Management Development Institute - Gurgaon

Post Graduate Programme in Management

(PGPM: 2020-22 Batch) Term: IV (Aug - Oct, 2021)

Supply Chain Management

Date: Saturday, 04th Sep 2021 Mid-Term Examination (Section: A & B) Time: 02:15 PM – 04:15 PM
Duration: 2 Hours (OPEN BOOK, Laptops also allowed) Max Marks: 25 (Weightage: 25%)
Prof. (Dr.) Manoj K Srivastava

1 2 3 4
Question Supply Chain Logistical Most Lear
Challenges and Issues Consolidation Appropriate Option corporation

Marks 09 04 06 06
AOL Mapping LG-X LG-Y LG-Z LG-X
All Questions are compulsory. Marks are indicated against each question. There are THREE printed pages and FOUR questions
in this paper. You are permitted to use any no. of books, handwritten notes, hardcopy printouts of lecture/other ppts and Xerox
material etc. Write Answers on Physical Page, Scan and Upload. Do not forget to write Roll No. and Name on First page.

Question –1 Supply Chain Challenges and Issues (3 x 03)

Write an appropriate title (not more than five words, not mentioning company name in title) for each supply chain concept depicted in these three
caselets. Be precise and innovative. Then write one page (500 words approx., in Five precise headings) for each caselet on the challenges and
issues to be faced by Supply Chain Manager for implementing / managing this supply chain theme.
Berry Interlining (BI) is the manufacturer of “interlinings,”
A supplying its products to garment manufacturers and tailoring
firms. In their extended supply chain, BI procures yarn from
multiple yarn producers, sends the inspected yarn to weavers for
producing fabrics, which are later sent for bleaching to third-party
processors, and finally uses colored fabric for producing
interlinings. In this yarn-to-interlining manufacturing cycle, there
was multiple material handling, inspection and transportation of
material. This results in a high percentage of damage during
transit, huge rejection during quality inspections and delay in the
manufacturing cycle. The working capital requirement obviously
increases year by year, putting pressure on the profit margins. BI re-engineered its extended supply chain in
a bid to reduce costs and improve delivery. It started procuring fabrics duly inspected and certified by the
suppliers, thus eliminating all non-core processes. Thus, by eliminating the extended part of its supply chain,
BI reduced costs, improved on the manufacturing cycle, reduced working capital requirements and enhanced
profit margins.
For flight passengers the greatest worry is their baggage; damage-free
B loading and unloading without delay. At Frankfurt Airport, the baggage
handling system with its automatic baggage conveyor facility is
unique in the world. It differentiates itself from the baggage handling
systems in any other airports in the world in terms of its size,
functionality and performance. It guarantees the airport staff a
minimum connecting time of 45 minutes. Hence, the Frankfurt hub is
at a true competitive advantage.
The conveyors are automated and are having 70 kilometers of
conveyor routes. During peak hours, the system handles more than
99, 000 baggage items per day. These items are transported reliably
with speed to their destination points. On an hourly basis the system takes care of 18,000 baggages per hour
with a transport speed of 2.5 meters per second. The automated system ensures very short transfer times
keeping reliability rating of 99.65 per cent. It is a unique system, which differentiates itself in terms of scale,
speed and reliability. The luggage is safely transported in coded plastic tray-type containers which are
subjected to 100 per cent X-ray screening of non-EU baggage into the baggage conveyor system. The end
result is customer satisfaction by eliminating baggage worries of air travelers.
Harry Potter and the Deathly Hallows, the much-awaited seventh and final book in the Harry
C Potter series of novels, was released in 93 countries simultaneously on 21 July 2007.
Managing a launch of this magnitude is a supply chain nightmare. Ensuring that the book is
available in sufficient quantity at tens of thousands of outlets across 93 countries across the
globe poses substantial challenges to supply chain managers, who have also to ensure that
the content of books is not leaked out before the launch date. The books had to reach the
stores just in time for the launch, neither too early nor too late. Penguin India, the distributor
of Harry Potter books in India, had to manage the seemingly impossible task of delivering
the books simultaneously to 300 destinations just a few hours prior to the launch time of
6:30 a.m.
1
 Question – 2 Logistical Consolidation (04)
Chetak Logistics, located in Chennai, has orders from “N” destination cities located at D1, D2, D3…... DN.
The weight of each individual shipment is W=1,400 kg.

Schema-A
The transportation carrier quotes a freight rate of Rs.
300 per hundred kg. for individual direct shipments
between the two cities, as is the normal practice in
the transportation industry.

Schema-B
Alternatively, the carrier’s rate for a
shipment that weighs more than 4,000 kg is
Rs. 100 per hundred kg. However, if the orders are combined into one shipment, the carrier
will charge Rs. “X” for each destination stop it is required to make.
I. Calculate the value of X, such that in all cases where destination cities numbers N > 3, overall
logistics cost of Schema-A is HALF of that Schema-B.
II. In this scenario of now determined value of X, what must be the new revised value of W (weight of
each individual shipment) such that overall logistics cost of Schema-A is EQUAL to that of Schema-
B.
Consider a carrier’s weight capacity for schema B, as infinite for this modelling exercise.

