Q1.

It is necessary for Supply Chain managers to identify the obstacles to

co-ordination in the Supply Chain so that they can take suitable
actions that help achieve co-ordination. Explain the major categories
of obstacles.
Answer- Incentive obstacles refer to situations in which different incentives are
offered to different members of the Supply Chain. This difference in
incentives leads to increase in variability and decrease in the total Supply
Chain profit. For example, if a transport manager is not given high incentives
and if he / she reduce the average transportation cost per unit then the use
of cheaper modes of transport may increase inventory-carrying cost or affect
customer service due to delayed deliveries.
Information processing obstacles refers to situations in which demand
information is distorted as it flows between different stages of the Supply
Chain. This results in increased variability in orders within the Supply Chain.
When forecast are based on orders received, any variability in customer
demand may be magnified since orders move up the Supply Chain to
manufactures and their suppliers(i.e., Bullwhip effect). In addition, lack of
information sharing between different stages of the Supply Chain magnifies
the Bullwhip effect.
Operational obstacles refer to actions taken in the course of placing and
filling orders that lead to an increase in variability. When a firm places orders
in bundle sizes that are much larger than the bundle sizes in which demand
occurs then variability of orders is magnified up the Supply Chain. Firms
may result ordering in large bundles because there may be significant fixed cost associated with
placing, receiving or transporting an order. Other
reason for this may be that the supplier offers quantity discounts based on
bundle sizes. In such cases, the order stream will not match with the
demand stream.
During replacement, lead times between stages in a Supply Chain are large;
this leads to a magnified Bullwhip effect.
Pricing obstacles refers to situations in which the pricing policy for a
product leads to an increase in variability of orders placed. Bundle size-base
quantity discounts may increase the bundle size of orders within the Supply
Chain and the large bundles would magnify the Bullwhip effect within a
Supply Chain.
Trade promotions and other short term price discounts offered by a
manufacturer results in forward buying in which a wholesaler or retailer
purchases large bundles during the promotion period to cover future
demand also.
Behavioural obstacles refer to problems in learning within organisations
that contribute to the Bullwhip effect. These problems are linked to the way
the Supply Chain is structured and type of communication between different
stages in the Supply Chain.
Q2. Write a note on assessment tool.
Answer- Planning an assessment involves the following 10 steps:
1. Gain commitment for an assessment.
2. Select the process to assess.
3. Choose the participants for the assessment.
4. Schedule the assessment.
5. Acquaint participants with the framework and the supply chain

management process.
6. Complete the assessment toll individually.
7. Summarise responses to use for discussion in the consensus-building
meeting.
8. Hold the consensus building meeting.
9. Prepare a summary of scores, importance, justifications and potential
action items.
10. Develop a plan for action.
An assessment needs to be planned at least a month in advance of the
consensus building meeting. The appropriate length of time depends on the
agendas of the executives that need to be part of the assessment. Most
frequently, planning starts 60 days before the consensus building meeting.
The activities that are involved in conducting the assessment usually occur
during a period of 10 to 14 days.
Figure shows a sample timeline of the activities that are required to
conduct an assessment.

Each item in the assessment tool includes a box with the option Dont Know.
Respondents should choose this option if appropriate, rather than leaving
the item blank. The fact that someone does not know about a particular
issue is useful information. If that person must know more about the activity,
providing them with the necessary information offers the opportunity for a
quick fix.
Because the assessment tool was designed to be used in any organisation,

it is possible that an individual activity may not be important to a specific

organisation at a point in time. For this reason, we ask participants to rate
the important of each item on a three-point scale: minor importance,
important, critical, rating depends on the individuals perception of the
importance of the item to the organisations success now and in the future.
It is important that respondents take the time to include a short justification
for the score and the importance they give to each item. This justification will
be necessary during the consensus-building session in order to explain their
scores to the other participations. Completing the assessment tool individually takes between 45
minutes and one hour. It is recommended that
respondents complete the assessment without interruption because the
structure of the process requires a sequence of thought that if interrupted
might result in the respondent forgetting the reasoning behind previous
responses.

