95182487-CSCP-ExamContentManual-2012

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

CSCP Exam Content Manual i

Table of Contents Letter to Candidates ..........................................................................................................................................1

Introduction .......................................................................................................................................................2

About the APICS CSCP Examination.................................................................................................................2

Question Format ...........................................................................................................................................2 Taking the Test .............................................................................................................................................3 Interpreting Test Scores ................................................................................................................................3 Suggested Study Materials............................................................................................................................3

Additional Resources for APICS CSCP Candidates ...........................................................................................4

APICS CSCP Learning System .....................................................................................................................4 APICS CSCP Instructor-Led Review Courses................................................................................................5 APICS Educational Programs........................................................................................................................5 APICS Certified in Production and Inventory Management (CPIM) Basics of Supply Chain Management (BSCM) Review Course and Examination......................................................................................................5

APICS CSCP Certification Maintenance Continuing Professional Development .................................................5

The Importance of Certification Maintenance................................................................................................5 APICS Code of Ethics ...................................................................................................................................6

APICS Certified Supply Chain Professional (CSCP)...........................................................................................7

Scope of the Subject Matter ..........................................................................................................................7 APICS CSCP Content ...................................................................................................................................7 Content Outline .............................................................................................................................................8 Key Terminology ......................................................................................................................................... 14 Supplemental Glossary ............................................................................................................................... 17 Bibliography ................................................................................................................................................ 18 Sample Questions....................................................................................................................................... 18 Answers to Sample Questions..................................................................................................................... 20

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CSCP Exam Content Manual 1

Letter to Candidates Dear Candidate:

On behalf of all the members of APICS The Association for Operations Management and the Certified Supply Chain Professional (CSCP) Examination Committee, I 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 training, 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 capabilities 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 knowledge 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 chain—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 company's 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 chain.

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 balancing 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 of its 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.

Roly White, CFPIM, CIRM, CSCP CSCP Examination Committee Chair

©2012 APICS The Association for Operations Management 2

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, which defines the scope of the material.

study each topic, using the suggested references.

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.

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 Bulletin or visit the APICS website at apics.org/certification/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/cscp or via the APICS Bookstore at apics.org/bookstore.

Question Format Several question formats are used in the APICS CSCP examination although not all are included in this manual’s sample questions (pages 18–19). A review of all 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 or a question, followed by four suggested completions or answers. In Example 1, 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 (B) Defect measurement (C) Root cause analysis (D) Pareto analysis (The correct answer is D.)

Example 2: Which of the following is used as a key performance indicator (KPI) to measure variability of demand through the supply chain?

(A) Bullwhip effect (B) Fill rate (C) Inventory turns (D) Internal failure (The correct answer is A.)


Example 3 is different. All the choices given are correct EXCEPT one. You are to choose the option that does not correctly complete the statement.

Example 3: All of the following are examples of voice of the customer EXCEPT:

(A) collecting point-of-sale (POS) data (B) customer panel groups (C) recording customers’ problems with recent

purchases (D) surveying customers online (The correct answer is A.)

Examples 4 and 5 ask for a judgment or evaluation of the MOST or LEAST appropriate choice. The judgment is not one person’s opinion; it is the accepted choice according to the APICS body of knowledge. Example 4 asks for the MOST appropriate choice. Example 5 calls for the LEAST appropriate choice.

Example 4: The MOST significant advantage of strategic sourcing is:

(A) finding suppliers who can provide materials at lowest cost

(B) using technology to select low-cost, high-quality sources of materials

(C) developing long-term supplier relationships (D) having a process for recurring transactions

with single suppliers (The correct answer is C.)

Example 5: Which of the following factors has had the LEAST impact on the growth of customer relationship management?

(A) increased customer expectations (B) reduced commodity prices (C) increased ease in comparison shopping (D) reduced cost of gaining new customers (The correct answer is C.)

Taking the Test Before starting your exam, read all the directions carefully. Be sure you understand them before you begin to read and answer any questions.

