EXERCISES: INDIVIDUAL

E 1: 5Q
1. Compare the concept of a modern supply chain with more traditional distribution channels. Be
specific regarding similarities and differences.
Traditional distribution channels typically had an order fulfillment time of 15-30 days. But if something
went wrong, this time would increase dramatically. It was a common practice to maintain inventory at every
stage of the supply chain like retailers, wholesalers, and manufacturers. The market was characterized by
scarcity to the primary goal of traditional model was to ensure availability of products. However, today
customers want more options in product offerings. Modern supply chain is geared towards meeting the
changing consumer needs. Transportation capacity and operational performance has become more reliable
and economical. Logistical systems are capable of capable of delivering products at exact times. So
customer orders can be fulfilled faster. With massive development in information technology, the need to
maintain inventory has reduced dramatically. The occurrence of failures, characteristic of traditional supply
chain, has been replaced by a commitment towards zero-defect of six sigma performance. In essence a high
level of performance is achieved at a lower total cost with commitment of fewer financial resources than
that in the past.
2. What specific role does logistics play in supply chain operations?
Logistics is the primary conduit of product and service flow within a supply chain arrangement. It is the
work required to move and to position inventory throughout a supply chain. It is a combination of order
management, inventory, transportation, warehousing, material handling and packaging as integrated
throughout a facility network. Logistics is essential for effective supply chain connectivity.

3. Illustrate a common trade-off that occurs between the functional areas of logistics.
Any illustration that demonstrates an inherent trade-off between information, inventory, transportation,
warehousing, material handling or packaging is acceptable. The few examples of such trade-offs will be
shown below:

Information is increasingly being used as a substitute for inventory. For instance, a warehouse manager that
is in constant contact with a supplier of his/her stocks need not hold traditional, high levels of inventory. By
being connected, the supplier realizes when the warehouse is in need of product and can make
accommodations of product processing and shipping accordingly. Fast and improved of transportation also
prevent manufacturers and merchandisers from holding high levels of inventory. Poor packaging can lead to
product damage in transit. Management should either improve packaging or seek a transportation mode that
is more stable and less damage-inducing, regardless this might lead to increase of logistics in logistics due to
damaged products will be send back for repair or remanufacture.
4. Discuss and elaborate on the follow statements: the selection of a superior location network can
create substantial competitive advantage.
The statement The selection of Superior location network can create substantial competitive advantage
holds true with regard to logistical networks. The network design implies customer service and cost
considerations. Added value (and perhaps a competitive advantage) may be derived from the intimacy of
being located near customers. Networks that strive for the highest levels of effectiveness (superior service
performance) often do so at significantly higher expense. Networks may also be designed for efficient
product flows in order to lower transportation and inventory holding costs. Depending upon the competitive
environment in which a firm operates, competitive advantage may result from either being located near the
customers to provide superior service or through low cost service with the cost-efficient network design.
5. What is meant by value-added services? Why these services are considered essential in a customer
success program?
The notion of value-added service is a significant development in the evolution to customer success. By
definition, value-added service refers to unique or specific activities that firms can jointly develop to
enhance their efficiency effectiveness, and relevancy.
Cleary, a customer success program involves a thorough understanding of individual customer requirements
and a commitment to focus on long-term business relationship having high potential for growth and
profitability. When a firm becomes committed to value-added solutions for major customers, it rapidly
become involved in customized or tailored logistics. It is doing unique things to enable specific customer to
achieve their objectives. In reality, some value-added services that buyers and sellers agree to involved
integrated service providers that are positioned to provide such services. Another form of value-added
service involves the proper sorting and sequencing of products to meet specific customer requirements.