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Quiz 3

Which of the following is an enterprise business system (EBS) backbone application?
A. Order history
B. Managing online bidding sessions
C. Product cataloging
D. Managing EDI with suppliers
A
EBS backbone applications focus on gathering, storing, and reporting information that is necessary to perform other functions in the SRM system, such as data on order history and accounting and information about suppliers and their performance.
“The most profitable period but also the period most vulnerable to competitive inroads.” This phrase best describes what phase of the product life cycle?
A. Development
B. Introduction
C. Growth
D. Maturity
D.
During the maturity phase of the product life cycle, the costs of acquiring sales are declining, so profit is higher. At the same time, growing competition places pressure on prices. Increased sales promotion and aggressive customer acquisition help balance this influence.
In which type of customer segmentation are customers grouped by income?
A. Segmentation by value
B. Segmentation by channel
C. Segmentation by demographics
D. Segmentation by need
C.
Demographic segmentation groups customers by group characteristics such as age, income, marital status, or family size.
An example of a supplier performance reporting mechanism is
A. a certification document.
B. an automated performance alert.
C. a floor failure event rate.
D. a rejected materials rate.
B
Rates, such as number of floor failures, rejected materials, or delays in shipment, are used to compile reports of supplier performance but are not themselves reports. Reporting mechanisms include such tools as scorecards, performance failure alerts (which are online and in real time), and surveys. A certification indicates that a supplier has met criteria but does not report ongoing performance.
Which of the following is an example of a loyalty program?
A. “Buy one, get two” offer
B. Free shipping for high-volume customers
C. Introductory rates
D. Customer profiling system
B.
A loyalty program simultaneously rewards repeat or high-value customers and encourages continued business through special incentives.
An organization whose IT and operations groups are able to collaborate easily is best described as
A. able to lead.
B. change-oriented.
C. cross-functional.
D. farseeing
C.
A cross-functional organization is one that enjoys cooperation between internal groups, especially IT and operations.
Creation of brand image is a concern related to
A. promotion.
B. product.
C. pricing.
D. placement.
A.
Pricing, product, and placement are all important strategy elements in implementing and maintaining brand image or identity, but creation of the desired image is a promotional activity.
Which of the following statements about ISO certification is correct?
A. ISO certification is a one-time process.
B. ISO certification has limited recognition globally.
C. Because of their depth, ISO standards can often be used in place of a company’s own supplier criteria in the supplier certification process.
D. ISO certification may be one criterion a supplier must meet in a larger certification process.
D.
ISO certification is a globally recognized process that certifying companies must update every three years. Since it is industry- rather than business-specific, it often complements a business’s own certification process. ISO certification may be a requirement for suppliers, but because of the certification’s broad criteria it is usually not the only requirement in the certification process
A customer-focused business
A. gathers information about the customer but restricts its use to critical points in the supply chain.
B. restricts communication and distribution channels to the most profitable options.
C. focuses on customer care rather than product/service design and delivery.
D. educates customers throughout the purchasing process.
D.
Customer-focused businesses try to make their customers feel better educated about what they are buying before, during, and after the purchase. They promote sharing of information about the customer throughout the supply chain, appreciate the need to consider customer needs in designing as well as marketing and distributing products, and maintain communication and distribution strategies that value convenience for the customer more than profitability.
Which of the following are current global forces shaping supply chain management strategies?
A. Greater market volatility
B. Shrinking markets
C. Increased influence of trade unions
D. Increased difficulties in communication and application sharing
A
Companies are responding to the forces of globalization, increased project complexity, and greater market volatility by investing in technology that will enable them to better manage knowledge both within and across organizations.
Which of the following factors has led to greater customer focus in business?

A. Higher quality of goods and services
B. Advances in technology
C. Greater global competition
D. All of the above

D
All of the answers are correct. Higher quality, made possible through technology, has created increased customer expectations, which has in turn led to price as a differentiating factor. This has created a downward pressure on profit margin. Greater customer focus helps counter this pressure.
Which of the following statements about successful strategic supplier relationships is true?
A. The best change occurs in large movements that motivate the entire organization rather than in smaller increments.
B. No single restructuring of processes will be adequate.
C. Relationships should not be affected by the shifting priorities of the partners.
D. Although marketplace change may be constant, the details of the relationship should not change.
B.
Supply partners must accept and commit to the fact of change in their relationships. As conditions and individual priorities and strategies change, the processes that define the relationship should change as well. It is better if change can be accomplished incrementally.
In an SCM implementation effort, the channel master is

A. the organization that drives the implementation process.
B. the person designated as strategic team leader.
C. the organization that designates the optimal delivery channels.
D. the person who designates the optimal communications channels

A.
Designating one organization as channel master positioned at the center of the initiative during its inception can contribute to the strategy’s success. The channel master should be capable of rallying supporters and driving the implementation beyond the preoccupation with improving internal competencies.
A vulnerable customer is one who

A. the competition has been selling intensively.
B. is about to discontinue service or stop purchasing the brand products.
C. is segmented into a low-value group and offered little incentive.
D. has bought product that is becoming obsolete.

