location (point of revenue). Total Cost to Serve comprises of two types of cost * Direct cost. Cost that can be directly attributed to fuffilling customer orders. For ‘example the cost of the materials used and/or delivered, all direct supply chain labor, etc. * Indirect cost. Cost required (or occurring) to operate the supply chain. For example: Cost to lease and maintain equipment, inventory depreciation, damage and returns costs, and more. Total Cost to Serve can be measured per ‘event and at the aggregated supply chain level {assuming reporting capabilities exist) Measuring Cost to Serve at transactional level generally requires activity based costing Capabilities for direct cost and a system to allocate indirect cost. Upside Supply Chain Adaptability Adiscrete measurement of the quantity of increased production a supply chain can achieve and sustain in 30 daystime. Upside Supply Chain Flexibility Adiscrete measurement of the amount of time it takes a supply chain to respond to an Unplanned 20% increase in demand without service or cost penalty. Waste Exchange 1) Arrangement in which companies exchange their wastes for the benefit of both parties. 2) An exchange service of valuable information between generators and potential Users of industrial and commercial wastes, whereby a beneficial use rather than disposal is the end result. This service identifies both the producers and potential markets for by- products, surpluses, unspent materials and other forms of solid waste that is no longer needed. Waste Hierarchy A tool that ranks waste management options according to what is most environmentally sound. It gives top priority to preventing waste in the first place, and can be applied to various applications. SCP Exam Content Manual 19Bibliography All test candidates should familiarize themselves with the following references for this examination. The recommended references pertaining to the diagnostic area are listed at the end of each section of the. content outline. All of these references are available from the APICS Bookstore. 1 2, APICS Dictionary. 14th ed., 2013. Bowersox, Donald J., David J. Closs, M. Bixby Cooper, and John C. Bowersox. ‘Supply Chain Logistics Management. 4th ed., McGraw-Hill, 2013, Cohen, Shoshanah and Joseph Roussel. Strategic Supply Chain Management: The Five Core Disciplines for Top Performance. 2" ed., Mc-Graw-Hill Education, 2013. Crandall, Richard E., William R. Crandall, and Charlie C. Chen. Principles of Supply Chain Management. 2 ed., CRC Press, 2015. Project Management Institute, Inc. A Guide to the Project Management Body of Knowledge, 5" ed., Project Management Institute, Inc. 2013. Ross, David F. Introduction to Supply Chain Management Technologies. 2nd ed., CRC Press, 2011. Schlegel, Gregory L. and Robert J. Trent. ‘Supply Chain Risk Management: An Emerging Discipline. CRC Press, 2014. Simohi-Levi,David. Philip Kaminsky, and Edith Simchi-Levi, Designing & Managing the Supply Chain. 3rd ed., MoGrawHill, 2008, G4 Sustainability Reporting Guidelines. Global Reporting Initiative. https://www.globalreporting,org/resourc elibran/GRIG4 Partt-Reporting- Principles-and Standard Disclosures pdt 20 @APICS 10. United Nations Global Compact Brochure: Corporate Sustainability in the World Economy. 2014. UN Global Compact Office. http://www.unglobalcompact.org/ docs/news_events/8.1/GC_brochure_ FINAL. pdf 11. UN Global Compact Management Model: Framework for Implementation. 2010. Deloitte Touche Tohmatsu. Welcome message by Georg Kell Foreword by John Connolly http://www.unglobalcompact.org/doos/ news_events/9.4_news_archives/2010 -06_17/UN_Global_Compact_ Manage ment_Model.paf 12. Additional reference materials that are relevant to the CSCP body of knowledge ‘can be found at apies.org/esop. Questions appearing on the exam may be based on these additional references. Internet links cited in the bibliographic references above can be found in a more usable format on the APICS website at apics.org/cscp.Sample Questions The following ten questions are similar in format and content to the questions on the CSCP exam. These questions are intended for practice—that is, to enable you to become familiar with the way the questions are asked. ‘The degree of success you have in answering these questions is not related to your potential for success on the actual exam, and should ‘ot be interpreted as such. Read each question, select an answer, and check your responses with the explanations on pages 23-24, 1. Which of the following is the primary advantage of using web-based electronic data interchange (ED!) for communication of transactions? (A) There is more flexibility in transaction formats. (8) It lowers the cost per transaction. (C) Iteliminates translation of transactions. (0) A larger number of transactions are supported, 2. Quality remains an elusive concept in ‘most organizations because (A) it depends on customer perception. (B) there are many quality philosophies. (0) itis everyone's responsibility. (0) quality targets change frequently. 3. An example of the use of a third-party logistics (SPL) company would be when ‘8 company contracts with another company to (A) perform its shipping and receiving functions. (8) produce and deliver a major subassembly. (©) provide payroll services. (0) act as a sales agent in another country. Which of the following is an expected benefit of implementing supply chain event management? {A) Itwill reduce the need for supply chain performance reporting, (8) It will improve forecasting accuracy. (C) Itnotifies partners when a deviation from plans occurs. (0) It reduces the cost of communications between partners. 