Read each question carefully and thoroughly. Take care to avoid assuming information not given or “second guessing” the question. Do not look for hidden tricks or exceptional circumstances. Every effort has been made to avoid misleading wording and to provide sufficient

information for each question. Choose the best answer from the choices given.

If a question includes stimulus material, such as a table, graph, or situation, be sure to study it before you answer the question.

Interpreting Test Scores Scoring is based on your correct responses. There is no penalty for incorrect answers. It is to your benefit to make a choice, even if you are not certain of the correct answer. A blank answer will have the same result as an incorrect answer.

The APICS CSCP scaled score range is 200–350. The minimum passing score is 300.

You will receive your final exam score along with diagnostic information on your performance.

Suggested Study Materials This manual contains a Bibliography section that lists references. A candidate may discover that the material covered in the chapters of one reference duplicates material covered in another reference. Both sources are included as references to allow candidates some discretion in selecting test preparation materials that they find accessible and understandable. In deciding if a single reference is sufficient, candidates should assess their own level of knowledge against both the descriptive examination specifications and the detailed topic list contained in the content outline. If there are any areas of weakness, the candidate should consult another reference as part of the test preparation process.

It is not practical to list all texts that contain excellent material. The serious student of supply chain management who wishes to stay current with the state of the art will take advantage of publications such as those listed in the comprehensive APICS Educational Resources Brochure (stock #01041), featuring APICS reference materials. To receive the brochure, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777, or via the APICS Bookstore at apics.org/bookstore.

The content outline provided in this document should be considered a primary resource for exam preparation. It provides an overview of the major topics included in the exam, as well as a list of the concepts that are relevant to that topic.


The APICS Dictionary, 13th edition, is an essential publication that applies to the exam content manual and exams. Within the profession, terminology varies among industries, companies, and the academic community. The examination uses standard terminology as defined in the APICS Dictionary and the Supplemental Glossary section in this manual. Recognizing the terms and understanding their definitions are essential.

In studying for the APICS CSCP certification exam, candidates may discover multiple terms used to denote the same technique. An example of this is lateral integration versus horizontal integration. APICS has attempted to provide consistency with preferred terminology. However, synonyms are often used by authors in the various references used to compile the body of knowledge. Candidates are encouraged to be familiar with all terms and concepts listed within each outline and key terminology section, using the APICS Dictionary as the primary guide for definitions. The Supplemental Glossary, included in this manual, provides needed additional information identified by the exam committee.

Additional Resources for APICS CSCP Candidates APICS offers a number of resources to help individuals prepare for the APICS CSCP examination.

In addition to the cited references, it may be helpful for you to pursue chapter-sponsored courses, college courses, APICS workshops, self-study courses, or courses offered by APICS’ network of Authorized Education Providers (AEPs) as a means of learning the body of knowledge that is tested in the certification program. A wide variety of courses and materials is available. As with any other investment of time and money, you should research various courses before investing in one. For courses in North America, visit the Chapter Locator on the APICS website at apics.org or call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777 to obtain contact information for your local chapter. For courses outside North America, visit apics.org/international to locate the nearest AEP.

APICS CSCP Learning System The APICS CSCP Learning System is a comprehensive professional development and certification preparation program. This self-directed program combines print material and online interactive tools. This system is also offered in instructor-led formats.

The APICS CSCP Learning System does not “teach the test” and in many areas reviews concepts but does not teach concepts. The APICS CSCP Learning System provides a thorough review of the subject matter, but it should not be used without the most current APICS CSCP Exam Content Manual as a means to direct the candidate’s study. There will likely be some content in the APICS CSCP Learning System not covered by the exam; conversely, there will likely be some content in the exam not covered by the learning system. Thus, the use of the current exam content manual to assist candidates with their studies is essential.

For more information, visit the APICS website at apics.org or call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1- 773-867-1777 and request a complimentary


APICS Educational Resources Brochure (stock #01041).

APICS CSCP Instructor-Led Review Courses The instructor-led format combines the APICS CSCP Learning System print and online components with the leadership of a qualified instructor; peer collaboration; company networking; and a structured, set schedule to keep participants on track. APICS provides an on-line list of APICS Qualified Instructors for your review at apics.org/cscpprepare.