B.
The most accurate answer is that a vulnerable customer is one who is about to stop being a customer. This may be due to factors described in some of the incorrect choices. A vulnerable customer may perceive little value in the relationship, may have developed little loyalty, and may be willing to try a competitor. A customer with obsolete product who does not receive customer care may soon become vulnerable.
Which of the following statements about virtual organizations is correct?
A. Customers perceive the member organizations as distinct entities.
B. Information belonging to member organizations remains proprietary.
C. Member organizations retain their original, distinctive cultures and values.
D. Individual organizations must preserve their own identity and integrity.
D.
In a virtual organization, there is integration of many systems and extensive sharing of information, often proprietary information. Forming virtual organizations thus requires trust and a cultural shift that embraces the common identity of the virtual organization. At the same time, the member organizations must evaluate the risk of the relationship and preserve their own identity and integrity.
A company maintains a secondary outsourced transportation network capable of meeting the needs of its primary customer base. This is an example of
A. managing possible risks of supplier relationship management (SRM) outsourcing.
B. using an off-site delivery center.
C. outsourcing transportation needs.
D. poor outsourcing practices.
A.
It is reasonable to outsource transportation, especially in a global marketplace. And it is an especially sound practice to manage risks associated with this outsourcing by maintaining a redundant supplier in the event of disruptions with the primary outsourced transportation network.
Which of the following is an example of the voice of the customer (VOC) technique?

A. Brief checkoff customer satisfaction surveys printed on invoices
B. Collated comments of sales representatives calling on specific customer groups
C. Customer design groups
D. Analysis of customer buying behaviors

C.
Customer design groups are an example of open-ended information gathering used by VOC to make complex customer perceptions more visible to a business. A brief checkoff survey does not capture complex information. Analysis of behaviors and analysis by others do not present the customer’s own voice.
A chief customer officer (CCO) is in charge of
A. responding to customer dissatisfaction.
B. assigning account managers to high-value customers.
C. identifying opportunities for enhancing revenue and profit through customer interactions.
D. identifying and responding to customer care opportunities.
D.
A chief customer officer may supervise management of customer dissatisfaction, but the job entails more activities, including identifying customer touch points, defining and enforcing service standards, enriching the customer experience, and helping customers navigate within the organization.
A company invites key business customers to participate in the performance evaluations of its account managers. This is an example of

A. collaborative management practices.
B. supply chain integration.
C. voice of the customer information gathering.
D. measuring customer satisfaction.

D.
Measurement of customer satisfaction is a key element of customer relationship management (CRM). B2B companies may measure the customer relationship management (CRM) effectiveness of their account managers by inviting the managers’ customers to participate in their performance evaluations. VOC is considered a more general research tool.
Which of the following statements about technology and customer relationship management (CRM)/supplier relationship management (SRM) is true?
A. Both CRM and SRM are essentially technological.
B. The effects of technology are more significant in SRM than customer relationship management (CRM).
C. Technology plays a supporting role in CRM and SRM.
D. All of the above
C
While CRM and SRM are not synonymous with technical tools (they are philosophies and competitive strategies), they are both greatly supported by technological solutions.
Which of the following is a good example of a virtual organization?
A. Merger of two competitors
B. Company that sells only services, not products
C. Raw materials supplier that agrees to supply product for an upcoming production cycle
D. Strategic alliance of four companies to develop a new drug product and market it under the name of one of the companies
D.
A virtual organization is a long-term strategic alliance of separate business entities that presents itself to third parties as a single entity.
Which of the following statements about the certification process is correct?

A. All potential suppliers should go through the certification process.
B. Criteria should be adjusted to individual suppliers’ capabilities.
C. Suppliers should be clearly informed of criteria and processes to be used in the certification process.
D. Certification is a supplier selection tool only.

To achieve certification’s highest potential, companies must clearly communicate what they will be measuring and how. Criteria should be consistent from one supplier to the next. The outcome can be used not only for selection but also for supplier improvement. Companies usually opt to pursue the certification process only with actual or key suppliers.
In the supply chain model, customer relationship management (CRM) is instrumental in

A. creating and maintaining demand.
B. eliminating volatility in orders of raw materials.
C. ensuring supply at the retail level.
D. aligning distributors with retailers.

