L5M7 Achieving Competitive Advantage Through the Supply Chain (L5M7) Questions and Answers

TQM is aholisticphilosophy requiringorganisation-wideadoption and leadership commitment; partial/isolated adoption undermines results. Short cited terms: “holistic,” “organisation-wide commitment” (L5M7 Study Guide, p.118).

The5S Methodology—Sort, Set in order, Shine, Standardise, Sustain—originates from Lean philosophy to promote efficiency and discipline in operations.

Short cited extract: “5S – a Lean technique for organisation and cleanliness in the workplace.” (L5M7 Study Guide, p.166)

Single-sourcingbuildsexclusive, strategic relationshipswith one supplier to secure priority service and joint improvement opportunities.

Short cited extract: “Single-sourcing – exclusivity to gain stronger commitment and collaboration.” (L5M7 Study Guide, p. 81)

On the relationship spectrum,arm’s-lengthis alow-collaborationstyle (onlyadversarialis lower), characterised by limited information sharing and short-term focus. Short cited term: “relationship spectrum … arm’s-length (low collaboration)” (L5M7 Study Guide, p.80).

TheModeis the value thatappears most oftenin a dataset, distinguishing it from themean(average) andmedian(middle value).

Short cited term: “mode = most frequent value.” (L5M7 Study Guide, p. 149)

ISO 9001focuses oneight principlessuch as customer focus, leadership, and improvement.Environmental protectionbelongs underISO 14001, not 9001.

Short cited term: “environment protection covered by ISO 14001, not 9001.” (L5M7 Study Guide, p. 122)

ANormal Distributionforms asymmetrical bell-shaped curve, representing probability distribution around a mean.

Short cited term: “normal distribution = bell-shaped curve.” (L5M7 Study Guide, p. 150)

The main relationship drivers aretrust, communication, duration, and problem-solving. Finance alone does not define the relationship type.

Short cited extract: “Key relational attributes: trust, communication, duration, joint problem-solving.” (L5M7 Study Guide, p. 80)

AnAgilesupply chain prioritisesflexibility and responsivenessto customer and market changes—ideal for dynamic industries like electronics.

Short cited extract: “Agility = rapid response to changing demand.” (L5M7 Study Guide, p.155)

TheKraljic Matrixrecommendspartnership/alliancesfor strategic items to secure continuity, innovation, and joint value creation. Short cited term: “strategic items … partnership” (L5M7 Study Guide, p.84).

Agilesupply chains prioritiseflexibility and responsivenessto change, whereasLeanfocuses on waste elimination.

Short cited term: “agile = responsive to demand; lean = waste removal.” (L5M7 Study Guide, p. 155)

The Act defines quality as products beingfit for purpose,as described,safe, anddurable. It doesnot guarantee freedom from every defect.

Short cited term: “fit for purpose, safe, durable – but not free from all defects.” (L5M7 Study Guide, relevant section on statutory quality standards)

ThePDCA Cycle—Plan, Do, Check, Act—provides a structured approach tocontinuous quality improvement. It begins with planning, implementing, monitoring, and then acting to refine the process.

Short cited extract: “The PDCA cycle – Plan, Do, Check, Act – underpins continuous improvement.” (L5M7 Study Guide, p.129)

Inventory valuation requires data onquantity in stockandunit purchase cost. These determine the total inventory value at any given time.

Short cited extract: “Inventory value = number of items × purchase cost.” (L5M7 Study Guide, p.147)

In supplier preferencing,nuisancecustomers havelow value/attractivenesswithlimited growth potential. Short cited terms: “nuisance,” “low attractiveness/low value” (L5M7 Study Guide, p.86).

A downstream supplier influencesmost aspects of qualitybutnot customer perception, which is shaped bymarketing and brand functions.

Short cited term: “except customer perception, influenced by marketing” (L5M7 Study Guide, p. 30).

Amarket-oriented approachcentres oncustomer needs, designing offerings around satisfaction and experience rather than internal operations.

Short cited extract: “Market-oriented – focus on customer satisfaction and value creation.” (L5M7 Study Guide, p.55)

Revenue-basedandOutcome-basedpricing share financial benefits and performance gains, motivating suppliers to excel.

Short cited term: “gainshare, revenue and outcome pricing as supplier incentives.” (L5M7 Study Guide, p. 198)

The guide distinguishes a simple chain from a“supply network,”emphasisingmulti-tier interdependencies. Short extract: “supply networks reflect multiple interdependent tiers.” (L5M7 Study Guide, p.4)

Dynamic Pricingadjusts prices in real time to reflectmarket demand and supply conditions, commonly used in commodities.

Short cited term: “dynamic pricing – prices adjust to demand fluctuation.” (L5M7 Study Guide, p. 189)

The study guide describes how demand variabilityamplifies upstreamin the chain—commonly termed the“bullwhip effect.”This is introduced when explaining basic supply-chain dynamics and flows. Short extract: “demand changes become amplified upstream (bullwhip effect).” (L5M7 Study Guide, p.4)

Multi-sourcing canincrease inventory/duplicationand createquality inconsistencybetween sources. Reduced dependency (C) is anadvantage, and (D) is a neutral characteristic rather than a disadvantage. Short extract: “multiple sources may lead to duplication/stock and variable quality.” (L5M7 Study Guide, p.6)

Porter’sFocus Strategyinvolvestargeting a niche marketto meet unique needs better than competitors.

Short cited term: “focus – targeting a narrow market segment” (L5M7 Study Guide, p. 52).