9. Which of the following applications. ‘would enable a company to detect patterns in the preferences of a ‘customer segment? (A) Business intelligence (B) Advanced planning system (C) Sales force automation (0) Artificial intelligence . Cash-to-cash cycle time is a measure of how efficiently a company (A) recovers its investment in plant and equipment. (B) manages assets to generate cash flow. (C) converts inventory into sales. (0) collects on sales to customers. Which of the following types of inventory is used to protect against variations in supply and/or demand? (A) Cycle stock (8) Transportation inventory (C) Safety stock (0) Anticipation inventory . Which of the following outcomes is typically a characteristic of strategic sourcing? (A) Itincludes automation of contract management processes. (8) It reduces the price of goods and services. cst CP Exam Content Manual 21(C) Asupplier receives all of the company’s orders for a product or product family. (D) The focus of the relationship is on large transactions. 9. Which of the following measures would be most appropriate for trading partners to use to assess the delivery Performance of the manufacturer of items built to forecast? (A) Percentage of items shipped within the final assembly lead time. (8) Percentage of orders shipped ‘complete within 24 hours of their receipt. (C) Number of items shipped within 24 hours of their receipt. (D) Revenue from orders shipped in a week. 10. Which of the following benefits is ‘expected when implementing collaborative supply chain management? (A) Maximizing the performance of the firm (B) Reducing the number of competitors (C) Increasing scope of operations (0) Synchronizing supply and demand 22 @APICSAnswers to Sample Questions Note: References to the content outline appear in parentheses. 1. B (IB5) Bis the best choice because a ‘web-based EDI system would eliminate the cost of a private or value-added network. Ais not the best choice because the EDI transaction formats are independent of the network used for transmission. C is not the best choice because the transactions still must be translated to and from the standardized format. D is not the best choice because the standards are independent of the transmission method used. 2. A\llA3) Ais the best choice because the customers are the ultimate judges of quality and they may have differing requirements and priorities. B is not the best answer because the philosophies have similar definitions of quality and address how to improve it. Cis not the best choice because the fact that it is everyone's responsibility has nothing to do with the concept of what is quality. D is not the best choice because targets should change once they have been achieved. 3. A(lIB4) A is the best choice because a 3PL company is a company that manages part or all of a company's product delivery operations and shipping is part of the product delivery operations. B is not the best choice because neither producing the subassembly nor delivering itis part of the company's product delivery operations. C is not the best choice because payroll services are not a part of the company's product delivery operations. D is not the best choice because selling does not necessarily include any delivery operations. C (IB6) Cis the best choice because supply chain event management monitors the supply chain and notifies, designated individuals when specified events or exceptions occur or when trends are recognized. A is not the best choice because it enables performance reporting but does not reduce the need for it. Bis not the best choice because supply chain event management itsetf does not affect any specific application. D is not the best choice because supply chain event management does not directly affect the amount or cost of ‘communications among partners. ‘A(IIC2) Ais the best choice because business intelligence applications collect, organize, and analyze information. Use of these applications ‘on customer data would allow the company to detect patterns in the data. B is not the best choice because advanced planning systems address operations rather than customers. C is not the best choice because sales force automation does not capture or organize the data required to detect pattems in customer preferences. 0 isnot the best choice because artificial intelligence applications are intended to learn and reason like humans to address specific problems. B (lIA4) B is the best choice because the definition of cash-to-cash cycle time is, ‘that itis an indicator of how efficiently a ‘company manages assets to improve cash flow. Its the inventory days + accounts receivable days ~ accounts payable days. A is not the best choice because cash-to-cash cycle time does: not consider the investment in plant and equipment. C is not the best choice because itis limited to the inventory days component of cash-to-cash cycle time. D is not the best choice because it is limited to the accounts receivable component of cash-to-cash cycle time, P Exam Content Manual 237. C(IB4) Cis the best choice because safety stock is maintained to protect against variability in either supply or demand. A is not the best choice because cycle stock is related to lot sizing, B is not the best choice because transportation inventory is inventory that is in transit between locations. D is not the best choice because anticipation inventory is inventory held to cover trends or planned events, such as promotions or plant shutdown, 8. A(lIA7) Ais the best choice because strategic sourcing focuses on the long- term relationship and, from an information technology perspective, typically includes automation of contract, management. B is not the best choice because the focus is on the total cost of ‘ownership rather than on the quoted price. Cis not the best choice because strategic sourcing can include contracting with more than one partner for a part or family of parts to reduce the risk of disruptions. D is not the best choice because the focus of the relationship is on a longterm relationship between the partners rather than on individual transactions. 