A.
In general, CRM benefits the supply chain by creating and maintaining demand for products and services.
Which one of these companies is practicing good supplier relationship management (SRM) risk management?
A. This company relies on the selection process as its only means of risk management.
B. This company sources a key raw material from one supplier who reliably provides the lowest price.
C. This company develops detailed plans to shift work orders among several certified global suppliers in the event of labor disruptions in their countries.
D. This company requires in its contracts that all suppliers use a defined third-party transportation provider for all shipments.
C.
Single sourcing of a key material or component is not a good example of risk management, even if the supplier is the lowest-cost provider. Good risk management may involve additional costs incurred through maintaining redundancy in the supply chain and requiring additional supplier performance or assumption of risk.
What supplier performance rating systems (SPRS) source indicates if a supplier-caused discrepancy is found after a part is shipped to stores or has been installed in an assembly?

A. Time line performance
B. Conformation rates
C. Levels of conditionally accepted materials
D. Number of floor failure events

The number of floor failure events indicates if a supplier-caused discrepancy is found after a part is shipped to stores or has been installed in an assembly. If this occurs, the organization needs to adjust the performance index accordingly.
Cost-effective and efficient collaboration between supply chain partners requires
A. maintaining separate decision-making structures to avoid conflicts.
B. defining an early point at which to dissolve a troubled relationship.
C. structuring communication and decision making so that conflicts do not occur.
D. a conflict resolution model.
Forging supplier relationships represents an investment that must be protected by developing ways to identify potential and actual conflicts, resolve them without endangering the relationship, and learning from the conflict.
Inventory status, capacity status and plans, production schedules, and shipment and demand forecasts are all shared by all parties on a real-time, online basis. This best exemplifies which of the following distinctions between traditional purchasing and strategic sourcing?
A. Purchase price versus true cost
B. Transactional versus collaborative
C. Boundary-specific versus realigned work processes and workflows
D. Limited visibility versus entire supply chain visibility
D.
When information from suppliers, manufacturers, distributors, retailers, and customers is available for analysis, there is enhanced visibility of the supply chain and opportunities for improvement. Demand information, inventory status, capacity status, capacity plans, production schedules, promotion plans, shipment forecasts, and demand forecasts are all shared and ideally can be accessed by all parties on a real-time, online basis.
A purchaser and its suppliers form an ongoing relationship in which they all participate in improving the system. This best exemplifies which of the following distinctions between traditional purchasing and strategic sourcing?
A. Boundary-specific versus realigned work processes and workflows
B. Transactional versus collaborative
C. Limited visibility versus entire supply chain visibility
D. Purchase price versus true cost
B.
Traditional purchasing sees each purchase as a discrete transaction. Since strategic sourcing involves ongoing relationships, there is opportunity for collaboration between the purchaser and suppliers that can result in improving the profitability of the supply chain and adding value to the final product or service.
Which of the following supply chain participants is likely to resist initial SCM efforts because they feel that they are lost in the network, never knowing whom to contact or how to check on an order?
A. Supplier
B. Internal
C. Distributor
D. Customer
D.
Initially, customers may complain of getting lost in the network and never knowing whom to contact or how to check on an order. This is particularly common when more than one organization is involved in the support of a product or service.
After selecting the proper partner, the next step in creating a successful alliance is to

A. negotiate a win-win deal.
B. appoint an alliance manager.
C. establish ground rules.
D. engage in a collaborative corporate mindset.

A.
Before the rules, supervision, and improvement of the relationship can be pursued, a win-win deal must be negotiated. This sets the tone for the future alliance.
In a supply chain, distributors can refer customers to other distributors who have needed product on hand. This best describes a

A. third-party logistics (3PL) company.
B. fourth-party logistics (4PL) company.
C. distributor integration (DI) network.
D. collaborative transportation management (CTM) network.

C.
Using modern information and communication systems, distributor integration relationships allow distributors to share access to product and service.
“Customer interest is high, and supply must be managed to meet demand and avoid stockouts that could boost growing competition.” This sentence best describes what phase of the product life cycle?

