L5M7 Sample Questions Answers

Supply chains are characterised bythree primary flows– materials, information, and finance. “Decision flow” is not a recognised category.

Short cited term: “three main flows: material, information, finance.” (L5M7 Study Guide, p. 155)

ARed Oceanmarket ishighly competitivewith many firms fighting for market share, leading to price wars and reduced margins.

Short cited term: “red ocean = intense competition and saturated market.” (L5M7 Study Guide, p. 179)

Theautomotive industryusessupplier tiering, assigning responsibility to different supplier levels (Tier 1, Tier 2, etc.) for efficiency and control.

Short cited extract: “Automotive sector commonly applies supplier-tier structures.” (L5M7 Study Guide, p. 115)

Defects discoveredbefore dispatchare classified asinternal failures, including rework, scrap, or re-inspection.

Short cited term: “internal failure = defects found before reaching customer.” (L5M7 Study Guide, p. 128)

Effective quality measurement requiresSMART data—Specific,Measurable,Achievable,Relevant, andTime-bound—ensuring that data supports actionable improvement.

Short cited extract: “Data should be SMART to allow accurate performance analysis.” (L5M7 Study Guide, p.140)

Aclosed-loop supply chainreturns used products to the chain forreuse/recycling/remanufacture. Short extract: “closed loop – products/materials re-enter the supply chain.” (L5M7 Study Guide, pp.5–7)

ThePareto Principlestates that approximately80% of outcomesarise from20% of causes, applied in supply chain analysis to identify key value contributors.

Short cited extract: “Pareto (80/20) – a small number of causes create the majority of effects.” (L5M7 Study Guide, p.141)

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)

Rationalisationincludesreducing supplier numbersand practices such astier-skippingto simplify the network and reduce cost/complexity. Short extract: “rationalisation—reduce supplier base; consider tier-skipping.” (L5M7 Study Guide, p.11)

Therelationship spectrumshows thattransactional relationshipsare theleast trust-based, focusing on short-term exchanges with minimal collaboration.

Short cited extract: “Transactional – low trust, short-term, low collaboration.” (L5M7 Study Guide, p.80)

TQMis along-term philosophydemanding sustained commitment; benefits emerge gradually through continuous improvement.

Short cited extract: “TQM is a long-term commitment where results may not be immediate.” (L5M7 Study Guide, p. 118)

ISO 9001sets the framework forquality management systems(QMS), based on principles such as customer focus, leadership, and improvement. Short extract: “ISO 9001—quality management.” (L5M7 Study Guide, p.122)

Six Sigmaapplies universally tomanufacturing, services, and administrative processes, improving quality and efficiency.

Short cited term: “applicable across all sectors to improve process performance.” (L5M7 Study Guide, p. 154)

TheBullwhip Effectdescribes amplified demand fluctuations up the supply chain;buffer stockmitigates shortages caused by sudden demand changes.

Short cited term: “buffer stock helps counter demand fluctuation” (L5M7 Study Guide, p. 4).

Risk management seeks toprevent and mitigate major risks, whiletolerating low-impact riskswhen elimination isn’t feasible.

Short cited extract: “Low-level risks can be tolerated if likelihood and impact are minimal.” (L5M7 Study Guide, p.49)

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)

Offshoring typically seekscost reduction(e.g., labour arbitrage) while maintaining service/output levels; other motives are secondary. Short cited term: “cost reduction/advantages” (L5M7 Study Guide, domain 1.4 discussion).

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

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)

Outsourcing can improvequalitywhen a specialist provider performs the activity better than in-house teams.

Short cited extract: “Outsourcing to specialist providers can enhance quality and performance.” (L5M7 Study Guide, p. 94)

Technology enhancesbuyer access to data, broadening supplier choice and transparency, whichreduces supplier power.

Short cited term: “technology has reduced suppliers’ bargaining power” (L5M7 Study Guide, p. 66).

AClient Experience Strategyfocuses on enhancing theend-to-end customer journeyby understanding customer needs, personalising interactions, and incorporating feedback.

Short cited extract: “Customer experience strategy includes listening to feedback and personalising interactions.” (L5M7 Study Guide, p.183)

Meeting expectations (B) is not exceeding them. Exceeding is demonstrated byunexpected extra valuesuch aslower-than-expected priceora free add-on. Short extract: “exceeding expectations—delighting customers with additional/unexpected value.” (L5M7 Study Guide, p.121)