1.

The supply chain of a company consists of different departments, ranging from

procurement of materials to customer service. Identify the departments and describe how
they are integrated. (10 marks)

a) Procurement

Procurement is responsible for sourcing and purchasing raw materials, products, or services
required by the company. This department works closely with suppliers, warehousing, and
production teams to ensure materials are available at the right time and in the right quantities.
They use data from demand planning to make purchase decisions.

b) Warehousing

Warehousing manages the storage, handling, and control of goods within the supply chain.
This department is integrated with procurement, logistics, and production to ensure that
materials are available when needed for manufacturing and orders are fulfilled without delay.
Inventory levels are shared across departments to avoid overstocking or shortages.

c) Production

Production is responsible for transforming raw materials into finished goods or assembling
products as per demand. This department works closely with procurement for materials,
warehousing for supplies, and logistics to ensure that finished products are shipped to the right
locations. They share production schedules with other departments to align demand and
supply.

d) Quality Control (QC)

QC ensures that the products or services meet specified quality standards before they move
through the supply chain. This department coordinates with procurement, warehousing, and
production. They ensure that materials and finished goods comply with company and industry
standards before moving to the next stage in the supply chain.

e) Logistics

Logistics oversees the transportation of goods from suppliers to the company and from the
company to customers. This department connects procurement, warehousing, and customer
service. They ensure that goods are transported efficiently and cost-effectively as well as
delivery deadlines are met. They work closely with inventory and customer service teams to
ensure timely deliveries.

f) Sales and Marketing

Sales and marketing is responsible for promoting products, generating demand, and managing
customer relationships. This department works closely with warehousing and logistics to
ensure that customer demand can be met. They forecast sales which impacts procurement and
production decisions.

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g) Finance

Finance manages budgeting, payments, and financial forecasting for supply chain activities.
This department collaborates with all departments to allocate funds for procurement,
production, and logistics. They track costs and optimizes financial performance through data
shared by other departments.

h) Human Resources (HR)

HR ensures that the supply chain has the required human resources to operate efficiently. This
department collaborates with all departments to recruit, train, and manage personnel. They
ensure compliance with labor laws and optimize the workforce for smooth operations.

i) Information Technology (IT)

IT provides the technological infrastructure to support the supply chain of a company. This
department connects all departments by allowing them to share data in real-time. This
integration ensures transparency and enables departments to coordinate seamlessly.

j) Customer Service

Customer service handles customer inquiries, orders, complaints, and after-sales support. This
department provides feedback to the warehousing, production, and logistics departments to
ensure customer satisfaction. They communicate with sales and marketing to manage customer
expectations and resolve any issues related to deliveries or product quality.

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2. There are number of supply chain activities. Identify at least 5 of such activities and
briefly explain their functions. (10 marks)

a) Procurement

Procurement involves identifying and acquiring the materials or services needed for
production. This process includes sourcing suppliers, negotiating prices, and purchasing raw
materials or components. The objective is to ensure these resources are obtained at the best
possible cost, quality, and delivery terms. Effective procurement is crucial in maintaining a
steady flow of materials, minimizing production interruptions, and managing costs, thereby
supporting overall operational efficiency and competitiveness in the market.

b) Production/Manufacturing

Production or manufacturing transforms raw materials into finished products through various
processes such as assembly, machining, or fabrication. This activity is central to creating goods
that meet quality standards and fulfill customer demand. It involves optimizing production
techniques, maintaining high standards of quality control, and efficiently utilizing resources to
ensure that products are delivered on time and within budget. The goal is to produce high-
quality products that satisfy market needs while maximizing operational efficiency.

c) Inventory Management

Inventory management oversees the control and storage of goods throughout the supply chain.
It involves tracking inventory levels, managing stock replenishment, and optimizing storage to
balance supply and demand. Effective inventory management aims to minimize holding costs
and prevent stockouts. It ensures that the right amount of inventory is available to meet
customer demand without excessive surplus. This balance helps to reduce operational costs
and improve service levels which contribute to a more efficient and responsive supply chain.

d) Transportation and Logistics

Transportation and logistics manage the movement of goods from suppliers to manufacturers
and from manufacturers to end customers. This activity includes planning and optimizing
transportation routes, managing shipping schedules, and ensuring timely and cost-effective
delivery. The focus is on minimizing transportation costs while maintaining product quality
and meeting delivery deadlines. Efficient transportation and logistics are essential in reducing
lead times, improving customer satisfaction, and enhancing overall supply chain performance.

e) Warehousing

Warehousing involves the storage of raw materials, in-process items, and finished goods. The
primary function is to provide a safe and organized space for inventory until it is needed for
production or distribution. Effective warehousing ensures that goods are stored under
appropriate conditions to prevent damage and facilitate easy access. Proper warehousing
practices help in managing inventory levels, reducing storage costs, and enabling timely order
fulfillment, thus supporting smooth operations and efficient supply chain management.

