Title: Supply Chain Fundamentals — LearnCoachAssist

Q: What is procurement in supply chain management?
A: Procurement is the strategic process of acquiring goods, services, or works from external sources, typically through a tendering or bidding process. It involves sourcing, negotiation, purchasing, and supplier management to ensure cost-effective and timely delivery of materials.

Q: What is the primary purpose of inventory management?
A: Inventory management aims to balance the cost of holding stock with the risk of stockouts. It ensures the right quantity of goods is available at the right time, minimizing carrying costs while meeting customer demand and avoiding production delays.

Q: Define logistics within a supply chain context.
A: Logistics refers to the planning, implementation, and control of the efficient forward and reverse flow and storage of goods, services, and information between the point of origin and the point of consumption to meet customer requirements.

Q: What is demand planning?
A: Demand planning is the process of forecasting future customer demand for products or services to ensure they can be delivered efficiently. It uses historical data, market analysis, and statistical models to predict sales and inform production and inventory decisions.

Q: Explain the bullwhip effect.
A: The bullwhip effect is a phenomenon where small fluctuations in retail demand cause progressively larger fluctuations in wholesale, distributor, and manufacturer orders. It results from order batching, price fluctuations, and demand forecasting errors, leading to inventory distortion and inefficiency upstream.

Q: What is a Key Performance Indicator (KPI) in supply chain management?
A: A supply chain KPI is a quantifiable metric used to evaluate the efficiency, effectiveness, and performance of supply chain activities. Examples include order accuracy, perfect order rate, inventory turnover, and on-time delivery, helping organizations track progress toward goals.

Q: What does Sales and Operations Planning (S&OP) stand for?
A: Sales and Operations Planning (S&OP) is a monthly integrated business management process that aligns demand, supply, and financial plans. It balances forecasted customer demand with production capacity and inventory levels to achieve profitability targets and operational efficiency.

Q: Why is sustainability important in supply chain management?
A: Sustainability in supply chains addresses environmental, social, and economic impacts across the product lifecycle. It reduces carbon footprint, ensures ethical sourcing, minimizes waste, and meets consumer and regulatory demands, often leading to cost savings and enhanced brand reputation.

Q: What is an Enterprise Resource Planning (ERP) system?
A: An ERP system is integrated software that manages core business processes—such as finance, HR, procurement, and supply chain—in real time. It centralizes data from multiple departments to improve coordination, efficiency, and decision-making across an organization.

Q: What is a Warehouse Management System (WMS)?
A: A WMS is software that optimizes and controls warehouse operations, from receiving and putaway to picking, packing, and shipping. It improves inventory accuracy, labor efficiency, and order fulfillment speed by providing real-time data on stock movements and locations.

Q: What is the difference between push and pull supply chain systems?
A: In a push system, production and distribution are based on forecasted demand, with goods 'pushed' to customers. In a pull system, production is triggered by actual customer demand, reducing inventory holding but requiring responsive processes.

Q: Define lead time in inventory management.
A: Lead time is the total time elapsed between placing an order with a supplier and receiving the goods. Accurate lead time estimation is crucial for setting reorder points and safety stock levels to prevent stockouts and minimize excess inventory.

Q: What is safety stock?
A: Safety stock is an extra quantity of inventory held to mitigate the risk of stockouts due to uncertainties in demand or supply. It acts as a buffer to maintain production continuity and meet customer service levels during unexpected events.

Q: What is Economic Order Quantity (EOQ)?
A: EOQ is a classic inventory management formula that calculates the optimal order quantity to minimize total holding and ordering costs. It balances the cost of holding inventory against the cost of placing orders, assuming constant demand and lead time.

Q: What does Just-In-Time (JIT) inventory mean?
A: JIT is a production strategy that aligns raw-material orders from suppliers directly with production schedules. Goods are received only as needed for production, reducing inventory holding costs and waste while requiring precise coordination and reliable suppliers.

Q: What is ABC analysis in inventory management?
A: ABC analysis categorizes inventory items into three classes based on their annual consumption value: A items (high value, low quantity, tight control), B items (moderate value and control), and C items (low value, high quantity, simple controls).

Q: Define logistics service provider (LSP).
A: An LSP is a company that specializes in managing and executing logistics operations—such as transportation, warehousing, and freight forwarding—on behalf of shippers. They offer expertise, networks, and economies of scale to optimize supply chain efficiency.

Q: What is a Bill of Lading (B/L)?
A: A Bill of Lading is a legal document issued by a carrier to a shipper acknowledging receipt of cargo for shipment. It serves as a contract of carriage, a receipt for goods, and a document of title, facilitating the transfer of ownership during transit.

Q: What is the role of freight forwarding in logistics?
A: Freight forwarding involves arranging the shipment of goods from one place to another via multiple carriers and modes of transport. Forwarders act as intermediaries, handling documentation, customs clearance, insurance, and logistics coordination for clients.

Q: What is a cross-docking operation?
A: Cross-docking is a logistics practice where incoming shipments are directly transferred to outgoing vehicles with minimal or no storage time. It reduces inventory holding costs and accelerates distribution by eliminating the need for long-term warehousing.

Q: Explain Vendor-Managed Inventory (VMI).
A: In VMI, the supplier is responsible for monitoring and replenishing the customer's inventory levels. The supplier accesses sales data and decides when and how much to ship, improving supply chain efficiency and reducing stockouts and administrative costs.

Q: What is a Kanban system?
A: Kanban is a visual scheduling system originating from lean manufacturing that uses cards or signals to control production and material flow. It triggers production or movement of items only when downstream demand occurs, reducing waste and overproduction.

Q: Define supply chain visibility.
A: Supply chain visibility refers to the ability to track and monitor all components of a supply chain—from raw materials to finished goods—in real time. It enhances transparency, improves risk management, and enables proactive decision-making using technologies like IoT and GPS.

Q: What is a demand forecast?
A: A demand forecast is an estimate of future customer demand for a product or service over a specific period. It uses historical sales data, market trends, and statistical models to guide production planning, inventory management, and procurement decisions.

Q: What is order fulfillment?
A: Order fulfillment is the complete process from receiving a customer order to delivering the product. It includes order processing, picking, packing, shipping, and handling returns. Efficiency in fulfillment directly impacts customer satisfaction and operational costs.

Q: What is the cash-to-cash cycle time?
A: Cash-to-cash cycle time is the duration between paying for raw materials and receiving payment from customers for finished goods. It measures supply chain liquidity; a shorter cycle improves cash flow and operational efficiency.

Q: What is a digital twin in supply chain management?
A: A digital twin is a virtual replica of physical supply chain assets, processes, or systems used for simulation, monitoring, and optimization. It allows companies to model scenarios, predict outcomes, and improve decision-making without disrupting real operations.