9. B(lIIA4) B is the best choice because the items are being produced to forecast and should be shipped from stock shortly after receipt of the order. A is not the best choice because the final assembly lead time should not be needed before shipment because the items are produced to forecast. C is not the best choice because it is a measure of the number of items shipped and there is no indication of the actual number of items that were ordered. D is not the best choice because revenue Is. a financial measure, but does not indicate delivery performance. 10. D (1IC2) D is the best choice according to the APICS Dictionary definition of supply chain management. A is not the best choice because SCM should improve the performance of the entire chain, not a 24 @APICS single member of the chain. B is not the best choice though it may be an outcome of collaborative supply chain ‘management. C is not the best choice because there is no direct relationship between collaborative supply chain management and the scope of operations for one of the partners.Introduction 2018 APICS A rights ‘There have been supply chains as longas there have been suppliers and customers, but the evolving discipline of managing those supply chains for competitive advantage belongs to recent decades. Even the term “supply chain” came into common use only toward the end of the 20th century. ‘As with many other phenomena occurring in that period of time, supply chains and their management reflect the revolution in electronic communication and the shrinking, of the world into one global community—what author Thomas Friedman, in his book ‘The World Is Flat, calls the “flattening of the globe.” There were supply chains when primitive hunters brought back skins for transformation into garments for use or trade. ‘Marco Polo went east in search of trade routes to bring raw materials from "the Orient” nt to Europe. But the scope, scale, and speed of supply chain processes have all gathered revolutionary momentum—and businesses around the world hasten to catch up or, in the case of leaders like Toyota, Walmart, and Zara, to stay ahead. Their opportunities result from the flattening of the global playing field and advances in technology; their discoveries contribute to globalization and revolutionary technology. Supply chain management may be a young discipline, but like those other young, disciplines, rocket science and brain surgery, it isn'ta simple one. It also resembles other youngsters in its rapid rate of development. Staying abreast of the theoretical and practical aspects of supply chain management—even keeping up with the vocabulary— requires constant attention, ‘This first module in the APICS CSCP Learning System addresses considerations in the design ofa competitive supply chain. ‘Section A introduces the competitive advantage of various organizational strategies and then addresses how to develop a complementary supply chain strategy, including how to resolve misalignments or gaps. The section concludes with a iscussion of some tools and techniques that help in understanding the economic environment and some ways to assess an organization's strategic strengths and ‘weaknesses. ‘Section B explores supply chain design, first looking at the use of market research, financial modeling, and an understanding of product life cycle stages in developing a sense of customer and business requirements. Collaboration with supply chain partners is examined, Since the ideal is to design the product to meet strategic goals, various product design focus strategies are covered. After that, the discussion turns to how to design and deliver value using supply chain information technology and the proper methods of acquiring and managing data. The section concludes with primers on the fundamentals of communications and project management, which often need improvement to close the gaps between the as-is and the to-be states of a supply chain, ‘CSCP Version 4.2, 2038 Editionake : IMoouLe 4: SuPPLY CHAIN DESIGN Section A: Develop the Supply Chain Strategy There's a kind of magic in some words, “strategy” and “strategic” being key examples. Place “strategic” in front of the name of any business process, and suddenly that process acquires an aura of great importance. Strategic objectives cry out to be achieved in a way that simple objectives do not. Strategic planning, the process of developing a strategic plan, sounds considerably more sophisticated and powerful than plain old planning. There’s.a reason those words have such power. Strategy, originally a military term, is how generals marshal all available resources in pursuit of victory. Strategy wins football games and chess matches—or loses them. It's really the same in the business world. Each company has a business strategy that paints a broad picture of how