Module 1 - Book 1 of 2 2012 APICS CSCP Exam Content Manual (ECM) Course Overview Section A: Supply Chain Management Concepts. Section B: Supply Chain Alignment with Business Strategy Section C: Supply Chain Design and Improvement Considerations Section D: Inventory ManagementI-A: Supply chain nsnagentent concepts Preparing for the Certification Exam Studying the APICS CSCP Learning System combined with on-the-job knowledge. professional experience, and other APICS learning tools, such as the PICS Dictionary. is the most effective way to prepare for the APICS CSCP certification examination. The APICS CSCP Learning System is intended to cover the body vf knowledge tested by the APICS CSCP certification examination; however, the APICS CSCP Learning System does not “teach the test.” The Learning System Focuses on sequiring knowledye, whereas the exam tests the candidate's ability to upply that knowledge in accordance with accepted industry standards Content on the exam is based on real-world scenarios and requires candidates to apply the concepts in the APICS CSCP Learning System, While both the APICS CSCP Learning System and the APICS CSCP certifieation examination are based on the APICS CSCP Exam Content Manual (which is available for free downloud at wsew LearuCSCP.com » Resource Center » Certification Exam Resources). they ate developed independently of ene another. To preserve exam integrity, specifie exam questions and th breadth are not shared with the APICS CSCP Learning System developers Intellectual Property and Copyright Notice All printed materials in the APICS CSCP Learning System and all material and information in the companion online component are owned by APICS and protected by United States eopyright faw as well as international treatics and protocols. ineluding the Beene Convention, The APICS CSCP Learning System and the companion Aecess Code for the CSCP online component are for your personal educational use only nd may not be copied, reproduced. reprinted, modified, displayed, published, transmitted (electronically or otherwise}, transferred, sold. distributed, leased, licensed, adapted, uploaded, downloaded, or reformatted. In addition to bein CSCP materials in violation of copyright laws will fimit the program's uselulness. 4 ficant resources to create quality professional development opportunities for ity membership. Please do not violate APICS* intellectual property rights or copyright laws, APICS Dictionary, 13" Edition Reference Definitions contained within the APICS CSCP Learning Sy with the APICS Dictionary 13¢h edition, You may purchase the complete dictionary from the APICS bookstore. Module I—Book I Checklist: Fundamentals of Supply Chain Management Section Start Date Completion Date Section Quiz Score* EB: Supply chain alignment with business strategy t 1-Ce Supply chain ID: Inventory management *Look for this test on the Web al wCourse Overview and Module 1: Fundamentals of Supply Chain Management Book 1 Module 1, Book 1 Contents 2012 APICS CSCP EXAM CONTENT MANUAL (ECM) COURSE OVERVIEW. cacao mination -ECM-1 MODULE 1: FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT Introduction ane reac I Section A: Supply Chain Management Concepts ......unusnnnnninnennnnnnneneesl I's a World of Global, Complex, Interdependent Supply Chains. sal3 Basie Supply Chain . 1s ‘The SCOR® Model: Linking Processes, Metres, Best Practice, and Technologies ...--o1.0000 1-13, Vertical versus Horizontal Integration 1s Supply Chain Management Objectives... se seo 1-24 Supply Chain Management Benefits ...0.nnnmonne pad : ssn AB Accounting and Financial Statement Basics 1.52 Section B: Supply Chain Alignment with Business Strategy ....... ever 1468 Business Strategy and Competitive Advantages : 1-70 Organizational and Suppiy Chain Strategy, Prioritization, Capabilities, and Alignment. 1-74 Resolving Misaligament or Gaps... sens 1-106 Section C: Supply Chain Design and Improvement Considerations. Lis Understanding the Marketplace... stn 1s Supply Chain Design Considerations... See eee eee IeU8 Continuous Improvement 1-124 Section D: Inventory Management Seer ee tere eee 1148 The Need for Inventory 1-148 Aggregate and Item Inventory Management one eee LISI Flow of Material enon 1-153 Functions of InventOry wr.cnnisnnnnnnnnnnnnnnnnnn sone FASS Inventory Related Cost Categories nnn eee iisy Effecis of Inventory on the Financial Statements 1-159 © 2012 aPICs Version 3.0, 2012 Edition Alright reserved @ cwasiminensawengearerModule 1, Book 2 Contents Section E: Logistics Fundamentals Lint Role af Logistics in Supply Chain Management Witt Logistics Service Providers. 