Q: Explain the concept of agile supply chain.
A: An agile supply chain is designed to respond quickly to changes in demand or market conditions. It emphasizes flexibility, speed, and adaptability, using real-time data and responsive processes to handle disruptions and customize offerings efficiently.

Q: What is a supply chain risk management (SCRM) strategy?
A: SCRM involves identifying, assessing, and mitigating risks that could disrupt supply chain operations—such as supplier failures, natural disasters, or geopolitical events. Strategies include diversification, contingency planning, and using predictive analytics for early warning.

Q: Define logistics outsourcing.
A: Logistics outsourcing is the practice of contracting third-party logistics providers (3PLs) to handle distribution, transportation, or warehousing functions. It allows companies to focus on core activities while leveraging external expertise and reducing capital investment.

Q: What is a purchase order (PO)?
A: A purchase order is a commercial document issued by a buyer to a seller, detailing the type, quantity, and agreed price of products or services. It serves as a formal offer and, once accepted, becomes a binding contract for the transaction.

Q: What is the formula for inventory turnover ratio?
A: Inventory turnover ratio = Cost of Goods Sold (COGS) divided by average inventory value. It measures how many times inventory is sold or used in a period, indicating efficiency. A higher ratio suggests better inventory management and sales performance.

Q: What is a logistics network design?
A: Logistics network design involves planning the optimal location and capacity of facilities—such as warehouses, distribution centers, and plants—to minimize total logistics costs while meeting service level requirements. It considers transportation, inventory, and demand patterns.

Q: What is a request for quotation (RFQ)?
A: An RFQ is a procurement document sent to suppliers inviting them to provide price quotes for specific goods or services. It standardizes the bidding process, enabling buyers to compare offers based on cost, quality, and terms before selecting a vendor.

Q: What is procurement negotiation?
A: Procurement negotiation is the strategic discussion between buyers and suppliers to agree on terms such as price, quantity, delivery schedules, and quality. Effective negotiation aims to achieve cost savings, favorable conditions, and long-term supplier relationships.

Q: What is supply chain resilience?
A: Supply chain resilience is the ability to anticipate, prepare for, respond to, and recover from disruptions. It involves building redundancy, flexibility, and collaboration to maintain operations and minimize impact during unforeseen events like pandemics or natural disasters.

Q: What is logistics cost analysis?
A: Logistics cost analysis involves evaluating expenses related to transportation, warehousing, inventory holding, order processing, and packaging. It identifies cost drivers and opportunities for efficiency improvements, helping organizations optimize their logistics spending and profitability.

Q: What is a fulfillment center?
A: A fulfillment center is a large warehouse designed specifically for receiving, processing, and shipping customer orders efficiently. It differs from traditional storage warehouses by focusing on rapid order handling, often using automation and advanced sorting systems.

Q: What is the role of blockchain in supply chain management?
A: Blockchain technology provides a secure, decentralized ledger for recording transactions and tracking assets across the supply chain. It enhances transparency, traceability, and trust among participants, helping verify product authenticity and reduce fraud and errors.

Q: What is supply chain optimization?
A: Supply chain optimization is the use of mathematical models, algorithms, and data analytics to improve the efficiency and performance of supply chain operations. It aims to minimize costs, maximize service levels, and balance trade-offs across procurement, production, and distribution.

Q: What is strategic sourcing in procurement?
A: Strategic sourcing is a structured, data-driven approach to analyzing an organization's spend and supplier base to develop long-term procurement strategies that reduce total cost, mitigate risk, and maximize value beyond simple price negotiations.

Q: What is supplier segmentation?
A: Supplier segmentation categorizes suppliers based on factors like spend, risk, and strategic value, enabling organizations to tailor relationship management strategies and allocate resources effectively across their supplier base.

Q: What is the difference between direct and indirect procurement?
A: Direct procurement involves purchasing goods and services directly used in producing a company's end products, while indirect procurement covers items supporting daily operations like office supplies, IT services, and facility maintenance.

Q: What is a category management strategy?
A: Category management treats product or service groups as strategic business units, applying dedicated analysis, sourcing strategies, and supplier management to maximize value, reduce costs, and align procurement with business objectives.

Q: What is the role of a purchase requisition?
A: A purchase requisition is an internal document used by employees to formally request the procurement of goods or services, initiating the purchasing process and providing necessary details for approval before a purchase order is created.

Q: What does total cost of ownership (TCO) mean in procurement?
A: TCO represents the complete cost of acquiring, using, and disposing of a product or service, including purchase price, operating costs, maintenance, training, and disposal, enabling better-informed sourcing decisions beyond upfront price.

Q: What is inventory carrying cost?
A: Inventory carrying cost includes expenses like capital, storage, insurance, taxes, depreciation, and obsolescence incurred to hold inventory, typically expressed as a percentage of inventory value annually to guide stocking decisions.

Q: What is the reorder point formula?
A: The reorder point is calculated as (average daily demand × lead time) + safety stock, indicating when to place a new order to replenish inventory before stockouts occur while accounting for variability in demand and supply.

Q: What is dead stock inventory?
A: Dead stock refers to inventory that has not been sold or used for an extended period and is unlikely to be sold in the future, tying up capital and warehouse space and often requiring discounting or write-offs.

Q: What is the difference between perpetual and periodic inventory systems?
A: Perpetual systems update inventory records continuously in real-time with each transaction, while periodic systems update inventory counts at scheduled intervals through physical counts or calculations for financial reporting purposes.

Q: What is a stock-keeping unit (SKU)?
A: An SKU is a unique alphanumeric code assigned to each distinct product variant to track inventory levels, sales, and locations, enabling precise stock management and detailed analytics across warehouses and retail locations.

Q: What is the difference between FTL and LTL freight?
A: FTL (Full Truckload) shipments fill an entire truck with one shipment, while LTL (Less-Than-Truckload) combines multiple smaller shipments from different customers into one truck, affecting cost, transit time, and handling.

Q: What is last-mile delivery?
A: Last-mile delivery refers to the final leg of the delivery process from a distribution center or local facility to the end customer's doorstep, often the most complex and expensive part of logistics due to fragmented routes.

Q: What is a 3PL provider?
A: A 3PL (third-party logistics) provider offers outsourced services including warehousing, transportation, fulfillment, and value-added logistics functions to businesses, allowing them to focus on core competencies while leveraging specialized expertise.

Q: What is inbound logistics?
A: Inbound logistics covers the transportation, receiving, and warehousing of incoming materials and goods from suppliers to the organization, serving as the first stage of operations and directly impacting production efficiency.

Q: What is outbound logistics?
A: Outbound logistics involves the storage and movement of finished products from the end of production to end customers, including warehousing, order processing, picking, packing, and transportation distribution activities.

Q: What is reverse logistics?
A: Reverse logistics manages the flow of goods from end customers back to the organization for returns, repairs, recycling, or disposal, critical for e-commerce, sustainability initiatives, and value recovery from returned products.