APICS Educational Programs APICS offers a variety of educational programs and the APICS International Conference & Expo. For a list of APICS learning opportunities and information on course availability, call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777.

APICS Certified in Production and Inventory Management (CPIM) Basics of Supply Chain Management (BSCM) Review Course and Examination The APICS CPIM Basics of Supply Chain Management module introduces terminology, approaches, and techniques for managing the internal supply chain in a manufacturing organization. For that reason, the references and the review course may be valuable resources for APICS CSCP candidates who are not familiar with the production and inventory management environment. Additionally, individuals inexperienced in taking certification examinations using the multiple-choice format of items typically find it beneficial to take the BSCM examination.

APICS CSCP Certification Maintenance Continuing Professional Development The Importance of Certification Maintenance The growing number of individuals choosing to pursue professional development through APICS’ Certified Supply Chain Professional (CSCP) program indicates a strong awareness that continuing education and skills development are essential to meeting the information and technological challenges in today’s rapidly evolving workplace and global marketplace. Professional development opens doors to individual career opportunities and organizational success.

Although APICS CSCP certification and APICS CSCP certification maintenance are voluntary programs, they equally demonstrate one’s commitment to achieving the highest level of professional development and standards of excellence.

The APICS CSCP Certification Maintenance program upholds both the objectives of the APICS CSCP program and APICS’ vision to promote lifelong learning. This flexible program recognizes that individuals are at various levels in their careers, come from many industries, have different educational needs and career goals, and have varying degrees of access to continuing education. Thus, requirements for maintaining certification can be met through multiple sources and a variety of professional development activities intended to help prepare for the challenges ahead and maintain a professional edge by

preserving the currency of hard-earned certification credentials expanding your knowledge of the latest industry practices

expanding your knowledge of the latest industry practices reinforcing skills

exploring new technology solutions reinforcing skills


improving job performance demonstrating commitment to excellence increasing competitive advantage.

To promote professional growth and lifelong learning, APICS CSCP designees must complete the APICS Certification Maintenance program every five years. Complete details on how to maintain your APICS CSCP designation will be mailed to candidates upon successful completion of the certification requirements. Visit the APICS website at apics.org or call APICS Customer Service at 1-800-444-2742 (United States and Canada) or +1-773-867-1777.

APICS Code of Ethics When you start an examination, you will be asked to pledge to abide by the APICS Code of Ethics. Once certified, you pledge to continue your education to increase your contribution to the supply chain profession. After achieving the APICS CSCP certification, you pledge also to share your knowledge with others by participating in APICS research and educational activities at local, district, national, and international levels. APICS Code of Ethics:

To maintain and improve sound business practices and foster high standards of professional conduct.

To hold in professional confidence any information gained of the business of a fellow member’s company and to refrain from using such information in an unethical manner.

To seek success without taking unfair advantage or using questionable acts that would compromise one’s self-respect.

To neither engage in nor sanction any exploitation of one’s membership, company, or profession.

To encourage, and cooperate in, the interchange of knowledge and techniques for the mutual benefit of the profession.

To be careful with one’s criticisms and liberal with one’s praise; to build and not to destroy.

Whenever a doubt arises as to the right or ethics of one’s position or action, to resolve such doubt according to generally accepted standards of truth, fair dealing, and good taste.

To maintain high personal standards of moral responsibility, character, and business integrity.

To uphold the high ideals of the association as outlined in the bylaws.

Failure to abide by APICS Code of Ethics policy may result in sanctions up to and including decertification.


APICS Certified Supply Chain Professional (CSCP) Effective for January 1, 2012–December 31, 2012, exams.

CSCP EXAMINATION COMMITTEE

Roly White, CFPIM, CIRM, CSCP (Chair) Nishat Ahmed, CPIM, CIRM, CSCP, C.P.M.