3PLs and 4PLs. Last Reverse Logistics. Liss Section F: Market Segmentation Reasons to Mentify and Understand Market Seements, Ways tu Seginent Markets. Understanding the Wants and Needs of Each rem Section G: Demand Planning Forecastin Demand, Dumand Ma Finkages Among the Elements, Demand Management Functional Responsibitities and Imerlaves Section H: Customer Relationship Management (CRM) Concepts Need tor ORM Seope of CRM Elements of CRM. Benelits of CRM Implementing CRM ced for and Uses of Customer Information in CRM Section |: Supply Management Concepts L2sp Total Cost of Ownership 1290 Outsourcing and Offshoring : 1284 Make-verstrssBuy Analysis 1209 Range of Buye Supplier Relationships 1303, Developing Supply Plans 1-306 Supplicr Relationship Management (SRM 1-309 Inierrelationship bets cen CRM and SRM 313 Bibliography 323 Cumulative Course Index Laas © 2012 apices Version 3.0, 2012 Edition All ights reserved —APICS Certified Supply Chain Professional™ (CSCP) Learning System This product is based on the APICS CSCP Exam Content Manual (ECM) developed by APICS. Although the text is hased on the body of knowledge tested by the APICS CSCP exam, program developers do not have access to the exam questions. Therefore, reading the text does not guarantee a passing score, ‘The references in this manual have been selected solely on the basis of their educational value to the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials that may be offered or recommended by the authors or publishers of books and publications listed in this module. Every effort has been made to ensure that all information is current and correct. However, laws and regulations are constantly chan; publisher and authors are not offering legal or professional services, ‘Therefore, this product is distributed with the understanding that the Acknowledgments We would like to thank the following dedicated subject matter experts who shared their time, experience, and insights during the initial development and subsequent updates of the CSCP Learning System: Greg P. Allgair Julie Fenson, CPIM, CSCP Maryanne Ross, CFPIM, CIRM, Curtis Brewer, CFPIM, CIRM, CSCP Honey Johnson, CFPIM, CIRM, cSCP Jashobrata Bose, CSCP CPM. CSCP Kimber Ruoff. CPIM, CIRM, Al Bukey, CFPIM, CIRM, CSCP_ Rajesh Kamat, CSCP- CSCP, C.P.M. Luc Chalet, Ph.D, CEPIM,CSCP Prakash Kanagalekar, PIM, CSCP_ Ignacio Séncher-Chiappe Prashant Choudhary, CSCP Jack Kerr, CPIM, CSCP, CP.M Carolyn Sly, CPIM, CSCP, CPM, David N. Dadich, CSCP, LSS Jose Lara Pam Somers, CPIM, CIRM, CSCP Blackbelt Mike Loughman, CSCP Chad Strieklin Prasanta K. Dash, CSCP, PMP Giuseppe Lovecehio, CFPIM,CSCP Shashank Tilak, CPIM, CSCP Sudripto De, CSCP Richard Merit, CFPIM, CSCP. Huanjau (Arthur) Tseng, CFPIM, Arnaud Deshais, CPIM, CIRM, CPM. scp i SCP, CPM, CPSM_ ‘Thiagu Mathan, CSCP- Dave Turbide, CFPIM, CIRM Alan Downs, CPIM, CSCP- Steven J, Miller, CSCP. Sudeep Valmiki, CSCP Ralph G, Fariello, CFPIM, CIRM, Alan L. Milliken, CFPIM, CIRM, Rosemary Van Treeck, CPIM, esc csc ‘CIRM, CSCP J aura E. Gram, CSCP Peter W. Murray, CIRM. Wout Verwoerd, CFPIM, CIRM, Janice M. Gullo, CPIM, CSCP. Mike Okrent, Ph.D., CIRM, CSCP - ra ; okurke, Ph.D. CFPIM, ‘Amit Kumar Gupta, BE, CSCP Kasthuri Rengan Ponnambalam, tet PhD . CIRM, CSCP, CPM Joni Holeman, CEPIM, CIRM, CSCP escp aga Whiauslcrl CHa Fie P_ Jack, PD, CFPIM, CScP Gitar Chand Pradhan, CPIM, he Whites CPIM, CIRM. Rajesh Kumar Jagadeeswaran, CPIM, oo vive wikkerCScr: ser David Rivers, CFPIM, CIRM, CSCP es Blair Williams Jonah, CEPIM, Dave Jankowski, CPPIM, CSCP oe © 2012 aries Version 3.0, 2012 Fition All eights reserved ® rtd 1M postPICS The Association for Operations Management® APICS CSCP Exam Content Manual This manual is in effect from January 1, 2012, through December 2012. Visit apics.org/CSCP for APICS CSCP Exam Content Manual Errata. ‘The references in this manual have been selected solely on the