A. Development
B. Introduction
C. Growth
D. Maturity

C.
During the growth phase, the customer base increases and competitors begin to enter the market. Data on the growing customer base must be analyzed for new opportunities, and supply must be managed to meet growing demand.
The Internet and intranets have benefited supplier relationship management through improved communication. Which of the following represents a benefit of the Internet and intranets to supplier relationship management (SRM)?
A. Early detection of quality problems through timely information sharing
B. Better forecasting of raw materials and labor through synchronized planning activities
C. Decreased time-to-market through coordinating workflows
D. All of the above
D.
Improved, real-time communication can benefit supply relationships in all of the ways listed, from planning through production and distribution.
In the Pareto principle, a significant percentage of a company’s revenue or profits is derived from

A. less than 10 percent of the customer base.
B. about or less than 20 percent of the customer base.
C. about or less than 40 percent of the customer base.
D. about or less than 80 percent of the customer base.

B.

The Pareto principle posits that a small percentage of the customer base (usually about or less than 20 percent) accounts for a large proportion of a company’s revenue or profit (80 percent or more).

Maintaining a high level of customer care is critical to customer relationship management (CRM) brand image promotion, because

A. The Internet has given dissatisfied customers the means to make their disloyalty quickly and widely known.
B. Price and placement are no longer of importance to today’s service-conscious customer.
C. Customer loyalty no longer extends from an individual product to the supplier of that product.
D. Brand image awareness has become independent of product satisfaction.

A.
Dissatisfied customers have the means to make their disloyalty very well-known by the Internet. Complaints posted on Web sites, Web logs, chat rooms, or electronic bulletin boards can have a significant impact on today’s Internet-savvy customer and can destroy a once-strong business relationship.
Which of the following is the best example of risk mitigation in a strategic alliance?

A. Surmounting limited availability of component suppliers.
B. Overcoming barriers to market entry.
C. Improving operations by lowering system costs.
D. Improving overall financial position.

A.
From a purely reactive stance, companies with certain types of supply situations may be able to manage risk better in a strategic alliance. Purchasers must consider the strategic importance of the component, the complexity of the component-product interface, the number of component suppliers available, and the uncertainty of the supplier relationship.
An SCM partner organization that measures supply chain sales, shipments, and stockouts is adhering to which of the following collaborative principles?

A. Monitor performance.
B. Use supply chain assets collectively.
C. Understand the needs of the partners.
D. Continuously improve.

A.
An effective collaborative strategy must be measured to ensure its effectiveness. Processes and systems must be in place to monitor performance. Important measurements include supply chain sales, shipments, stockouts, invoicing, and payments.
Which of the following benefits applies to lifetime customers?

A. They are more difficult to satisfy than first-time or short-term customers.
B. They tend to have a null effect on revenue but a positive effect on profit.
C. They increase the need for customer relationship management (CRM) activities.
D. They increase total marketing costs.

C.
Lifetime customers increase the need for customer relationship management (CRM), but they also make it a little easier as the business learns more about them over time. Total marketing costs decline, satisfaction increases with better customer understanding, and both revenue and profit increase.
Which of the following statements about purchased customer data is true?
A. They may be more useful in new customer acquisition.
B. They paint a picture of a business’s own customers.
C. They can be very broad.
D. They are very useful in managing relationships with existing customers.
A.
Data purchased from companies such as database marketing companies provide information about customers outside a company’s own customer base. These data are useful in reaching new customers.
Which of the following statements about customer relationship management (CRM) strategy components is true?

A. Price is determined primarily by the cost of production.
B. Placement is determined primarily by product specifications.
C. Promotion in customer relationship management (CRM) is distinctly different from traditional marketing strategies.
D. The starting point for product design is the customer.

D.
Successful product designs begin with knowledge of the customer’s needs and buying habits. Promotional activities are greatly supported and enhanced by customer relationship management (CRM) abilities, but promotion decisions, goals, and activities are, for the most part, unchanged from the traditional marketing model. Price may be determined by a number of factors, as may placement.
Which of these phases of collaborative transportation management (CTM) defines the process flow?

A. Operational
B. Design
C. Tactical
D. Strategic

C.
The tactical phase of CTM defines the process flow, beginning with the product/order forecast, which is combined with a shipping forecast according to predetermined strategies. The shipping forecast is communicated to all parties so that they can decide whether and how the projected forecasts can be supported.
Which of the following supply chain participants is likely to resist SCM efforts because they feel that e-marketplaces have the effect of reducing their products and services to a commodity?

A. Internal
B. Customer
C. Supplier
D. Distributor

C
Which of the following supply chain participants is likely to resist SCM efforts because they feel that e-marketplaces have the effect of reducing their products and services to a commodity?