Q: What is a demand sensing technique?
A: Demand sensing uses real-time data, machine learning, and AI to detect short-term demand changes and anomalies faster than traditional forecasting, enabling proactive inventory adjustments and improved supply-demand matching.

Q: What is collaborative planning, forecasting, and replenishment (CPFR)?
A: CPFR is a supply chain practice where trading partners jointly plan, forecast, and replenish inventory using shared data and collaborative processes to reduce the bullwhip effect, improve service levels, and optimize inventory.

Q: What is demand shaping?
A: Demand shaping involves strategically influencing customer demand patterns through pricing, promotions, product availability, and marketing to smooth peaks, shift demand, and align it better with supply capacity constraints.

Q: What is meant by forecast accuracy?
A: Forecast accuracy measures how closely predicted demand matches actual demand, typically calculated using metrics like MAPE (Mean Absolute Percentage Error) to evaluate and improve forecasting models and processes.

Q: What is a control tower in supply chain management?
A: A supply chain control tower is a centralized hub providing real-time visibility and analytics across end-to-end supply chain operations, enabling proactive exception management, decision-making, and performance monitoring.

Q: What is the perfect order metric?
A: The perfect order metric measures the percentage of orders delivered on time, complete, undamaged, and with correct documentation, providing a comprehensive indicator of overall supply chain execution quality.

Q: What is order cycle time?
A: Order cycle time measures the total elapsed time from when a customer places an order to when they receive it, encompassing order processing, production, picking, packing, and shipping activities across the supply chain.

Q: What is the difference between service level and fill rate?
A: Service level is the probability of not stockouting during a replenishment cycle, while fill rate measures the percentage of customer demand immediately met from stock, both indicating product availability differently.

Q: What is S&OE in supply chain management?
A: Sales and Operations Execution (S&OE) is the short-term operational counterpart to S&OP, focusing on executing the plan over a near-term horizon, managing daily supply-demand imbalances, and resolving execution-level issues.

Q: What is a sustainable procurement policy?
A: A sustainable procurement policy integrates environmental, social, and governance criteria into purchasing decisions, requiring suppliers to meet standards on emissions, labor practices, and ethics while supporting corporate sustainability goals.

Q: What is carbon footprint reduction in logistics?
A: Carbon footprint reduction in logistics involves strategies like route optimization, load consolidation, alternative fuels, electric vehicles, and efficient warehousing to minimize greenhouse gas emissions from transportation and storage operations.

Q: What is the circular supply chain concept?
A: A circular supply chain designs products and processes to minimize waste and maximize resource reuse, recycling, and remanufacturing, creating closed-loop systems that reduce environmental impact and dependency on virgin materials.

Q: What is the role of IoT in supply chain management?
A: IoT (Internet of Things) enables real-time tracking, monitoring, and data collection from connected devices like sensors and GPS across the supply chain, improving visibility, asset utilization, condition monitoring, and predictive maintenance.

Q: What is predictive analytics in supply chain?
A: Predictive analytics uses historical data, statistical algorithms, and machine learning to forecast future supply chain events like demand spikes, equipment failures, and delivery delays, enabling proactive decision-making and risk mitigation.

Q: What is AI-driven demand forecasting?
A: AI-driven demand forecasting applies machine learning algorithms to large datasets including historical sales, market signals, weather, and social trends to generate more accurate and granular demand predictions than traditional statistical methods.

Q: What is the difference between TMS and WMS?
A: A Transportation Management System (TMS) manages the movement of goods, carrier selection, and routing, while a Warehouse Management System (WMS) controls warehouse operations like receiving, putaway, picking, and shipping.

Q: What is supply chain finance?
A: Supply chain finance uses financial instruments and technologies to optimize cash flow for buyers and suppliers through techniques like reverse factoring, dynamic discounting, and inventory financing, reducing working capital across the chain.

Q: What is lead time variability?
A: Lead time variability refers to fluctuations in the actual time between order placement and receipt compared to expected lead times, driven by supplier performance, transport disruptions, or demand spikes, requiring safety stock buffers.

Q: What is a multi-echelon inventory optimization?
A: Multi-echelon inventory optimization determines optimal inventory levels across multiple supply chain stages (suppliers, factories, warehouses, stores) simultaneously, minimizing total system costs while meeting target service levels.

Q: What is postponement strategy in supply chain?
A: Postponement delays final product differentiation or customization until closer to customer demand, using standardized base products to reduce inventory risk, improve responsiveness, and customize products efficiently in regional facilities.

Q: What is supply chain network design?
A: Supply chain network design determines the optimal configuration of facilities (plants, warehouses, distribution centers), their locations, capacities, and flows to balance cost, service levels, and responsiveness for current and future needs.

Q: What is horizontal collaboration in logistics?
A: Horizontal collaboration involves companies at the same supply chain level sharing logistics resources like warehousing and transportation capacity to reduce costs, improve truck utilization, and lower carbon emissions through synergistic partnerships.

Q: What is supply chain mapping?
A: Supply chain mapping is the process of creating a visual representation of a company's supply chain, identifying all suppliers, sub-suppliers, processes, and material flows to enhance transparency, identify risks, and improve decision-making.

Q: What is a blanket purchase agreement in procurement?
A: A long-term contract with a supplier that outlines predetermined terms, pricing, and delivery schedules for recurring purchases, allowing buyers to issue individual release orders as needs arise without renegotiating each time.

Q: What is the role of a procurement category manager?
A: A category manager oversees sourcing strategy for a specific group of related goods or services, analyzing spend, supplier markets, and risks to negotiate contracts and drive value across the category lifecycle.

Q: What does maverick spend refer to in procurement?
A: Maverick spend is purchasing activity that occurs outside of established procurement policies, contracts, or approved suppliers, often leading to inflated costs, compliance issues, and missed volume discounts.

Q: What is a three-way match in accounts payable and procurement?
A: The three-way match verifies that the purchase order, goods receipt note, and supplier invoice agree on quantities, prices, and terms before payment is authorized, helping prevent fraud and invoice errors.

Q: What is the difference between sole sourcing and single sourcing?
A: Sole sourcing means only one supplier can provide the required product due to specification or market constraints. Single sourcing is a strategic choice to buy from one supplier even though alternatives exist, often for volume discounts.

Q: What is lead time variability and why does it matter?
A: Lead time variability refers to fluctuations in the actual time between order placement and receipt. High variability increases safety stock needs, raises costs, and complicates production scheduling and customer service commitments.

Q: What is the standard deviation formula application in safety stock calculation?
A: Safety stock is often calculated as Z × σ_LT × √L, where Z is the desired service level z-score, σ_LT is the standard deviation of lead time demand, and L is the average lead time in periods.