M.C. Dean, Inc. Joanne Gorski, CFPIM, CSCP

Fox Valley Technical College Robert Pinchot, CPIM, CSCP

DuPont Andrea M. Prud’homme, Ph.D., CPIM, CIRM,

CSCP, The Ohio State University Eduardo A. Shelley, CFPIM, CIRM, CSCP

Solmex

Scope of the Subject Matter Please read the introductory material in this manual for essential information about the examination.

The APICS CSCP certification covers concepts, strategies, processes, tools, and technologies applied to managing the end-to-end forward and backward flow of materials, information, and value in a supply 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 chain.

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 balancing supply and demand through measuring, analyzing, and improving supply chain processes.

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 ability to, manage

alignment of supply chain processes and capabilities 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.

Many of the items on this exam require the candidate to apply one or more of the items identified in the outline and key terminology.

APICS CSCP Content Three content areas have been designed to organize the APICS CSCP domain. The relative importance of a topic is not necessarily reflected by its appearance in the outline. The relative importance of these topics will vary among industries. The percentage figures given below can be used as a guideline for the APICS CSCP exam content.

DIAGNOSTIC PART MAIN TOPIC PERCENTAGE

OF EXAM

I

Fundamentals of Supply Chain Management (SCM)

33.33%

II

Supply Chain Strategy, Design, and Compliance

33.33%

III Implementation and Operations

33.33%


Content Outline I. Fundamentals of Supply Chain Management (SCM)

This section addresses the fundamental concepts used for effective SCM and will provide the foundation for the APICS CSCP exam. It includes an overview of SCM concepts and the need to align resources with the strategy of the organization. Management and improvement of the supply chain are then addressed. Exam questions covering this area will include elements related to the following:

A. Supply Chain Management Concepts: A thorough understanding of the roles in a supply chain network and the flow of value through it is required. A broad understanding of the supply chain management processes, objectives, integration, and benefits is also required. Knowledge in this area encompasses:

1. Basic supply chain a. Entities b. Structures c. Flows

2. Supply chain management processes – SCOR® model a. Planning demand and supply b. Sourcing goods and services c. Producing goods and services d. Delivering goods and services e. Planning for and processing returns

3. Vertical and horizontal integration

4. Supply chain management objectives a. Improved customer service b. Efficient use of systemwide resources c. Effective use of systemwide resources d. Leverage of partner strengths

5. Supply chain management benefits a. Improved market knowledge b. Increased velocity in the flows of goods

and services, funds, and information c. Increased visibility of flows d. Reduced variability of flows e. Integrated operations f. Improved management of risk g. Increased sustainability

B. Supply Chain Alignment with Business Strategy: The supply chain strategy should align with and enable the business strategy. Achieving appropriate alignment requires an understanding of the forms of competitive advantage being pursued. It also requires an understanding of the organizational strategy, priorities, capabilities, and the resolution of misalignments or gaps. Knowledge in this area encompasses:

1. Competitive advantages

2. Business capabilities and strategy a. Organizational strategy b. Prioritization options c. Organizational capabilities d. Alignment of capabilities and strategy

3. Resolving misalignment or gaps

4. Collaboration among trading partners a. Benefits of collaboration b. Requirements for success

C. Supply Chain Design and Improvement Considerations: The supply chain strategy should be designed with an understanding of the marketplace. It also requires an understanding of supply chain management design and continuous improvement considerations. Knowledge in this area encompasses:

1. Understanding the marketplace

2. Supply chain design considerations a. Network configuration b. Inventory location and levels c. Product design d. Information technology e. Support systems

3. Continuous improvement a. Product considerations b. Process improvement initiatives c. Managing change

D. Inventory Management: Inventories throughout the supply chain must be planned and controlled for effective supply chain management. Managing inventories, in turn, requires an understanding of the costs of


maintaining and not maintaining inventory. Knowledge in this area encompasses:

1. Need for inventory

2. Aggregate and item inventory management

3. Flow of material

4. Functions of inventory

5. Inventory-related cost categories

6. Effects of inventory on the financial statements

E. Logistics Fundamentals: An understanding of the logistics function is required. Understanding the role of logistics, types of logistics service providers, and reverse logistics is required. Knowledge in this area encompasses:

