Chapter 5

1. A metric and a measure are the same.

2. A metric is complex to define, usually involves a calculation or a combination of measurements, and is often in the form of a ratio.

3. A metric could drive inappropriate behavior.

4. Scorecards and key performance indicators (KPIs) are the same thing.

5. Evaluating current or potential supply chain performance metrics is not important to a sound logistics program.

6. The focus on performance measurement is a recent event in industry.

7. Customers and suppliers should be included in the development of metrics.

8. Managers should resist sub-optimization of their particular function unless it benefits the organization as a whole.

9. Four major categories that provide a useful way to examine logistics and supply chain performance are: time, quality, cost, and inventory.

10. Another metric classification scheme that has been receiving increased attention is that
developed by the Supply Chain Council and contained in the Supply Chain Operations and
Reference (SCOR) model.

11. Order cycle time (OCT) is another very important logistics service metric. OCT influences product availability, customer inventories, and seller’s cash flow and profit.

12. Supply chain management involves the control of raw material, in-process, and finished
goods inventories.

13. The purpose of this chapter is to
a. discuss how supply chain metrics are developed.
b. develop quantitative tools to show how metrics can be linked to financial performance.
c. offer methods for classifying supply chain metrics.
d. all of these answers

14. An index
a. combines two or more metrics into a single indicator.
b. is complex to define, usually involves a calculation and is often in the form of a ratio.
c. is easily defined with no calculations and with simple dimensions
d. is any quantitative output of an activity or process

15. Scorecard and key performance indicators (KPIs) refer to
a. sporting events.
b. metrics to manage logistics operations.
c. management’s evaluation of supply chain staff.
d. measuring output.

16. The current logistics management approach is supported by which performance measurement concepts?
a. metrics.
b. total cost.
c. least total cost.
d. the D1 concept developed by the Supply Chain Council.

17. Another driving influence for supply chain reexamination has been the desire of organizations to change their supply chain focus from a __________to an “investment” center.
a. warehouse system
b. logistics-oriented system
c. cost center
d. value neutral

18. An “executive dashboard” is
a. a small number (usually less than five) of KPIs.
b. used by senior management to track profits.
c. metrics used by an organization’s suppliers
d. a trend that has only recently developed.

19. There are four major categories that provide a useful way for examining logistics and supply chain performance: They are: time, ______, cost, and supporting metrics.
a. delivery
b. KPIs
c. competition
d. quality

20. In the SCOR Model there are five major categories of metrics that need to be used to measure the performance of Process D1: reliability, ___________, agility, costs, and asset management.
a. ROA
b. responsiveness
c. supply chains
d. cash to cash cycle

21. The decision to alter the supply chain process is essentially ___________issue.
a. a management
b. an optimization
c. a supply chain
d. a customer satisfaction

22. What is the best financial metric to show the profit an organization generates in relationship to assets utilized?
a. ROA
b. Profit
c. Return on net worth
d. Stock price

23. Channel structure management includes decisions regarding the use of outsourcing,
channel inventories, ____________, and channel structure.
a. cash to cash management
b. information systems
c. order cycle
d. KPIs

24. Effective order management can have an impact on
a. reducing supply chain costs.
b. increasing revenues.
c. improving ROA.
d. all of these answers

25. Which of the following is NOT an element of Order Management?
a. reducing stockouts
b. reducing order processing times
c. optimizing mode mix
d. optimizing order fill rate

26. Which of the following is NOT a supply chain decision area regarding ROA
improvement?
a. Channel Structure Management
b. Inventory Management
c. Order Management
d. Information Management

27. Gross margin equals
a. sales minus COGS
b. Sales + taxes minus COGS
c. COGS – Sales
d. COGS - taxes