Q: What is the difference between cycle stock and pipeline stock?
A: Cycle stock is inventory consumed between replenishment orders, while pipeline stock is in-transit or work-in-progress inventory moving through the supply chain that is not yet available for use.

Q: What is a dunnage in warehouse operations?
A: Dunnage refers to protective packaging materials such as foam, bubble wrap, pallets, or dividers used to secure and cushion goods during storage and transportation to prevent damage.

Q: What is the difference between a bonded and free warehouse?
A: A bonded warehouse is a secured facility where imported dutiable goods are stored without payment of customs duties until they are withdrawn. A free warehouse stores domestic goods without such customs restrictions.

Q: What is a pick-and-pass warehouse zone picking strategy?
A: In pick-and-pass, pickers retrieve items within their assigned zone and pass the partial order cart to the next zone. This reduces congestion, shortens travel distance, and improves throughput compared to discrete picking.

Q: What is warehouse slotting optimization?
A: Slotting optimization assigns SKUs to optimal storage locations based on velocity, size, and pick frequency. Fast movers are placed near dispatch areas to reduce travel time and labor costs.

Q: What is a wave picking method in order fulfillment?
A: Wave picking batches orders into waves released at scheduled times. Workers pick multiple orders simultaneously, balancing workload across shifts and aligning order completion with outbound carrier departure windows.

Q: What is the difference between a warehouse and a distribution center?
A: A warehouse primarily stores inventory long-term, while a distribution center is designed for rapid goods movement, featuring cross-docking, sortation, and value-added services to facilitate quick order fulfillment.

Q: What is a hub-and-spoke logistics network design?
A: A hub-and-spoke network routes shipments from origin points (spokes) through a central consolidation facility (hub) before final dispatch to destinations, reducing transportation costs through volume consolidation.

Q: What is milk run logistics?
A: A milk run is a delivery route where a single vehicle picks up goods from multiple suppliers on a fixed schedule and circuit, reducing empty miles, consolidating freight, and improving supplier pickup efficiency.

Q: What is the difference between intermodal and multimodal transport?
A: Intermodal uses multiple transport modes under separate contracts with each carrier. Multimodal uses several modes under a single contract and one carrier assumes responsibility for the entire journey.

Q: What is freight class in less-than-truckload (LTL) shipping?
A: Freight class is a standardized NMFC classification (50-500) based on density, stowability, handling, and liability that determines LTL shipping rates. Lower classes indicate higher density and lower cost per pound.

Q: What is a bill of lading's role in freight liability?
A: The bill of lading serves as a contract of carriage, receipt of goods, and document of title. It establishes the carrier's liability for loss or damage and determines when ownership transfers between parties.

Q: What is drop-shipping in order fulfillment?
A: Drop-shipping is a fulfillment model where the retailer transfers customer orders directly to the supplier or manufacturer, who then ships products straight to the customer, eliminating the retailer's inventory holding.

Q: What is the difference between backorder and lost sale?
A: A backorder is a customer order accepted but not yet fulfilled due to stock shortage, with shipment planned once inventory arrives. A lost sale occurs when no order is taken because stock is unavailable.

Q: What is the exponential smoothing forecast method?
A: Exponential smoothing calculates a weighted average forecast giving more weight to recent observations. The smoothing constant alpha (0-1) controls responsiveness: higher alpha reacts faster to demand changes.

Q: What is the moving average forecast method?
A: Moving average forecasting averages demand from the most recent n periods to predict future demand. It smooths short-term fluctuations but lags trend changes and assigns equal weight to all periods included.

Q: What is the difference between qualitative and quantitative forecasting?
A: Qualitative forecasting relies on expert judgment, market intelligence, and surveys when historical data is unavailable. Quantitative forecasting uses mathematical models and historical data to project future demand patterns.

Q: What is a demand driver in forecasting?
A: A demand driver is an internal or external variable such as price, promotions, seasonality, or economic indicators that influences customer purchasing behavior and should be incorporated into demand models.

Q: What is the consensus forecasting approach?
A: Consensus forecasting combines statistical models, sales input, and market intelligence from multiple stakeholders into a single agreed forecast, reducing bias and improving accuracy through collaborative input.

Q: What is the difference between dependent and independent demand?
A: Independent demand is finished product demand from end customers and must be forecasted. Dependent demand is derived from independent demand for components and materials needed to produce the parent item.

Q: What is post-hoc analysis in supply chain performance review?
A: Post-hoc analysis examines forecast errors, KPI results, and operational events after they occur to identify root causes, refine models, and improve future planning accuracy and decision-making.

Q: What is the four-wall asset utilization metric?
A: Four-wall utilization measures the percentage of time warehouse resources (labor, equipment, space) are actively productive versus available. It excludes non-value-added time like breaks, delays, or administrative tasks.

Q: What is inventory days of supply?
A: Inventory days of supply indicates how many days current inventory will last based on average daily usage. It is calculated as on-hand inventory divided by average daily demand or cost of goods sold.

Q: What is the difference between OTIF and fill rate?
A: OTIF (On-Time-In-Full) measures orders delivered complete and on schedule. Fill rate measures the percentage of order lines or units shipped from stock immediately upon order receipt, regardless of timing.

Q: What is supplier on-time delivery performance measurement?
A: It is typically calculated as the percentage of shipments received on or before the promised date with the correct quantity. This KPI drives supplier scorecards, corrective action plans, and sourcing decisions.

Q: What is a balanced scorecard in supply chain management?
A: A balanced scorecard tracks performance across financial, internal process, customer, and learning-and-growth perspectives, linking supply chain KPIs to overall corporate strategy and stakeholder value creation.

Q: What is S&OP maturity model progression?
A: S&OP maturity evolves through stages: stage 1 reactive (no formal process), stage 2 annual planning, stage 3 monthly tactical reviews, stage 4 cross-functional alignment, stage 5 advanced analytics, stage 6 continuous optimization.

Q: What is a demand vs supply balancing meeting in S&OP?
A: The demand-supply meeting brings cross-functional teams together to compare forecasted demand against available capacity and inventory, identify gaps, and recommend actions to balance the equation before executive review.

Q: What is green logistics?
A: Green logistics refers to environmentally sustainable logistics practices, including route optimization, modal shifts, electric vehicles, efficient warehousing, and reverse logistics that reduce carbon emissions and resource consumption.

Q: What is a Scope 3 emissions in supply chain?
A: Scope 3 emissions are indirect greenhouse gas emissions occurring in a company's value chain, including upstream supplier activities and downstream transportation, use, and end-of-life treatment of sold products.

Q: What is ethical sourcing certification?
A: Ethical sourcing certification verifies that suppliers adhere to labor, environmental, and human rights standards through third-party audits such as Fair Trade, BSCI, or SA8000, helping buyers ensure responsible procurement.