basis of their educational value to the APICS CSCP certification program and on the content of the material. APICS does not endorse any services or other materials that may be offered or recommended by the authors or publishers of books and publications listed in this manual © 2012 APICS The Association for Operations Management 8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 USA (773) 867-1777 (800) 444-2742 Fax: (773) 639-3001 No portion of this document may be reproduced under any circumstances. CSCP is a registered trademark of APICS. Stock #09031-2012Table of Contents Letter to Candidates nnn ECM4 Introduction... -ECM-2 ‘About the APICS CSCP Examination LEOM2 ‘Question Format -ECM-2 Taking the Test ~_ ECM-3 Interpreting Test Scores... ECM-3 ‘Suggested Study Materials. EcM-3 ‘Additional Resources for APICS CSCP Candidates, ECM-4 APICS CSCP Learning System EOM-4 APICS CSCP Instructor-Led Review Course ECM-5 APICS Educational Programs. Ecms APICS Certified in Production and inventory Management (CPIM) Basics of Supsly Chain Management (BSCM) Review Course and Examination. ECMS APICS CSCP Certification Maintenance Continuing Professional Development ..n..nsmnenn ECMS ‘The Importance of Certification Maintenance... peace oot CM APICS Code of Ethics... ECM-6 APICS Certified Supply Chain Professional (CSCP) ECMT Scope of the Subject Matter ECM-7 APICS CSCP Contert.. ECM-7 Content Outline came : : : ECM8 Key Terminology ECM-14 Supplemental Glossary. -ECM-17 Bibliography ....nnnenennmsennnennnnnnn sere aneetesereaatt nnn ECMAB ‘Sample Questions. ECM-18 Answers to Sample Questions... ECM.20 SP Exam Content Manual iLetter to Candidates Dear Candidate: ‘On behalf of all the members of APICS The ‘Association for Operations Management and the Cerfied Supply Chain Professional (CSCP) Examination Committee, | want to congratulate you for your interest in the APICS CSCP certification program. APICS is the global leader and premier source of the body of knowledge in operations management, including production. inventory, supply chain, purchasing, and logistics. Since 1957, individuals and companies have relied on APICS for its superior taining, internationally recognized certifications, comprehensive resources, and worldwide network of accomplished industry professionals. ‘The APICS CSCP program is primarily intended for professionals in supply chain management and operations management and is designed to test the candidate's knowledge and application of the supply chain management body of knowledge. ‘The successful candidate will be able to recognize and analyze specific supply chain situations and opportunities and select the appropriate approaches, tools, techniques, and technologies. The candidate will be able to define the actions necessary to implement selected solutions. This includes an understanding of, and the ability to, manage the ‘alignment of supply chain processes and capabilites with strategic business goals ‘+ organizational roles and infrastructures in the supply chain ‘+ material, information, and financial flows ‘+ intra- and interorganizational relationships ‘+ selection and use of technologies to enable effective process management. The APICS CSCP program will help you advance your career while giving you validated foundational knowiedge to assist in improving your company’s competitive position and profitability. The program takes a broad view of the field, extending beyond internal operations to ‘encompass all the steps throughout the supply cchain—from the supplier, through the company, to the end consumer and the reverse flow of products and materials for the purpose of ‘managing returns, refurbishing, or recycling. The program provides you with the knowledge to effectively manage the integration of these activities to maximize a companys value chain, The subject matter is organized into three content areas. Fundamentals of Supply Chain Management (scm) This section provides the foundation for the exam by addressing the concepts and strategies used. for effective supply chain management. It includes an overview of supply chain management. ‘managing the supply chain, and improving the ‘supply chai Strategy, Design, and Compliance This section addresses considerations in the design of