A. Internal
B. Customer
C. Supplier
D. Distributor

Which of the following statements about the role of supplier relationship management (SRM) in the supply chain model is correct?
A. It measures success only by satisfaction of end customers.
B. It focuses on gaining information about customers.
C. It focuses on meeting demand.
D. It helps ensure the same profitability for all supply chain elements
C
SRM helps ensure that demand created by customer relationship management (CRM) can be fulfilled in a manner profitable for all supply chain partners while maintaining customer satisfaction. Success of supplier relationships may be measured by various means, including time-to-market, cost efficiency, competitive advantage, and end customer satisfaction.
The five best practices for supply chains include which of the following?

A. Advertising and sales analysis
B. Strategic sourcing and supplier management
C. Outsourcing operations and logistics
D. Maximizing profits

B
The five best practices for supply chains are strategic sourcing and supplier management, operations and logistics, customer relationship management and channels, information technology, and change management.
Which of the following statements about customer segmentation is true?
A. Customer segmentation is a concept introduced in customer relationship management (CRM).
B. Customer segmentation does not apply well to business (B2B) customers.
C. Demographic segmentation is not based on data about actual customer buying behaviors.
D. Customer segmentation may help increase revenue but is not a tool for increasing profitability.
Customer segmentation predates customer relationship management (CRM) but in the past relied heavily on demographic segmentation, which does not use actual customer buying behavior as customer relationship management (CRM) segmentation methods do. Customer segmentation can increase both revenue and profitability for retail as well as B2B customers
Companies outsourcing customer relationship management (CRM) should
A. encourage vendors to establish their own performance standards that will be meaningful to their own resources and culture.
B. transfer responsibility for customer relationship management (CRM) to vendors as a contractual obligation.
C. develop an exit strategy.
D. consider outsourcing core competencies.
C.
The company outsourcing customer relationship management (CRM) should be the one to define the performance standards against which the vendor will be measured at regular intervals. customer relationship management (CRM), after all, remains the responsibility of the outsourcing business, since these are their customers. These businesses should also maintain an exit strategy in case the relationship with the customer relationship management (CRM) vendor falters.
In a customer relationship management (CRM) context, a product and service agreement (PSA)
A. is part of a promotional strategy to win back customers.
B. is a type of customer communication.
C. defines product or service specifications.
D. aligns customer groups with certain service levels.
D.
A product and service agreement does define specifications, but it does so in the context of segmenting customer groups. Customers are mapped and then aligned with different levels of customer service.
An example of a proactive benefit driving a strategic alliance would be a concern about
A. complexity of the component’s interface with the final product.
B. improving time to market or increasing quality.
C. a sourcing relationship’s potential to jeopardize attaining business objectives.
D. strategic importance of the component being purchased.
B.
Proactive reasons an organization should consider a strategic alliance are the alliance’s ability to add value to products, enable strategic growth, increase market access, strengthen operations, increase organizational expertise, build organizational skills, and enhance financial strength.
Supplier relationship management (SRM) structures and supports relationships with suppliers, thereby assisting in which of the following?
A. Focusing on cost of materials and components
B. Reducing procurement and excess inventory costs
C. Targeting suppliers for cross-selling and up-selling opportunities
D. Improving depth of purchased parts knowledge
B.
SRM is a methodology to structure and support relationships with suppliers that will assist in reducing procurement and excess inventory costs, supporting a customer-focused business that delivers product/service customization and quality in the desired time frame, and improving processes in an ongoing manner.
Who promotes relationships between alliance partners, identifies opportunities for collaboration and improvement, and builds joint initiatives to capitalize on those opportunities?

A. CEO
B. Channel master
C. Manager of purchasing
D. Alliance manager

D.
The alliance manager is an individual whose job is to promote the alliance itself by sustaining relationships between partners, building joint initiatives, and bringing them to market to generate revenue and increase customers.
You are purchasing an item online and receive the following automated message: “Other customers like you have also ordered X. Would you like to learn more about this product now? If so, click here.” This is an example of

A. cross-selling.
B. up-selling.
C. a win-back program.
D. a loyalty program

A
Cross-selling is a customer relationship management (CRM) tactic made possible by the accumulation of data about a customer’s buying habits. Customers are offered related products in addition to their current purchase.
Customer relationship management (CRM) and supplier relationship management (SRM) share a focus on
A. gathering and sharing information.
B. understanding buying habits of retail customers.
C. choosing appropriate strategic partners.
D. providing superior marketing decision support.
A
Both CRM and SRM focus on gathering information but for different purposes: customer relationship management (CRM) to understand customers better and support marketing, SRM to develop and manage relationships with key partners in the supply chain.
Which supplier relationship management (SRM) technology allows information collected by one application or supply chain partner to be shared by all applications or partners?