Q: What is the difference between prescriptive and predictive analytics in SCM?
A: Predictive analytics forecasts future outcomes based on historical data patterns. Prescriptive analytics recommends optimal actions by evaluating constraints, objectives, and trade-offs to achieve the best possible supply chain decision.

Q: What is the role of an API in supply chain integration?
A: An API (Application Programming Interface) enables different software systems such as ERP, WMS, and TMS to exchange data in real time, automating workflows, eliminating manual entry, and improving end-to-end visibility.

Q: What is a blanket purchase agreement?
A: A long-term contract with a supplier that outlines fixed terms, pricing, and conditions for recurring purchases. Buyers issue individual purchase orders against the agreement as needed, reducing administrative work and securing favorable pricing.

Q: What is the role of a procurement card (P-card)?
A: A P-card is a corporate credit card issued to employees for low-value, indirect purchases. It streamlines purchasing, reduces transaction processing costs, and accelerates order-to-pay cycles while providing automated spending data.

Q: Define supplier onboarding in procurement.
A: The structured process of registering, vetting, and approving a new vendor before transactions begin. It includes collecting legal documents, tax forms, banking details, and conducting compliance and risk assessments to ensure eligibility.

Q: What is a contract management system?
A: Software that stores, tracks, and manages supplier contracts throughout their lifecycle. It automates obligation tracking, renewal alerts, compliance monitoring, and performance evaluation against contractual terms and service-level agreements.

Q: What is spend analysis in procurement?
A: A systematic review of an organization's purchasing data to identify cost-saving opportunities, supplier consolidation possibilities, maverick spending, and category trends. It supports strategic sourcing decisions and improves procurement transparency.

Q: What is the difference between RFQ and RFP?
A: An RFQ (Request for Quotation) seeks price quotes for clearly defined specifications. An RFP (Request for Proposal) solicits detailed proposals addressing complex problems where methodology, experience, and approach matter as much as price.

Q: What is tail-end spend management?
A: The practice of controlling and consolidating low-value, high-volume purchases typically handled outside formal procurement processes. It reduces maverick spending, improves supplier visibility, and captures savings often overlooked by category strategies.

Q: What is first expiry first out (FEFO) inventory management?
A: FEFO is a method that dispatches items with the earliest expiration dates first, regardless of arrival sequence. It is widely used for perishable goods, pharmaceuticals, and food to minimize waste and ensure product viability.

Q: What is the difference between cycle stock and safety stock?
A: Cycle stock is inventory consumed between replenishment orders based on expected demand. Safety stock is a buffer held to protect against demand variability and supply lead time uncertainty, preventing stockouts during fluctuations.

Q: What is a min-max inventory system?
A: A simple reorder method setting minimum and maximum stock levels for each item. When inventory falls to the minimum, an order is placed to replenish stock up to the maximum, balancing availability with carrying costs.

Q: What is the difference between backordering and drop-shipping?
A: Backordering accepts a customer order despite stock shortage, fulfilling it once inventory arrives. Drop-shipping transfers the order directly to a supplier who ships directly to the customer, eliminating the retailer's warehousing entirely.

Q: What is the difference between LIFO and FIFO inventory methods?
A: FIFO (First In, First Out) assumes oldest inventory sells first, reflecting current costs. LIFO (Last In, First Out) assumes newest inventory sells first, useful for tax benefits in inflationary environments but rarely matches physical flow.

Q: What is an inventory write-off?
A: The accounting removal of unsellable, obsolete, or damaged inventory from balance sheets at its net realizable value. It reflects losses from spoilage, expiry, theft, or technological obsolescence, directly impacting profitability.

Q: What is a pick-and-pack operation?
A: A warehouse process where individual items are picked from storage locations and packed into shipment cartons for customer orders. It is the most labor-intensive fulfillment activity, often optimized through zone or batch picking strategies.

Q: What is the difference between a distribution center and a warehouse?
A: Warehouses store goods for longer durations, focusing on inventory preservation. Distribution centers are designed for rapid throughput, cross-docking, and order fulfillment, minimizing storage time and emphasizing movement rather than holding inventory.

Q: What is a dock-to-stock cycle time?
A: The duration between a shipment's arrival at a receiving dock and its placement into available storage locations. Shorter cycles reduce congestion, accelerate order fulfillment, and improve overall warehouse throughput efficiency.

Q: What is the difference between less-than-truckload (LTL) and partial truckload (PTL)?
A: LTL consolidates multiple shippers' freight onto one truck, with terminal transfers. PTL ships shipments larger than LTL but not requiring a full truck, moving directly without terminal handling, reducing transit time and damage risk.

Q: What is an intermodal container?
A: A standardized shipping container designed to move seamlessly across multiple transportation modes—ship, rail, and truck—without unloading and reloading cargo. Common sizes include 20-foot (TEU) and 40-foot (FEU) units.

Q: What is a bill of materials (BOM)?
A: A comprehensive list detailing all raw materials, components, sub-assemblies, and quantities required to manufacture one unit of a finished product. It serves as the foundation for production planning, procurement, and costing processes.

Q: What is the difference between logistics and distribution?
A: Logistics encompasses the full planning and execution of moving and storing goods, including inbound, outbound, and reverse flows. Distribution is a subset focusing on delivering finished products from manufacturer or warehouse to end customers.

Q: What is a milk run in logistics?
A: A scheduled route where a single truck collects deliveries from multiple suppliers or delivers to multiple destinations on one trip. It reduces transportation costs, consolidates freight, and improves supply chain efficiency for nearby partners.

Q: What is a logistics service level agreement (SLA)?
A: A contractual document defining performance metrics a logistics provider must meet, such as on-time delivery rates, transit times, damage rates, and order accuracy. SLAs establish accountability and enable performance monitoring with penalties.

Q: What is the difference between routing and scheduling in transportation?
A: Routing determines the optimal path or sequence of stops for vehicles. Scheduling assigns specific departure and arrival times to those routes. Together they minimize distance, time, and cost while meeting customer service requirements.

Q: What is a demand sensing tool?
A: Software that analyzes short-term, real-time data—like point-of-sale transactions, social media signals, and weather patterns—to detect emerging demand patterns earlier than traditional statistical forecasting models, enabling faster supply responses.

Q: What is the forecast bias metric?
A: Forecast bias measures whether forecasts systematically over- or under-predict actual demand. It is calculated as the average forecast error; consistently positive values indicate over-forecasting, negative values suggest under-forecasting tendencies.

Q: What is a rolling forecast?
A: A continuously updated forecasting approach that adds new periods as old ones expire, maintaining a constant planning horizon. Typically updated monthly or quarterly, it improves forecast accuracy by incorporating the latest market intelligence.

Q: What is the order promising process in supply chain management?
A: Order promising, or Available to Promise (ATP), calculates deliverable quantities and dates based on current inventory, production schedules, and inbound supply. It enables accurate customer commitment dates during the quote-to-cash process.