it will compete in the marketplace. According to the APICS Dictionary, 1Sth edition, a strategic plan describes how to marshal and determine actions to support the mission, goals, and objectives of an organization. [It] generally includes an organization's expli ion, goals, and objectives and the specific actions needed to achieve those goals and objectives. ‘Since business strategy is like military strategy in that it requires the marshaling and organizing of al its resources, then it becomes clear that the business's supply chain can be its most potent strategic resource. Designing and building the right supply chain, one that promotes the business strategies, may just be the most powerful way to gain an edge on the competition, to move faster, deliver more value, and be more flexible in the face of both steady change and surprises. The supply chain strategy is a complex and evolving way that organizations use to distinguish themselves in the competitive contest to create value for their customers and investors. In Exhibit 1-1 you can see how the direction of an organization is predicated on its business strategy. Of course many organizations now also use mission and vision statements to give clarity to their purpose. Exhibit 4-4: Alignment of Strategies Business \ Organizational, Supply chain strategy strategy strategy Ifthese strategies are notaligned, the direction and fit will be askew. All three strategies are linked and dependent. The APICS Dictionary, 15th edition, differentiates between business and organizational strategy (listed as “strategy” in the Dictionary) as follows: Business strategy. A plan for choosing how to compete. Three generic business strategies are (1) least cost, (2) differentiation, and (3) focus. ‘2018 APICS 2 (CSOP Version 43 [rights reserved @® rosen 125408 2018 Eaton‘SECTION A: DEVELOP THE SUPPLY CHAN STRATEGY Strategy [organizational]. The strategy of an enterprise identifies how a company will function in its environment. The strategy specifies how to satisly customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives. Supply chain strategy is then a strategy for how the supply chain will function in its environment to meet the goals of the organization's business and organizational strategies. Competitive advantages are closely related to business strategy because they outline the advantages the organization should realize once it has decided how it will compete. A business model is the organization's business and organizational strategy formalized into a business plan, ‘The business model, competitive advantages, and external influences on supply chain strategy are the subjects of the first chapter in this section. The next two chapters explore supply chain strategy and how to resolve gaps between thea: and desired strategies. The last chapter provides some tools to achieve supply chain strategy. Processes for developing the supply chain strategy ‘The key processes that supply chain managers need to be able to perform related to developing the supply chain strategy are ‘¢ Aligning with the business strategy ¢ Creating the supply chain strategy. The following is a general overview of these processes. The information required to plan and execute these processes is presented in this section's chapters. Aligning with business strategy The process of aligning with the business strategy involves the following steps: ‘Reviewing the organization's business plan, financial statements, and other information and analyses related to business strategy to learn * The organization’s overall strategic objectives, including its vision, key business policies, and cost and revenue objectives * Its value proposition for customers and stakeholders, including its core capabilities (and areas it chooses to avoid) ¢ How itwill differentiate itself in the marketplace to compete and grow in the face of change and uncertainty 2018 APICS 13 (SOP Version 42, 208 Ealtion Al nghts reserved a sda al[MooULe 4: SUPPLY CRAIN DESIGN ‘¢ Gathering information on the external environment, including © Customer requirements Competitor business and supply chain strategies Competitor supply chain maturity Market size and market share Overall, regional, local, and industry market conditions, Global risks and opportunities Reviewing current supply chain capacity, resilience, sustainability, and adaptability to understand the current state of the supply chain (actualized strategy) Analyzing actual alignment to business strategy and the current environment Creating supply chain strategy 2018 APICS Alright reserved ‘The process of creating a supply chain strategy that is complementary to the business model and the current environment involves the following steps: Defining customer service objectives for business-to-business and/or business-to-consumer # Selecting a revenue model, including direct and/or indirect and sales channels for each customer segment + Mapping supply chain objectives to business objectives Aligning in-house versus contracted supply chain operating models and cost structure to organizational core capabilities and strategy * Aligning operating model (eg., make-to-stock) * Aligning cost structure or asset footprint (e.g, property, plant, and equipment and human resources for planning, sourcing, production, and logistics by region) ¢ Documenting the strategy, including % Clarifying the supply chain value proposition * Creating a network model ¢ Presenting and marketing the strategy to get executive or supply chain partner support