A. Data warehousing and mining applications
B. Web-based procurement
C. Satellite-based tracking of transportation assets
D. Wireless communication

A
While the other options are also valuable SRM tools, data warehousing and mining allow sharing of information between applications and partners.
Which of the statements about workflow management systems is correct?
A. They are a form of automated customer relationship management (CRM).
B. They ensure consistency in implementing customer relationship management (CRM) policies.
C. They allow access to customer information and communications at critical service points.
D. All of the above
D
Workflow management systems automate a sequence of steps and communications that must be completed to handle a customer situation. This is especially valuable when resolving a customer’s problem may involve multiple company employees. Workflow management systems allow the system users to visualize the entire relationship and share the same information about the customer at all critical service points.
“A strategic decision, based on competition, perceived value, and brand identity.” This describes which component of a customer relationship management (CRM) strategy?

A. Price
B. Promotion
C. Product
D. Placement

A
Pricing is influenced by many factors other than cost of production, including competitive positions, customers’ willingness to pay for the value received, and consistency with the brand identity that has been created.
An SCM initiative’s strategic plan must address which of the following issues?
A. How the network will be differentiated across the full chain
B. Defining the architecture to be used for the company’s intranet
C. Communicating the business rationale for the initiative
D. Defining how physical assets and resources will be reduced
A
A strategic plan addresses how the network will be differentiated across the full chain, the architecture used for Internet and intranet supply chain features, how physical assets and resources will be shared, and who will be in charge of executing each of the major changes needed.
When embracing continuous improvement, which one of the following actions do partner companies not take?
A. Display a strong commitment to joint pursuit of continuous improvement.
B. Treat continuous improvement as a static process.
C. Pursue closely integrated, collaborative projects.
B.
Only partner companies that consistently display a strong commitment to common goals and objectives within a dynamic, collaborative process will outpace their competition in providing products and services to customers.
Which of these proactive reasons to form strategic alliances focuses on shared technology that can add to the skills base of both organizations?

A. Enable strategic growth
B. Strengthen operations
C. Increase organizational expertise
D. Build organizational skills

C
Partnering with an organization that has expertise in a certain area makes it easier to implement new technology but also results in increased knowledge and experience that will benefit both organizations.
Supplier relationship management (SRM) is collaborative rather than transactional. Allowing suppliers to participate in improving the supply chain system benefits SRM participants in which of the following ways?

A. Cheaper products
B. Reduced marketing costs
C. Increased control by the alliance manager
D. Higher customer satisfaction

D

In SRM’s collaborative relationships, suppliers can participate in improving the system, which results in better product, higher customer satisfaction, and better customer retention.

Supplier relationship management (SRM) increases the visibility of the entire supply chain. This benefits SRM participants in which of the following ways?
A. Lowers the number of required distributors
B. Reduces customer service calls
C. Enables faster response and better contingency planning
D. Simplifies market segmentation
C.
Increased supply chain visibility can lessen the bullwhip effect and enable early problem detection, faster response and better contingency planning, and stronger relationships because of increased trust.
Which of the following is part of the correct definition of customer relationship management?

A. Tool to manage marketing, sales, supply planning, and production scheduling
B. Tool to support existing and potential customer needs
C. Focused on forecasting and analysis of information
D. Solely a marketing philosophy

B.
Information gathered in the customer relationship management (CRM) process is used to support service to customers and potential customers and sales and marketing decisions, not resource and production planning.
Which of the following is a benefit associated with customer segmentation?

A. Shorter time-to-market
B. Better ROI on promotion budgets
C. Lower production costs
D. Shorter sales cycle

B.
Customer segmentation allows businesses to learn customer desires and habits and design more effective promotional programs.
Supply chain integration allows the reduction of safety stock levels, which benefits participants by

A. enhancing demand.
B. lowering inventory levels and reducing costs.
C. insuring that all partners have adequate information technology.
D. improving the ability to anticipate needs and convey benefits.

B.
With shorter lead and cycle times, the level of safety stock may be reduced, which leads to savings by reducing inventory levels and obsolescence costs.
Increased customer visibility means
A. knowing what each customer values.
B. being aware of each point of contact between the customer and the business.
C. seeing the transaction from the customer’s viewpoint.
D. all of the above.
D.
Increased customer visibility is a benefit of customer relationship management (CRM) in that customer relationship management (CRM) helps businesses to see each point of the purchasing transaction from the customer’s perspective and to understand what the customer needs and values.
Which of the following statements about customer relationship management (CRM) strategy components is true?

A. Promotion in customer relationship management (CRM) is distinctly different from traditional marketing strategies.
B. The starting point for product design is the customer.
C. Price is determined primarily by the cost of production.
D. Placement is determined primarily by product specifications.