1. Role of logistics in supply chain management a. Logistics functions b. Logistics value proposition c. Flow of goods and information d. Push, pull, and push-pull systems

2. Logistic service providers a. Types of logistics services b. Advantages of using logistics service

providers c. Disadvantages of using logistics service

providers

3. Reverse logistics a. Activities supported b. Design for reverse logistics c. Benefits

F. Market Segmentation: An understanding of market segmentation is required. Understanding the reasons for identifying market segments, ways to segment markets, and understanding the wants and needs of each segment is important. Knowledge in this area encompasses:

1. Reasons to identify and understand market segments

2. Ways to segment markets

3. Understanding the wants and needs of each segment

G. Demand Planning: An understanding of demand forecasting, the components of demand management, associated linkages, and demand management functional responsibilities and interfaces is required. Knowledge in this area encompasses:

1. Forecasting demand a. Demand forecasting concepts b. Qualitative methods c. Quantitative methods d. Combination methods e. Measures of forecast error

2. Components of demand management a. Planning demand b. Communicating demand c. Influencing demand d. Prioritizing demand

3. Linkages among the components

4. Demand management functional responsibilities and interfaces a. Product development b. Marketing c. Sales d. Operations

H. Customer Relationship Management (CRM) Concepts: Effective customer relationship management includes an understanding of the CRM philosophy. It also requires the understanding of the need, scope, elements, and benefits of CRM. Knowledge in this area encompasses:

1. Need for CRM

2. Scope of CRM

3. Elements of CRM

4. Benefits of CRM

5. Implementing CRM

6. Need for, and uses of, customer information in CRM

I. Supply Management Concepts: Effective management of all sources of supply requires an understanding of the components of the total cost of ownership and the considerations in deciding whether to source an item internally or externally. It also requires an understanding of


the types of relationships that can exist between a firm and its suppliers, the development of supply plans, and supplier relationship management. Knowledge in this area encompasses:

1. Total cost of ownership

2. Make versus buy analysis

3. Range of buyer-supplier relationships

4. Developing supply plans

5. Supplier relationship management (SRM)

References: 1; 2 (1–6); 3 (1–2, 6–7, 9); 4 (1, 5–8); 5 (1, 3, 5, 8–9, 12)

II. Supply Chain Strategy, Design, and Compliance

This section addresses considerations in the design of a competitive 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. Exam questions covering this area will include elements related to the following:

A. Sustainability: Designing and operating a supply chain requires an understanding of the concepts of sustainable business practices and how to adapt and apply them to a specific supply chain. Knowledge in this area encompasses:

1. Economic a. Micro and macro considerations b. Leading and lagging economic

indicators c. Balancing short-term and long-term

performance

2. Environmental a. ISO 14000 Series of Environmental

Management Systems Standard b. Governmental regulatory compliance c. Industry-specific guidelines and

standards d. Impact of supply chain decisions

3. Social a. ISO 26000 Guidance on Social

Responsibility b. Corporate social responsibility

considerations

4. United Nations “The Global Compact”

5. Triple bottom line (TBL)

B. Risk Management: Designing a robust supply chain requires recognizing the sources and forms of risks, the magnitude and potential impact of each, and methods of mitigating each form of risk. Knowledge in this area encompasses:

1. Identification, mitigation, and response to risk a. Forms of risk b. Assessing the risk in a supply chain c. Mitigating significant risks d. Responses to risk

2. Security and regulatory concerns a. Risk of loss, such as intellectual

property or goods b. Complying with import and export

requirements, such as prohibited goods, labeling, and documentation

c. Costs and benefits of participating in security partnerships

d. Costs and benefits of meeting sustainability regulations

e. Product traceability

3. ISO 31000 Risk Management Principles and Guidelines

C. Globalization: Managing globally dispersed sources of supply and demand requires an understanding of the requirements for operating in multiple countries and for moving goods and funds among countries. Knowledge in this area encompasses:

1. Effects of globally dispersed supply and demand a. Export and import participants b. Currency considerations c. Harmonized Tariff Schedule (HTS) d. Total, or landed, cost of acquisition