Q: What is the difference between lead time and cycle time?
A: Lead time is the total duration from order placement to receipt. Cycle time is the time spent actually working on producing or fulfilling an order. Lead time includes waiting, queuing, and transit phases.

Q: What is a supply chain segmentation strategy?
A: The practice of dividing products, customers, or suppliers into distinct groups based on characteristics like demand variability, volume, or strategic value. Each segment receives tailored supply chain policies, inventory rules, and service levels.

Q: What is the difference between MAPE and MAD in forecast accuracy?
A: MAPE (Mean Absolute Percentage Error) expresses forecast error as a percentage, useful for comparing across product lines. MAD (Mean Absolute Deviation) measures error in the same units as demand, offering scale-specific accuracy insights.

Q: What is the difference between S&OP and IBP?
A: S&OP (Sales and Operations Planning) balances supply and demand tactically over 12–24 months. IBP (Integrated Business Planning) extends this concept, incorporating financial planning, strategic alignment, and scenario modeling across the entire enterprise.

Q: What is a supply chain disruption?
A: An unexpected event that interrupts the normal flow of goods, services, or information across the supply chain. Examples include natural disasters, supplier bankruptcies, geopolitical conflicts, pandemics, and cyberattacks affecting operations.

Q: What is dual sourcing in procurement?
A: A risk mitigation strategy that engages two qualified suppliers for the same component or material. It reduces dependency on a single source, encourages competitive pricing, and provides backup capacity when primary suppliers face disruptions.

Q: What is the formula for calculating the perfect order rate?
A: Perfect Order Rate = (Orders delivered on time, in full, with no damage, and with accurate documentation) ÷ (Total orders shipped) × 100. It is a critical logistics KPI measuring end-to-end supply chain execution quality.

Q: What is the difference between throughput time and takt time?
A: Throughput time measures how long a unit takes to move through an entire production process. Takt time sets the production pace needed to meet customer demand, calculated as available production time divided by customer demand volume.

Q: What is a green logistics initiative?
A: Programs aimed at reducing logistics' environmental impact through route optimization, electric vehicles, eco-friendly packaging, carbon-neutral warehousing, and consolidated transportation. It supports corporate sustainability goals while often reducing long-term costs.

Q: What is supplier relationship management (SRM)?
A: A systematic approach to evaluating and managing supplier interactions, contracts, and performance. SRM segments suppliers strategically, fosters collaboration, drives innovation, and ensures alignment with organizational objectives and risk management practices.

Q: What is the role of AI in supply chain management?
A: Artificial intelligence analyzes vast data sets to improve demand forecasting accuracy, optimize inventory levels, automate procurement decisions, predict equipment maintenance, and enable dynamic routing—transforming supply chains into intelligent, self-adjusting networks.

Q: What is a supply chain control tower?
A: A centralized hub providing real-time visibility and orchestration across end-to-end supply chain operations. It integrates data from multiple systems, enabling proactive exception management, scenario planning, and collaborative decision-making across stakeholders.

Q: What is the difference between dependent and independent demand in inventory planning?
A: Dependent demand is derived from the production of finished goods (e.g., components, raw materials) and is calculated using a bill of materials. Independent demand is for finished products driven directly by customer orders or forecasts, requiring statistical forecasting techniques.

Q: What is the reorder point (ROP) and how is it calculated?
A: ROP is the inventory level that triggers a new order. It is calculated as: ROP = (Average daily demand × Lead time) + Safety stock. It ensures replenishment arrives before stockouts occur during supplier lead time.

Q: Define make-to-stock (MTS) and make-to-order (MTO) production strategies.
A: MTS produces goods based on forecasted demand and holds them in inventory for immediate shipment. MTO begins production only after a customer order is received, reducing inventory holding costs but increasing delivery lead time.

Q: What is the role of a bill of materials (BOM) in manufacturing supply chains?
A: A BOM is a structured list of all raw materials, components, sub-assemblies, and quantities required to manufacture one unit of a finished product. It drives MRP calculations, dependent demand planning, and procurement decisions.

Q: What is the fill rate KPI in order fulfillment?
A: Fill rate measures the percentage of customer demand met from available stock without backorders or lost sales. It is calculated as (Units shipped immediately ÷ Total units ordered) × 100. Higher fill rates improve customer satisfaction but increase inventory levels.

Q: What is supplier scorecarding in procurement?
A: Supplier scorecarding is a performance evaluation system that rates suppliers on metrics such as on-time delivery, quality defect rates, cost competitiveness, and responsiveness. It enables data-driven sourcing decisions and continuous supplier improvement.

Q: Define postponement strategy in supply chain design.
A: Postponement delays product differentiation or customization until the latest possible point in the supply chain. It reduces forecast errors, minimizes finished-goods inventory, and allows firms to respond to specific regional or customer demands efficiently.

Q: What is the difference between logistics and transportation management?
A: Transportation management focuses specifically on the movement of goods between locations, including carrier selection and routing. Logistics is broader, encompassing transportation, warehousing, inventory management, packaging, and order fulfillment activities.

Q: What is a logistics service provider (LSP) and what functions can it perform?
A: An LSP is a third-party company that performs logistics operations on behalf of shippers. Functions include warehousing, transportation, freight forwarding, customs brokerage, inventory management, and value-added services like labeling or kitting.

Q: Explain the concept of drop shipping in e-commerce logistics.
A: Drop shipping is a fulfillment method where the retailer does not hold inventory. When an order is placed, the supplier ships directly to the customer. This eliminates warehousing costs but reduces control over branding, packaging, and delivery experience.

Q: What is a hub-and-spoke distribution network design?
A: A hub-and-spoke model centralizes inventory in a main hub (distribution center) that ships to regional spokes (satellite facilities or stores). It consolidates freight, reduces transportation costs, but increases the risk of disruption at the central hub.

Q: What is the bullwhip effect and what causes it?
A: The bullwhip effect is the amplification of demand variability upstream in the supply chain. Causes include forecast errors, price fluctuations, order batching, shortage gaming, and lack of information sharing among supply chain partners.

Q: Define lead time variability and its impact on safety stock.
A: Lead time variability refers to fluctuations in supplier delivery times. Higher variability increases the risk of stockouts and requires larger safety stock buffers. Reducing variability through supplier collaboration improves service levels and lowers inventory costs.

Q: What is the formula for calculating economic order quantity (EOQ)?
A: EOQ = √(2DS / H), where D is annual demand, S is ordering cost per order, and H is holding cost per unit per year. EOQ identifies the order quantity that minimizes the total of ordering and holding costs.

Q: What is a cross-docking operation in a warehouse?
A: Cross-docking is a logistics practice where incoming goods are received and directly transferred to outbound vehicles with minimal or no storage time. It reduces warehousing costs, accelerates order fulfillment, and is common in retail and parcel networks.