Q3. How can differential advantage be achieved through Supply Chain

Management?
Answer- The customer value can be created as an objective of Supply Chain
Management and also as a means to other ends. A primary objective which
can be achieved by creating customer value is Differential Advantage.
Differential Advantage is supposed to enhance customer satisfaction and
also lead the profitability and long-term success of the firm. The terms
competitive advantage, comparative advantage, and differential advantage
used in Differential Advantage can be quite confusing. The terms
comparative advantage and competitive advantage have been used
interchangeably with distinctive competence or distinctive capability which
means relative superiority in delivering value or achieving lower cost in the
market place. If the customer understands the value created by the
competitors product or offering, differential advantage can be achieved in
the market place.
Competitive-forces approach which gives more importance to the
intensity of competition in the industry and the ability to achieve and to
defend a position of low cost or differentiation in an attractive market
segment. Strategies are focused on making pre-emptive moves that keep
competitors off balance and also allow the firm to maintain a favourable
balance of power.
Capabilities approach which is aimed on developing and
maintaining distinctive skills and resources that allow the firm to deliver
superior customer value or deliver value more cost effectively. Supply Chain
Management uses the capabilities approach to achieve Differential
Advantage through the creation and delivery of Customer Value.
Q4. Discuss the five basic components of Supply Chain Management
Answer- The following are the five basic components of Supply Chain Management:
Plan: This is the strategic part of Supply Chain Management. You need
a strategy for managing all the resources that go towards meeting
customer demand for your product or service. This may include
developing a set of metrics to monitor the Supply Chain so that it is
efficient, costs less, and delivers high quality and value to customers in
the most cost-effective manner.
Source: Here you have to select the suppliers who will deliver the goods
and services so that you can create your final product or service. This
involves developing a set of pricing, delivery and payment processes

with suppliers. This generates metrics for monitoring and improving the
relationships. Moreover, it involves mutual processes for managing the
inventory of goods and services that you receive from suppliers. This
also includes receiving shipments, verifying them, transferring them to
your manufacturing facilities and authorising supplier payments.
Make: This is the manufacturing part. This involves making schedule for
the activities necessary for production, testing, packaging and delivery.
This phase is the most metric-intensive part of the Supply Chain as it
requires measurement of quality levels, production output and workers
productivity.
Deliver: Many insiders refer this deliver part as Logistics. It involves coordination
of the receipt of orders from customers, developing a network
of warehouses, transporting products via carriers to customers and set
ting up an invoicing system to receive payments.
Return: This part refers to the reverse flow of goods from the customer
back to the producer. This is the problem part of the Supply Chain. It
involves creating a network for receiving defective and excess products
back from customers and supporting customers who have problems with
delivered products. The payment or discount procedures are established
here.

Q5. Explain Relationship Marketings impact on firms

Answer- Seven outputs of relationship marketing are presented as impacts on the
management of individual firms. These effects are explained below.
First, inter functional co-ordination should be reinforced because the
decision to either make or break a relationship is contingent on the role of
production and delivery processes as well as marketing (Gronroos, 1995).
Webster (I992) also claims that the common focus on customer value and
relationship management might result in much stronger co-ordination of the
procurement, sales, and marketing functions. These results are obtained in
an analogous manner to the merchandising function in retailing firms.
Second, relationship marketing compels a firm to redefine the
responsibilities of each function. The role of marketing in relationship
marketing strategy should be expanded from capturing new customers to
getting and keeping customers (Gronroos, 1995). Thus, marketing should
not be restricted to the marketing mix activities that are focused on the
manipulation of customers. It should focus on placing increased emphasis
on relationship marketing skills. At the same time, the fundamental
responsibility of the marketing function of a firm is to expertise on the
customer and keeping the rest of the network organisation informed about
the customer (Webster, l992). Gummensson (1987) uses the phrase parttime
marketer" to stress the critical marketing role performed by customer
contact employees other than the marketing department. He also argues
that part-time marketers are at the heart of relationship marketing.
Third, relationship marketing needs a firm to restructure the organisational
system into a boundary less organisation. In other words, the results of the
reinforced efforts on inter-functional co-ordination and role shifts in each
function should be consistent. Results should be consistent with the two
major trends of elimination of boundaries between management functions
within organisations and a blurring of the boundaries between the firm and
its market environment (Webster, 1992). In brief, traditional methods of
organising the marketing function and thinking about the purpose of
marketing activity must be re-examined. The re-examining should be with