a supply chain, the processes that support the organization's strategy, improvement of the sustainability of the organization and its trading partners, and compliance with applicable regulations and voluntary standards, Implementation and Operations This section covers managing and batancing supply and demand through measuring, analyzing, and improving supply chain processes, This APICS CSCP Exam Content Manual is intended to provide you with an overview of the program, an outline ofits body of knowledge, key terminology, and references. The outline is divided into three diagnostic areas, and the relative emphasis of each of the areas is indicated by a percentage figure. A sample of 10 illustrative ‘questions is also provided. The APICS CSCP Exam Content Manual should not be the only reference you use to prepare for the CSCP exam however, it should be the first. We wish you success in your pursuit of the CSCP designation, hy Lhe Roly White, CFPIM, CIRM, CSCP CSCP Examination Committee Chair CSCP Exam Content Manusl = ECMIntroduction This exam content manual provides guidance for individuals preparing for the certification examination, The objective of this manual is to outline the APICS CSCP tested body of knowledge, ‘The main section of this manual begins with a statement of the scope of the subject matter, followed by a descriptive outline of the content. Key terminology and a bibliography of references are provided. The section concludes with sample questions similar to those that appear on the examination and the correct answers for the sample questions, with brief explanations of why they are correct. ‘The recommended procedure for mastering the subject matter is to * review the content outline, scope of the material * study each topic, using the suggested references. dofines the ‘At the end of each major section is a list of the references that apply to the topics in that section, The first number indicates the sequence number for the reference in the Bibliography section, and the numbers in parentheses indicate the chapter(s) within that reference, Candidates should understand the definitions of the key terms and the application of the outlined tools and techniques. Sufficient references are given that provide different approaches to the material covered in each diagnostic area and different styles of presenting the information, Reading available periodical material, such as APICS magazine, will help you maintain an awareness of changes in the state of the art. ECM-2 2012 APICS The Association for Ope: About the APICS CSCP Examination ‘The APICS CSCP exam consists of 175 multiple- choice questions. There is a four-hour time limit for the exam, For more information about testing and registration policies and procedures, call APICS Customer Service at 1-800-444-2742 (United States and Canada), or +1-773-867-1777 and order a current APICS CSCP Certification Builtin or visit the APICS website at apics.orgicertification/CSCP/CSCPexam.htm. Candidates who plan to test in North America should order stock #09056, and candidates testing outside North America should order stock #09057. Candidates may also order the bulletins at apics.org/escp or via the APICS Bookstore at apics.orgibookstore. Question Format Several question formats are used in the APICS CSCP examination although not all are included in this manuals sample questions (pages 18-19). A review ofall the formats is recommended to ensure maximum preparedness. For each question, only one of the four choices represents the correct answer. Examples 1 and 2 are samples of an incomplete statement of a question, followed by four Suggested completions or answers. In Example 4, you are to choose the one option—A, B, C, or D— that completes the statement correctly. In Example 2, you are to choose the option that best, answers the question. Example 1: The 80-20 rule is an application of: (A) Statistical process control (8) Defect measurement (C) Root cause analysis (0) Pareto analysis (The correct answer is D.) Example 2: Which ofthe following is used as a key performance indicator (KP!) to measure variabilly of demand through the supply chain? (A) Bullwhip effect (8) Fill rate (C) Inventory tums (0) Internal feiture (The correct answer is A.) 3 Management