B.
Successful product designs begin with knowledge of the customer’s needs and buying habits. Promotional activities are greatly supported and enhanced by customer relationship management (CRM) abilities, but promotion decisions, goals, and activities are, for the most part, unchanged from the traditional marketing model. Price may be determined by a number of factors, as may placement.
Which of the following companies is most likely to be interested in supplier relationship management (SRM)?

A. Credit card company
B. Company that produces video games
C. Company that performs market research for political candidates
D. Paint manufacturer that purchases chemicals and dyes from various suppliers

D.
Companies whose ability to meet customer demands rests on their control over the supply side of the supply chain model will be most interested in SRM. The other companies are primarily concerned with understanding and responding to customer needs and expectations.
A company performs transportation of both materials and finished product for a global manufacturer. To manage fluctuations in demand, they contract with service providers in geographical regions, who in turn manage contracts with individual suppliers. This best describes a

A. distributor integration (DI) network.
B. collaborative transportation management (CTM) network.
C. third-party logistics (3PL) company.
D. fourth-party logistics (4PL) company.

D.
Fourth-party logistics providers are often found in global markets where they can combine the resources of suppliers and often 3PLs to meet the challenges of time zone, geographical, and cultural differences.
Supplier relationship management (SRM) has been used in the parts/after-market industry to

A. select suppliers.
B. gather information about customers.
C. retool aging technology.
D. implement both production and sales tactics

D.
SRM has been used in the parts or after-market industry to plan both strategy and tactics as well as to budget and manage specific business events, such as managing inventory.
Which of the following major components of an enterprise marketing automation (EMA) campaign utilizes the Web to immediately engage the customer?

A. Response management
B. Marketing events
C. Cross-selling
D. Promotions

D.
Promotions include giveaways, contests, or discounting by utilizing the Web to immediately engage the customer, without using paper-based or telemarketing types of tools.
Suppliers are folded into the purchasing entity, business goals are shared, and competition has been eliminated. This best exemplifies which of the following types of business relationships?

A. Mergers and acquisitions
B. Ongoing relationship
C. Collaborations/strategic alliance
D. Buy the market

A.
In mergers and acquisitions, suppliers are folded into the purchasing entity. Business goals are shared; business areas participate in setting strategy and planning integration of capabilities, processes, and information. Competition has been eliminated.
Technological challenges facing supply chain integration efforts include which of the following?

A. Inability to customize off-the-shelf solutions
B. Open system infrastructures
C. Difficulty in accessing information
D. Underpowered, overly complex, or poorly designed solutions

D.
As with any technological solution, systems may be underpowered, overly complex, poorly designed, or just not right for the job at hand. In general, more systems today are designed to be open, information is more accessible, and software solutions are more easily customized to specific settings.
In a supply chain, distributors can refer customers to other distributors who have needed product on hand. This best describes a

A. third-party logistics (3PL) company.
B. distributor integration (DI) network.
C. fourth-party logistics (4PL) company.
D. collaborative transportation management (CTM) network.

B.
Using modern information and communication systems, distributor integration relationships allow distributors to share access to product and service.
To win back customers after they have discontinued service, when should the initial communication be made?

A. Within 1 week
B. Within 2 weeks
C. Within 1 month
D. Within 3 months

A.
Rapid communication, within the first week of a customer discontinuing service, is essential in securing win-back customers.
The first step to successfully implement a strategic supplier alliance should be to

A. select the proper partners by evaluating corporate culture and operating style.
B. align internally by identifying key issues and stakeholders.
C. establish ground rules for how partners will work together and resolve conflict.
D. appoint a dedicated alliance manager to oversee the partner relationship.

B.
Before entering alliances, start identifying key issues and decisions and involving key stakeholders for fewer surprises and greater buy-in by key people.
In a commodity pricing scenario

A. Businesses have greater opportunities for maintaining profit margins.
B. Competition is limited.
C. Goods are sold based on added value.
D. Businesses compete primarily on price and availability of goods.

D.
In a commodity market, goods are distinguished primarily by lowest price and greatest availability, which creates downward pressure on profit.
Supply chain participant priorities often conflict. Which of the following groups sets a priority on flexible delivery times, large volumes, and consistent materials mixes?

A. Retailers
B. Suppliers
C. Warehouse managers
D. Logistics managers

B.
Suppliers of raw materials typically prefer flexible delivery times, large yet stable volume demands, and consistency in mix of materials.
Successful implementation of customer relationship management (CRM) and supplier relationship management (SRM) philosophies usually requires

A. revision of decision-making processes.
B. outsourcing to companies with special expertise.
C. redefinition of core competencies.
D. common business goals and mission statements for all supply chain members.