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3. Purchasing plays an important role in any organization. What are some of the positive
trends in purchasing and procurement. (10 marks)

a) Digitalization and Automation

Embracing digital tools and automation in procurement streamlines processes, reduces manual
tasks, and minimizes errors. Technologies such as e-procurement platforms and AI-driven
analytics enhance efficiency, accelerate purchasing cycles, and allow teams to focus on
strategic decisions rather than routine operations.

b) Sustainability and Green Procurement

Companies are increasingly prioritizing eco-friendly practices by choosing suppliers who meet
environmental standards. Green procurement focuses on reducing carbon footprints and
promoting ethical sourcing, aligning business operations with sustainability goals and
corporate social responsibility initiatives.

c) Data-Driven Decision Making

The use of advanced analytics and big data enables more informed procurement decisions.
Predictive analytics helps to forecast demand, assess supplier risks, and optimize strategies
which result in cost savings and improve efficiency by providing actionable insights based on
real-time data.

d) Supplier Relationship Management (SRM)

It is crucial to build a strong and long-term relationships with suppliers for innovation and risk
management. SRM systems help to manage supplier performance, ensure compliance, and
foster collaboration which can lead to better quality, efficiency, and shared risk management
in the supply chain.

e) Cost Optimization and Strategic Sourcing

Instead of focusing solely on cost-cutting, strategic sourcing evaluates the total cost of
ownership, including quality and service. This approach seeks to maximize long-term value
from suppliers, balancing cost with other critical factors to drive overall value and efficiency.

f) Risk Management

In response to global supply chain disruptions, organizations are enhancing risk management
by diversifying suppliers, using AI for risk prediction, and improving contingency plans. This
proactive approach helps to mitigate risks and ensures continuity in the face of potential supply
chain challenges.

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g) Globalization and Local Sourcing Balance

While global sourcing offers cost benefits and variety, balancing it with local sourcing reduces
dependency on international supply chains. This strategy enhances supply chain resilience,
supports local economies, and provides greater flexibility to adapt to disruptions.

h) Blockchain for Transparency

Blockchain technology enhances procurement transparency and traceability by verifying each

step in the supply chain. It ensures product authenticity, tracks sourcing practices, and
improves trust among stakeholders by providing a secure and immutable record of transactions.

i) Cloud-Based Procurement Solutions

Cloud platforms enable real-time access to procurement data and foster collaboration across
departments. Integration with financial and supply chain systems enhances agility and
scalability. It allows organization to quickly adapt to changes and improves overall
procurement efficiency.

j) Focus on Diversity and Inclusion

Emphasizing supplier diversity ensures contracts are awarded to minority-owned and

underrepresented businesses. This focus promotes a more inclusive supply chain, supports
social equity, and helps organizations to achieve broader corporate social responsibility goals
while fostering diverse economic opportunities.

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4. In selecting a supplier, number of factors must be analyzed. What are some of the criteria
in a supplier selection. (10 marks)

a) Cost

Cost refers to the total expenses involved in purchasing goods or services from a supplier. This
includes the initial price, shipping, handling, taxes, and any long-term costs like maintenance
or repairs. A thorough cost evaluation ensures that the organization receives value without
exceeding budget limits.

b) Quality

Quality assesses whether the supplier provides products or services that meet the required
specifications and standards. This involves checking for consistency, durability, and defect
rates. High-quality products reduce operational disruptions and ensure customer satisfaction,
which make it a key criterion in supplier selection.

c) Reliability

Reliability refers to the supplier’s ability to consistently deliver products on time and in good
condition. A reliable supplier helps to maintain smooth operations by minimizing delays,
shortages, and defects. This also builds trust in long-term partnerships which is essential for
business continuity.

d) Financial Stability

A financially stable supplier is less likely to experience operational disruptions, bankruptcy, or

cash flow issues that could affect their ability to deliver. Financial stability assessment through
financial statements helps to ensure that the supplier can meet both current and future
obligations which safeguard company supply chain.

e) Capacity

Capacity refers to the supplier’s ability to meet current and future demand. This includes
production capabilities, workforce, and infrastructure. Company should select a supplier with
sufficient capacity to ensure that they can scale as company business grows and handle
unexpected surges in demand without compromising quality or timelines.

f) Location

Supplier’s geographic proximity impacts delivery times, shipping costs, and logistics
efficiency. Local suppliers can reduce transportation delays and costs, but international
suppliers might offer lower prices. Company should consider how location affects lead times
and the potential risks related to customs, tariffs, or regional disruptions.

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g) Technology and Innovation

Suppliers who utilize modern technology and innovative practices often provide higher
efficiency, improved product quality, or cost advantages. Their investment in research and
development may offer cutting-edge solutions that benefit company business which ensure
competitiveness in the market and enhancing long-term value.

h) Corporate Social Responsibility (CSR)

CSR evaluates whether a supplier follows ethical, social, and environmental practices such as
sustainable sourcing and fair labor conditions. A supplier with strong CSR aligns company
with responsible business practices, improves brand reputation and meets stakeholder
expectations for sustainability and ethics.

i) Reputation

Supplier’s reputation reflects their credibility, reliability, and market standing. Strong industry
reputation, positive customer feedback, and recognition through certifications or awards signal
trustworthiness. A reputable supplier minimizes risks associated with quality or service issues
and strengthens company business’s value chain.

j) Communication and Support

Effective communication and strong customer support are vital in quickly addressing any
issues that arise such as delays, defects, or changes in order requirements. A supplier with
responsive communication channels ensures smooth collaboration, reduces
misunderstandings, and fosters a healthy, long-term business relationship.