Q: What is vendor-managed inventory (VMI) and what are its benefits?
A: VMI is a model where the supplier monitors the buyer's inventory levels and is responsible for replenishment decisions. Benefits include reduced stockouts, lower inventory costs, improved forecast accuracy, and stronger supplier-retailer collaboration.

Q: Define perfect order metric in supply chain performance.
A: Perfect order measures the percentage of orders delivered without errors in documentation, product, quantity, on-time delivery, and condition. It is calculated as (Perfect orders ÷ Total orders) × 100 and reflects end-to-end supply chain accuracy.

Q: Explain the concept of supply chain resilience.
A: Supply chain resilience is the ability to anticipate, withstand, recover from, and adapt to disruptions. It involves diversification of suppliers, safety stock, redundancy, visibility tools, and contingency planning to maintain continuity under stress.

Q: What is total cost of ownership (TCO) in procurement decisions?
A: TCO is the comprehensive assessment of all costs associated with purchasing a product, including acquisition price, transportation, inventory carrying, maintenance, disposal, and quality-related costs. It guides sourcing decisions beyond the unit price.

Q: What is inventory carrying cost and what are its components?
A: Inventory carrying cost is the expense of holding inventory over time, typically expressed as a percentage of inventory value. Components include capital costs, storage, insurance, taxes, obsolescence, and shrinkage. It directly affects EOQ and safety stock decisions.

Q: What is the difference between FTL and LTL freight shipping?
A: FTL (Full Truckload) uses an entire trailer for one shipment, ideal for large loads or fragile goods. LTL (Less-Than-Truckload) consolidates multiple shippers' freight in one trailer, reducing costs for smaller shipments but increasing handling and transit time.

Q: Define last-mile delivery in e-commerce logistics.
A: Last-mile delivery is the final leg of the shipping process from a distribution center or fulfillment hub to the end customer's address. It is typically the most expensive and complex part of logistics due to fragmented routes, time windows, and customer expectations.

Q: What is a third-party logistics (3PL) provider?
A: A 3PL provider is an outsourced company that performs logistics functions such as warehousing, transportation, picking and packing, and freight forwarding on behalf of the shipper. 3PLs enable firms to focus on core competencies and scale operations flexibly.

Q: What is reverse logistics and why is it important?
A: Reverse logistics manages the flow of goods from the end customer back to the seller for returns, repairs, recycling, or disposal. It is critical for e-commerce, warranty management, sustainability goals, and recovering value from returned or end-of-life products.

Q: What is a circular supply chain?
A: A circular supply chain designs products and processes to minimize waste, maximize reuse, and keep materials in productive use for as long as possible. It contrasts with linear 'take-make-dispose' models and supports sustainability and resource efficiency.

Q: What is carbon footprint reduction in logistics operations?
A: Carbon footprint reduction in logistics involves strategies like route optimization, modal shifts to rail or sea, electric vehicles, consolidation of shipments, and use of low-emission fuels to decrease greenhouse gas emissions from transportation and warehousing activities.

Q: What is demand sensing in modern supply chain planning?
A: Demand sensing uses real-time data sources such as POS, social media, weather, and IoT signals to detect short-term demand shifts more accurately than traditional forecasting. It improves responsiveness and reduces reliance on historical statistical models.

Q: What is the difference between service level and fill rate in inventory management?
A: Service level (Type 1) is the probability of not stocking out during a replenishment cycle, measured by cycle service level. Fill rate (Type 2) is the proportion of demand met from stock on hand. Both measure customer service but use different calculations.

Q: What is sales and operations execution (S&OE) in supply chain planning?
A: S&OE is the short-term execution layer of S&OP that manages daily and weekly supply-demand balancing. It handles exceptions, prioritizes orders, and aligns production and logistics to the approved S&OP plan, typically covering a 0-3 month horizon.

Q: What is supplier segmentation and the Kraljic portfolio matrix?
A: Supplier segmentation classifies suppliers based on supply risk and profit impact. The Kraljic matrix categorizes purchases into strategic, leverage, bottleneck, and non-critical items, guiding differentiated procurement strategies for each category.

Q: Define logistics network design and its key objectives.
A: Logistics network design determines the optimal number, location, and capacity of facilities such as factories, warehouses, and cross-docks. Objectives include minimizing total costs while meeting service level requirements and supporting strategic growth initiatives.

Q: What is the role of a purchase requisition in the procurement process?
A: A purchase requisition is an internal document used by departments to request goods or services. It triggers the procurement process by specifying quantities, descriptions, and budget codes, and must be approved before a purchase order is issued to a supplier.

Q: What is the cash-to-cash cycle time in supply chain finance?
A: Cash-to-cash cycle time measures the days between paying suppliers for materials and receiving payment from customers for finished goods. It is calculated as Inventory days + Receivable days − Payable days. Shorter cycles improve liquidity and reduce working capital needs.

Q: What is a stock-keeping unit (SKU) and why is it important?
A: An SKU is a unique alphanumeric identifier assigned to each distinct product variant for inventory tracking. SKUs enable precise inventory management, order accuracy, demand analysis at the variant level, and efficient warehouse picking operations.

Q: What is the difference between inbound and outbound logistics?
A: Inbound logistics manages the receipt, storage, and movement of raw materials and components from suppliers to the company. Outbound logistics handles the storage and distribution of finished products from the company to the end customer or distribution channel.

Q: What is forecast accuracy and how is it measured?
A: Forecast accuracy measures how close predicted demand is to actual demand. Common metrics include Mean Absolute Percentage Error (MAPE), Mean Absolute Deviation (MAD), and tracking signals. High forecast accuracy improves inventory planning and reduces the bullwhip effect.

Q: What is the primary goal of supplier relationship management (SRM)?
A: SRM aims to systematically evaluate supplier performance, foster collaboration, reduce risks, and drive continuous value creation, ensuring suppliers contribute to strategic objectives such as innovation, cost reduction, and reliable delivery.

Q: Define the term 'lead time variability'.
A: It refers to the inconsistency or fluctuation in the actual time taken for procurement, production, or delivery compared to planned lead time. High variability increases safety stock needs and disrupts scheduling.

Q: What is the formula for the Economic Order Quantity (EOQ)?
A: EOQ = square root of (2DS / H), where D is annual demand, S is ordering cost per order, and H is holding cost per unit per year. It minimizes total inventory costs.

Q: Explain the concept of 'postponement' in supply chain design.
A: Postponement delays product customization or differentiation until the latest possible point, reducing inventory risk, enabling mass customization, and improving responsiveness to regional demand variations.

Q: What is a 'bill of materials' (BOM)?
A: A BOM is a comprehensive list of raw materials, components, sub-assemblies, and quantities required to manufacture one unit of a finished product, serving as a foundation for production planning.