A.
Implementing customer relationship management (CRM) and supplier relationship management (SRM) does not require that companies change their core competencies, although employees may need to acquire new skills. Nor do organizations need to form common goals or mission statements. They will need, however, to revisit work processes, job definitions, and decision-making structures.
Lifetime customers

A. are increasingly more expensive for a business to maintain as they become more demanding.
B. are common in commodity markets driven by price rather than value.
C. can increase revenue but have a neutral effect on profit.
D. have forged a win-win relationship with the business in question.

D.
Lifetime customers have a win-win relationship with the businesses they frequent. The customers gain greater satisfaction while the business enjoys decreased marketing costs and increased revenue and profit potential. Lifetime customers are not common in markets competing on price rather than added value.
Establishing clear ground rules for collaboration and conflict resolution benefits both alliance participants by

A. preventing any sources of tension between participant organizations.
B. providing clear channels of legal redress for each participant.
C. ensuring strict adherence to the established alliance contract by both participants.
D. encouraging participants to redefine problematic connections rather than break them.

D.
In a dynamic marketplace, a static consultant contract without clear and flexible guidelines and processes to manage the relationship simply encourages consultants to break their connection with the company rather than redefine it.
Central to implementing an supplier relationship management (SRM) strategy is the use of PSAs (product and service agreements). Which of the following statements about PSAs between strategic partners is correct?

A. The PSA is crafted only after a carefully conducted pilot program.
B. The negotiated PSA must be mutually beneficial for both partners.
C. PSAs should be standardized for all suppliers.
D. The PSA is not subject to standard strategic goal metrics.

B.
A PSA between partners should be mutually beneficial. It may be customized, should precede pilot and full implementation, and should always be measured for improvement.
A “best cost” risk management outcome is derived by

A. subtracting cost of possible risk from cost of business.
B. adding accumulated risk associated with all strategic suppliers.
C. multiplying the expected cost of the risk by its likelihood.
D. subtracting cost of possible risk from cost of business and dividing that by likelihood of the occurrence.

C.
A ‘best cost” analysis of risk is performed by multiplying the anticipated cost of the business disruption by the likelihood of its occurrence.
“A period marked by high costs and low sales.” This phrase best describes what phase of the product life cycle?

A. Development
B. Introduction
C. Growth
D. Maturity

B.
Because of costs associated with marketing, establishing inventory, and developing the distribution system and because a customer base has not yet been acquired, the introduction phase of the product life cycle is marked by high costs but low sales.
When applying supplier relationship management (SRM) strategy to an aftermarket process, which of these components has the longest phase?

A. Tactics planning
B. Budget planning
C. Strategy planning
D. Event management planning

B.
Budget planning is the longest phase in the process, with planning time measured in months or years. Decisions made during this phase determine the overall service strategy and may affect the design of the products being supported and the infrastructure used to deliver product.
Which of the following supplier relationship management (SRM) activities might be outsourced successfully?

A. Selection of strategic partners
B. Setting of procurement budgets
C. Setting corporate goals and developing strategy for alliances
D. Contracting with strategic partners

D.
Many SRM tasks may be outsourced, from researching and contracting with alliance partners to development of technology. However, companies should never outsource strategic tasks or core competencies.
Which of the following is the key to enabling supply chains to more quickly respond to customer demand and increase participants’ profitability?

A. Creating individual partnerships
B. Collaborative planning across the entire supply chain
C. Creating an alliance with a key supplier
D. Information sharing with key partners

B.
The key is collaborative planning across the supply chain rather than mere information sharing or single alliances.
Which of the following supply chain participants is likely to resist SCM efforts initially because they feel that they can’t trust any of their supply chain partners enough to share valuable data?

A. Distributor
B. Customer
C. Internal
D. Supplier

C.
Organizations’ internal members are sometimes hesitant initially to trust any of their supply chain partners enough to share what they value as important internal information or data. While most organizations are open to receiving information regarding best practices from partner organizations, they are typically not willing to reciprocate by sharing equal information
Which of these phases of collaborative transportation management (CTM) defines the process flow?

A. Design
B. Operational
C. Tactical
D. Strategic

The correct answer is C.

The tactical phase of CTM defines the process flow, beginning with the product/order forecast, which is combined with a shipping forecast according to predetermined strategies. The shipping forecast is communicated to all parties so that they can decide whether and how the projected forecasts can be supported.

Which of the following integration points of customer relationship management (CRM) technology can assist with predictive model scoring in the CRM system?

A. Customer problem tracking
B. Order/provisioning system
C. Online sales
D. Call center

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