and approval ‘¢ Accepting feedback and making agreed-upon changes ‘¢ Getting approval for the strategy 14 ‘CSP Version 4:2, 2018 EatonSECTION A: DEvELOP THE SuPPLy CHAIN SreATEGY Comparing supply chain strategy to actual supply chain capacity, resilience, sustainability, and adaptability ‘Creating action plans to resolve misalignments or gaps between desired and actual supply chain strategy Note that these action plans often involve supply chain design (or redesign), which is addressed in Section B of this module, “Design the Supply Chain.” © 2018 APICS 15 ~ CSOP Version 4.2, 2018 Edition Irs ered @ rmeo smeMooute 4: SuPPLY CHAN DESIGN Chapter 1: Inputs to Supply Chain Strategy This chapter is designed to Describe the relationship between the business strategy, the organizational strategy, and the supply chain strategy ‘¢ Define four types of organizational strategies and how they are used ‘¢ Explain how strategic decisions are made concerning customers and markets, technology, key processes, and sourcing, Discuss the importance of scanning the external environment for competitor capabilities, market conditions, and global perspectives. Topic 1: Business Model A business model is an organization's plan to generate revenue and turn a profit based on its operations. It shows how the organization will differentiate itself from the competition and how it will function, including the expenses it expects to incur and how its components will work together. A business model is the organization's modus operandi, or way of doing things. A business model consists ofa Business strategy Organizational strategy Business plan Value proposition Set of core capa Cost structure Revenue model. teens Each of these elements is discussed next. Business strategy 2018 APICS Align reserved ‘Typically, a business strategy will outline how to grow the business, how to distinguish the business from the competition and outperform them, how to achieve superior levels of financial and market performance, and how to create or maintain a sustainable competitive edge. ‘The definition provided previously describes business strategies as including least cost, differentiation, and focus. Least cost relates to a lower cost than the competition for an otherwise equivalent product or service. Differentiation relates to a product or service with more features, options, or models than the competition, Focus relates to whether the product or service is designed for a broad audience or a well-defined market segment or segments. There are many 16 (SCP Version 4.2, 2038 Eaton2018 APICS Aights reserved ‘SECTION A: DEVELOP THE SUPPLY CHAN STRATEGY ways that these generic strategies can be combined or made into hybrids, for example: # Low cost—Focuses on delivering no-frills basics with low prices that are hard to match; cost is the basis for competition. # Best cost—Focuses on delivering the best value at a relatively low price; both cost and quality are the bases for competition. ¢ Broad differentiation—Creates product/service attributes that appeal to many buyers looking for variety of goods; customer experience and/or quality are often the basis for competitive differentiation. ¢ Focused differentiation—Develops unique strategies for targeted niche markets to meet unique buyer needs; niche marketing and innovation are important examples of this type of competitive basis. ¢ Focused low cost—Designed to meet well-defined (niche market) buyer needsat a low cost; responsiveness can be the basis for competition. Competitive advantages mirror the strategies used to create them: A competitive advantage exists when an organization is able to provide the same benefits from a product or service at a lower cost than a competitor (low-cost advantage), deliver benefits that exceed those of a competitor's product or service (differentiation advantage), or create a product or service that is better suited to a given customer segment than the competition can offer (focus advantage). The result of this ‘competitive advantage is superior value creation for the organization and its customers. If this advantage is successfully implemented and marketed, it should result in improved profits and market share. ‘To see how low-cost, differentiation-, and focus-based competitive advantages could be interpreted in an organization and its supply chain, we will explore each of these strategies in more detail next. Low-cost advantage strategies Strategies consistent with a low-cost approach to competition include a variety of methods to reduce cost in all areas of the supply chain, including resource extraction, transportation, warehousing, and location and design of retail facilities. A powerful nucleus company with a low-price strategy and a large market share can exert great leverage on its suppliers. Such a company may be able to require suppliers to cut facility costs, relocate, adopt lean manufacturing (an approach that focuses on waste reduction and quality), change employment practices, and so forth. ‘Alow-cost strategy is adopted in supply chain strategy as high operational efficiency, standardized products, and tight supplier inventory control. Supplier quality also needs to be high, or rework and returns will cut deeply into the thin profit margins of this model. Supply chain metrics need to measure efficiency from many perspectives, including asset utilization, inventory turnover, and various direct, indirect, and total cost measures. (Metries are addressed in Module 3.) sion 4.2, 2018 Editon 17IMooute 4: SuPPLy CHAIN DESIGN Alow-cost strategy should not be confused with target cost. Target costingiis defined in the APICS Dictionary, 15th edition, as the process of designing product to meet a specific cost objective. Target costing involves setting the planned selling price, subtracting the desired profit as well as ‘marketing and distribution costs, thus leaving the required manufacturing or target cost. In many cities, this strategy has resulted in the opening of numerous “dollar stores,” where the majority of the products are only one dollar and the selection is huge. A variant on a low-cost strategy for multinational corporations is a global strategy, defined in the APICS Dictionary, 15th edition, as a strategy that focuses on improving worldwide performance through the sales and marketing of common goods and services with minimum product variation by country. Its competitive advantage grows through selecting the best locations for operations in other countries. In addition to selecting low-cost countries for operations, this strategy benefits from economies of scale by selling products with litte variation in all markets. The items themselves may be cheap, expensive, or a varying mix of products, but they can have a lower cost than the competition can offer because of these competitive advantages. Note that providing a product or service at the lowest price is generally not compatible with either the differentiation or focus (niche marketing) strategy. The lower profit margins provided by this approach are more consistent with mass marketing. However, even low-cost products have to meet some quality standards to remain competitive. Also, price competition can exist within a niche or differentiated market. One luxury automobile may undercut another in price, for example, if it maintains a level of quality and a sterling reputation. Product or service differentiation advantage strategies Determining how to differentiate a product or service begins with a competitive analysis of other companies in the market to see what they have to offer. According to the APICS Dictionary, 15th edition, competitive analysis is “an analysis of a competitor that includes its strategies, capabilities, prices, and costs.” Once a company has analyzed the offerings of competitors, it may differentiate its products and services in a number of ways. This is known as product differentiation, “a strategy of making a product distinct from the competition ona nonprice basis such as availability, durability, quality, or reliability” (APICS Dictionary, 15th edition). 2048 APIS Fry SGP Version 42,2048 Ein Ang reserved @ vos©2018 APICS: Arghts reserved SECTION A: DEVELOP THE SuPPLy CHAIN STRATEGY ‘The following are some types of differentiation: ‘High quality—durability, appearance, performance, type of materials, and so on (Quality is often an order “qualifier,” or an element necessary for a customer to even consider the purchase of a particular product.) + Diversity of the product line, offering customers many options (The opposite of this approach was Henry Ford’s alleged claim that people could have his cars in any color they wanted as long as they wanted black.) + Greater reliability (which could be considered a type of quality) ‘+ Special features not available from competing products or services ‘Taking quality asa differentiation strategy example, the idea is to gain a reputation for reliability and consistency, which requires solid investment in product development and the processes of source, make (especially quality assurance), and return. Quality can bea differentiator for perishable or fragile goods. In this case, transportation and storage are key areas to focus on in the supply chain strategy. For example, Tropicana has not only invested in cutting-edge refrigerated trucks but has also developed a system to ensure that oranges are harvested at peak ripeness. Supply chain strategies appropriate for product differentiation include ‘¢ Modular design combined with postponement. (Postponement is defined in the APICS Dictionary, 15th edition, as “a product design or supply chain strategy that deliberately delays final differentiation...until the latest possible time in the process.” Itis covered in Section B of this module.) Modular design with postponement allows last-minute customization to meet specific consumer demands. # Abase model with numerous options to reduce the risk of obsolescence (e.g. the same base could be used with upgraded subcomponents) while providinga large effective inventory (many configurations) with a small actual inventory. Collaboration with suppliers to develop innovative designs, numerous options appealing to different customer tastes, artistic design, and so on, ‘Global track and trace technology to reduce the risk of counterfeit items or subcomponents. Another way to differentiate a product or service is to provide a superior customer experience, When customer experience is the organization's primary competitive basis, the organization develops a thorough understanding of customer preferences to provide products and services that are just right and are available where and when the customer needs them. This could beas simpleas a convenience store that is open atall times. When customized services are offered, the organization's supply chain needs to be sophisticated enough to measure the cost of offering these services to ensure that they remain profitable, From an inventory and logistics perspective, ‘CSCP Version 4.2, 2018 Edition Qos 20