Q: Define 'freight consolidation'.
A: It combines multiple smaller shipments from different shippers into one full load, reducing transportation costs per unit, improving carrier efficiency, and lowering handling frequency.

Q: What is the 'order-to-cash' (O2C) cycle?
A: O2C is the end-to-end process from receiving a customer order through fulfillment, shipping, invoicing, and final payment collection, measuring overall commercial efficiency.

Q: What is 'dock-to-stock' time in warehousing?
A: It measures the duration between a shipment's arrival at the receiving dock and its availability as pickable inventory, reflecting receiving efficiency and inbound throughput speed.

Q: Define the 'bullwhip effect' and name one main cause.
A: The bullwhip effect is demand amplification as it moves upstream; a primary cause is order batching by retailers reacting to perceived shortages, distorting forecasts for manufacturers.

Q: What is the difference between 'make-to-stock' (MTS) and 'make-to-order' (MTO)?
A: MTS produces goods based on forecasted demand and holds inventory; MTO begins production only after a confirmed customer order, reducing inventory but increasing lead time.

Q: What is a 'safety stock' calculation based on service level?
A: Safety Stock = Z × σ_LT, where Z corresponds to the desired service level (e.g., 1.65 for 95%) and σ_LT is the standard deviation of demand during lead time.

Q: Define 'supply chain finance' (SCF).
A: SCF optimizes cash flow by allowing buyers to extend payment terms while suppliers receive early payment via financing from third-party institutions, reducing working capital for the entire chain.

Q: What is 'ship-from-store' fulfillment?
A: It is an omnichannel strategy where retail stores act as mini-distribution centers, shipping online orders directly to customers, reducing delivery distance and leveraging store inventory.

Q: What is the 'OTIF' metric in logistics?
A: OTIF stands for On-Time In-Full. It measures the percentage of orders delivered on the promised date with the exact quantity, indicating perfect delivery performance.

Q: Define 'incoterms' and give one example.
A: Incoterms are international commercial terms defining buyer/seller responsibilities for shipping, risk, and costs. Example: FOB (Free On Board) transfers risk when goods load onto the vessel.

Q: What is 'demand segmentation' in forecasting?
A: It divides demand into groups (e.g., predictable, intermittent, volatile) using statistical clustering, allowing tailored forecasting models and inventory policies for each pattern.

Q: What is a 'digital control tower' in supply chains?
A: It is a centralized, real-time visibility platform aggregating data across logistics, inventory, and orders to monitor operations, predict disruptions, and orchestrate responses.

Q: Define 'lean inventory' principles.
A: Lean inventory focuses on eliminating waste (muda), reducing variability, and maintaining only what is needed, when needed, to minimize costs while meeting customer demand.

Q: What is the 'landed cost' in international procurement?
A: Landed cost is the final price of a product including purchase cost, freight, duties, insurance, handling, and currency conversions, essential for true sourcing comparisons.

Q: What is a 'pick-face' in warehouse operations?
A: The pick-face is the dedicated storage area or slot from which pickers retrieve inventory to fulfill orders, optimized for item velocity, size, and ergonomic accessibility.

Q: Explain the 'Four Rs' of procurement.
A: The Four Rs refer to Right Quality, Right Quantity, Right Time, and Right Price. They represent core objectives ensuring efficient acquisition of goods and services.

Q: What is 'green logistics'?
A: Green logistics involves adopting environmentally sustainable practices in transportation, warehousing, and packaging, such as route optimization, electric vehicles, and reduced emissions.

Q: Define 'order allocation' in distribution.
A: Order allocation assigns incoming customer orders to specific distribution centers or warehouses based on inventory availability, proximity, and cost efficiency.

Q: What is the 'fishbone diagram' used for in supply chain quality?
A: It is a root-cause analysis tool identifying potential causes of a problem across categories like methods, materials, and machines to address quality or process defects.

Q: What is a 'drop-shipping' model?
A: Drop-shipping bypasses the retailer holding inventory; the supplier ships directly to the consumer upon retailer order, reducing retailer costs but limiting control.

Q: Define 'continuous replenishment program' (CRP).
A: CRP is a vendor-managed process where suppliers monitor retailer inventory data and automatically reorder to maintain agreed levels, reducing stockouts and order delays.

Q: What is 'supply chain mapping'?
A: It visually documents all entities, flows, and dependencies from raw materials to end customers, identifying risks, bottlenecks, and opportunities for optimization.

Q: What is 'demand-driven MRP' (DDMRP)?
A: DDMRP positions strategic inventory buffers based on demand patterns and lead times, using dynamic adjustments to drive procurement and production, reducing the bullwhip effect.

Q: What is the 'cost of goods sold' (COGS) impact of inventory?
A: COGS includes direct costs of producing goods sold. Excess or obsolete inventory increases carrying costs and write-offs, reducing gross profit margins.

Q: Define 'intermodal transportation'.
A: Intermodal transport moves freight using multiple modes (truck, rail, sea) in standardized containers, optimizing cost and efficiency across long distances.

Q: What is a 'supply chain audit'?
A: A systematic evaluation of processes, policies, and performance against benchmarks or regulations, identifying gaps, compliance issues, and improvement opportunities.

Q: What is 'dynamic pricing' in supply chains?
A: Dynamic pricing adjusts prices in real-time based on demand, inventory levels, competitor actions, and customer data to maximize revenue or clear slow-moving stock.

Q: Explain 'order promising' in advanced systems.
A: Capable-to-Promise (CTP) or Available-to-Promise (ATP) systems check real-time inventory and capacity to commit reliable delivery dates during sales order entry.

Q: What is the 'DIFOT' metric?
A: Delivered In Full On Time measures the percentage of orders meeting both quantity and time expectations, a stricter variant of OTIF.

Q: Define 'circular economy' in supply chain terms.
A: It designs out waste by keeping products, components, and materials in use through reuse, remanufacturing, and recycling, replacing the traditional 'take-make-dispose' model.

Q: What is 'supplier scorecarding'?
A: A scorecard quantitatively rates suppliers on metrics like quality, delivery, cost, and responsiveness, enabling objective performance management and development.

Q: What is 'batch picking' in warehousing?
A: Batch picking consolidates multiple orders into one pick tour, reducing travel time and labor versus discrete picking, increasing warehouse throughput.

Q: Define 'supply chain orchestration'.
A: It is the real-time coordination of people, processes, and systems across the supply chain to execute orders, balance capacity, and respond dynamically to disruptions.

Q: What is 'vendor consolidation' in procurement?
A: Reducing the number of suppliers for a category to a smaller group of strategic partners, simplifying management, increasing volume leverage, and deepening collaboration.

Q: What is 'forecast bias'?
A: The systematic tendency of forecasts to be consistently higher (over-forecasting) or lower (under-forecasting) than actual demand, leading to inventory imbalances.