the focus on long-term customer relationships, partnerships, and strategic

alliances (Webster, 1992).
Fourth, relationship marketing improves a firms marketing effectiveness by
following points:
A firm is always devoted to customers with long-term commitment. It can
appropriately direct marketing resources towards those uses that
provide the greatest value for a selective set of customers.
A promotion which has the early involvement of customers so that
customers provide valuable information to the firm.
A good example is Proctor and Gamble's (P&G) inter-functional Customer
Business Development Team. This team works with major customers in
identifying mutually beneficial opportunities and ways to add consumer
value. This team succeeded in reducing P&G`s inventory and helped
developing a more consumer-responsive product assortment.
Fifth, relationship marketing brings a firm resource from outside the firm to
satisfy customer needs. In the 1990s, consumers became more demanding
and competition became more intense. Jockeys president and COO,
Edward C. Emma, stated we are using our ability through worldwide
sourcing connections to make anything we need including more fashion
products, off shore because we just did not have the capabilities to make
some items domestically".
In this context, Kotler (I997) states, as firms globalise, they realise that no
matter how large they are, they lack the total resources and requisites for
success. Viewing the whole Supply Chain for producing value, they
recognise the necessity of partnering with other organisations. These
trends resulted in relationship marketing where it required teams to team up
with other firms to satisfy customers in today's market environment.
Sixth, customers are motivated to build and maintain relationships with the
suppliers to reduce risk. In this context, Bitner (l995) argues that having a
long-term relationship with a service provider can reduce consumer stress
as the relationship becomes predictable. Including initial problems are
solved, special needs are accommodated, and the consumer learns what to
expect. This is particularly so when customers need continuous and
periodical delivery of services that are important, variable in quality, and/or
complex. In other words, customers happen to be loyal to the service
provider for predictability and comfort as well the service quality itself.
The final impact of relationship marketing on an organisation or firm is
financial benefits such as increased revenue and lower marketing costs. For
example, Reichheld and Sasser (1990) came to know that lowering the
customer defection rate from 20% to 10% doubled the longevity of the
average customers relationship from 5 years to 10 years. It also increased
the net present value of the collective profit streams for a customer. In
addition, a firm can reduce costs by reducing some of the wasteful
marketing practices and by letting the consumer do such marketer jobs.
These jobs were processing orders, designing products, and managing
information directed to the firm. For example, Electronic Data Interchange
(EDI) ordering and invoicing allows P&G and its customers to automate
those processes. There by improving the delivery systems speed and
accuracy.

Q6. The Global Supply Chain Forum (GSCF) framework consists of eight
supply chain management processes. Explain them.
Answer- The GSCF framework consists of eight supply chain management

processes which are as follows:

Customer Relationship Management The customer relationship
management gives the structure of, how relationships with the
customers must be developed and maintained. The aim is to divide
customers based on the value over time and increase the customer
loyalty by, giving customised products and services.
Supplier Relationship Management The supplier relationship
management gives the structure of, how relationship with suppliers must
be developed and maintained. The manner in which a company needs
to develop relationship with its customers, it also has to establish
relationships with its suppliers. As in the case of customer relationship
management, a company will create close relationships with a small
subset of its suppliers, and manage arm-length relationships with others.
Customer Service Management The customer service management
gives the key point of contact for administering product and service
agreements. The customer service process must also help the customer
with the product applications.
Demand Management The demand management gives the structure
for balancing the customers requirements with supply chain capabilities,
which include reducing demand variability and increasing the supply
chain flexibility. This process is not limited to forecasting. It includes
synchronising the supply and demand, increasing the flexibility, and also
reducing the variability. A good demand management system uses
point-of-sale and the key customer data, to reduce uncertainty and
provide proficient flows throughout the supply chain.
Order Fulfilment The order fulfilment includes all the activities
required to define the customer requirements, design of the logistics
network, and fill the customer orders. This is not just the logistics
function, but instead requires to be implemented cross-functionally with
the coordination of the key suppliers and customers. The objective is to
develop a seamless process from, the supplier to the organisation and
then to its various customer segments.
Manufacturing Flow Management The manufacturing flow
management includes all the activities required to obtain, implement and
manage manufacturing flexibility, and movement of products through the
plants in the supply chain. Manufacturing flexibility reflects the facility to
make a wide variety of products in a timely manner at the least possible
cost. To achieve the desired level of manufacturing, the flexibility,
planning and execution must extend beyond the four walls of the
manufacturer in the supply chain.
Product Development and Commercialisation The product
development and commercialisation gives the structure for developing
and bringing to market, new products together with customers and
suppliers. The product development and commercialisation process
team must coordinate with customer relationship management to identify
customer articulated and unarticulated needs; select materials and
suppliers in conjunction with the supplier relationship management
process; and, develop production technology in manufacturing flow to
manufacture and integrate into the best supply chain flow for the
product/market combination.
Returns Management The returns management consists of all the
activities related to returns, reverse logistics, gate keeping, and

avoidance. The exact implementation of the process enables

management to not only manage the reverse product flow efficiently, but
also to identify opportunities in order to reduce unwanted returns and to
control reusable assets such as containers. Effective returns
management is a significant part of SCM and provides an opportunity to
achieve a sustainable competitive advantage.