Question – 3 Most Appropriate Option (6 x 01)

Write most appropriate option’s alphabet against serial no. in your copy.
Answer them by reproducing table of same format in your answer-sheet and do not change the order of your responses in this table.
A make-to-order organization competing on delivery speed would consider which of the
following to be a significant impact on its competitive position?
A. Relocation of suppliers
3.1 B. Increased labor costs
C. Outsourcing of customer service
D. Shifts in customer demand
In an engineer-to-order company performing a SWOT analysis, which of the following concepts
should be considered?
A. Education of management team in product design concepts
3.2 B. Implementation of a material requirements planning system
C. Accuracy of work-in-process inventory and routing data
D. A thorough understanding of critical resources
Supply chains delivering products or services are most able to respond quickly to changing
market requirements when:
A. Products have been standardized.
3.3 B. Products have a modular design.
C. Production processes have been standardized.
D. Production processes have been simplified.
When designing a supply chain for strategic advantage, a company first should consider:
A. The impact on customers using Just-in-Time manufacturing.
3.4 B. The financial stability of suppliers.
C. Matching the supply chain to product type.
D. Whether to use custom or standard parts.
Which of the following outcomes occurs when direct shipping is used instead of a distribution
network?
A. Outbound transportation cost is reduced.
3.5 B. Inventory velocity is reduced.
C. Order-fill rates are reduced.
D. Inventory obsolescence is reduced.
Which of the following might be a positive effect of adding more warehouses to a system?
A. Reduced overhead through economies of scale
3.6 B. Reduction in the ratio of inefficient facilities relative to total facilities
C. Reduced redundancies, leading to more storage space in relation to total square feet
D. Improved customer service
2
Question – 4 Lear corporation (06)
Lear Corporation (www.lear.com) is one of the ten largest independent automotive suppliers in the world. The
company is also the leading supplier of automotive interior systems in the global automotive interior market and
the third largest supplier in the global automotive electrical distribution systems market. In 2006 Lear employed
approximately 115,000 people worldwide, including about 29,000 in the United States and Canada, 40,000 in Mexico
and Central America, 33,000 in Europe and
13,000 in other regions of the world.
The company has established in-house
capabilities in three segments of the
automotive interior market: seating
systems; electronic and electrical; and
interior products. The company is the
largest supplier in the global seat systems
market (with total net sales in 2005 of $17.1
billion). In North America it is one of the
two largest suppliers in each of the other
principal automotive interior markets, with
the exception of the instrument panels
market, in which it is the fourth largest. The
company is also one of the leading global
suppliers of automotive electrical
distribution systems.
Lear’s objective is to strengthen and
expand its position as a leading automotive
supplier to the global automotive industry
by focusing on customer needs. Lear
supplies total solutions to major
automotive manufacturers around the world, including General Motors, Ford, DaimlerChrysler, BMW, PSA,
Volkswagen, Fiat, Renault-Nissan, Hyundai, Mazda, Subaru and Toyota. In order to realize substantial cost savings
and improved product quality and consistency, automotive manufacturers are requiring their suppliers to
manufacture products in multiple geographic markets. In recent years, Lear has expanded its operations
significantly in Europe, Central America, South Africa and Asia.
Lear’s automotive customers face continuing competitive pressures to improve quality and functionality at a lower
cost and to reduce time to market and capital needs. These trends have resulted in automotive manufacturers
seeking fewer independent suppliers to provide automotive interior systems and components. The company
believes that the criteria for selection of automotive interior systems suppliers are cost, quality, technology,
delivery and service. A worldwide presence is necessary to satisfy these criteria. Lear emphasizes the
development of strong relationships with its customers by focusing on customer service, quality and costs, aiming
to turn customers into partners. It believes that strong relationships with its customers allow it to identify business
opportunities and anticipate the needs of customers in the early stages of vehicle design. Working closely with
customers in the early stages of designing and engineering automotive interior systems gives Lear a competitive
advantage in securing new business with existing customers or in securing completely new customers.
In the local manufacturing process (e.g. at the seating facilities) Lear generally uses just-in-time manufacturing
techniques, and products are delivered to the automotive manufacturers on a just-in-time basis. These facilities are
typically located near customers’ manufacturing and assembly sites. Seating facilities utilize a variety of methods
whereby foam and fabric are affixed to an underlying seat frame. Raw materials used in seat systems, including
steel, aluminum and foam chemicals, are generally available and obtained from multiple suppliers under various
types of supply agreements. Leather, fabric and certain components are also purchased from multiple suppliers
under various types of supply agreements. The majority of steel purchases are comprised of engineered parts that
are integrated into a seat system, such as seat frames, mechanisms and mechanical components. Lear is
increasingly using long-term, fixed-price supply agreements to purchase key components from its suppliers. The
company generally retains the right to terminate these agreements if its supplier does not remain competitive in
terms of cost, quality, delivery, technology or customer support.
The Chinese automotive market is expanding rapidly, with an estimated 5 million units produced in 2005. Lear
seeks to partner with automotive manufacturers in China through joint venture arrangements and is well-
positioned to take advantage of China’s emerging growth. Currently the company has 12 joint ventures in China,
where the majority of its production is for the local market. In addition, Lear has established two wholly-owned
subsidiaries in China to supply seats to the joint venture between First Automobile Works Group and Volkswagen
and that between Shanghai Automotive Industry Corp. and General Motors Corporation. Lear also sees
opportunities for growth with customers in Korea, India and elsewhere in Asia.

Discussion Questions:
A. Draw a figure showing the total supply chain for Lear’s seat systems?
B. Describe the relationships that the company has with its customers.
3