2. Free trade zones a. Definition b. Benefits c. Requirements

3. Trading blocs a. Definition b. Effects on supply chains within the bloc c. Effects on supply chains that extend

outside the bloc


4. Operational considerations a. Exporting issues b. Importing issues c. Incoterms

5. Implications of globalization a. Legal and regulatory considerations b. Acceptable standards of conduct c. “Glocalization”

D. Logistics: An understanding of the total effect that globalization and supply chain management has on inbound and outbound logistics is important. An understanding of trade-offs among warehousing, transportation, and logistics services’ decision making is also required. Knowledge in this area encompasses:

1. Transportation a. Transportation objectives and

considerations b. Stakeholders in transportation decisions c. Modes of transportation d. Considerations in mode selection

2. Warehousing a. Warehousing objectives and

considerations b. Warehouse capabilities c. Automated material handling

3. Transportation and warehousing trade-offs a. Public/private b. Owning/leasing assets c. Capacity constraints

E. Managing the Supply Chain: Managing the supply chain requires an understanding of the dynamics of supply and demand and the need to balance efficiency and responsiveness in the supply chain. It also requires a set of comprehensive measures that are agreed upon and used by the organizations in the supply chain. Knowledge in this area encompasses:

1. Indicators of supply chain performance a. Customer-focused metrics b. Financial metrics c. Operational metrics d. Other key performance indicators

(KPIs)

2. Responsive versus efficient supply chains a. Attributes of an efficient supply chain

b. Attributes of a responsive supply chain c. Supply chain fit with the organizations’

markets requirements

F. Technology: An understanding of technologies that enable designing, tracking, operating, and communicating among trading partners within a supply chain is necessary. The correct application of appropriate technology is needed for efficient and effective supply chain management. Knowledge in this area encompasses:

1. Role of technology in supply chain management a. Information system architecture b. Use of information technology in the

supply chain c. Comprehensive supply chain

management system d. Need for timely and accurate data

2. Key application tools a. Enterprise resources planning (ERP)

systems b. Advanced planning and scheduling

(APS) systems c. Supply chain event management

(SCEM) d. Warehouse management systems

(WMS) e. Transportation management systems

(TMS)

3. Data acquisition and communications tools a. Interface devices b. Data communications methods c. Databases—hierarchical/relational/

network d. Acquisition and use of data e. Automatic identification technologies

4. Supply chain design and optimization tools a. Supply network design b. Supply network optimization

5. Interorganization integration tools a. Information technology in collaborations

and joint processes b. Standardization c. Challenges

6. Electronic business a. Enabling virtual organizations


b. Internet-enabled supply chains c. E-business considerations d. Business-to-business commerce (B2B)

and business-to-consumer sales (B2C)

G. Influencing and Prioritizing Demand: A thorough understanding of how the members of a supply chain can influence demand and how they may need to prioritize demand when necessary is required. Knowledge in this area encompasses:

1. Designing products and services a. Standardization b. Simplification c. Customization d. Sustainability considerations e. Design and development collaboration

2. Marketing a. Market research b. Demand generation c. Influencing demand

3. Selling

4. Matching customer orders to supply a. Need for matching b. Approaches to matching

H. Customer Relationship Management (CRM): Effective customer relationship management includes understanding the underlying concepts; enabling technologies; and requirements for improved demand management, customer service, and alignment of customer-facing processes and resources. Knowledge in this area encompasses:

1. Developing and implementing CRM as a strategy a. Components of CRM strategy b. Aligning CRM strategy and product or

service life cycle c. Creating a customer relationship

strategy d. Developing CRM strategy for various

types and segments of customers

2. Using technology to implement CRM a. Benefits of using a customer data

warehouse b. Sales force automation c. Keys to successful CRM

implementation

3. Measuring customer service a. Response to inquiries b. Order processing c. Level of service d. Product or service quality e. Customer satisfaction

4. Challenges in implementing CRM

I. Supplier Relationship Management (SRM): Successful implementation of supplier relationship management requires an understanding of the underlying concepts, the enabling technologies, and the requirements for improved management of sources of supply. Knowledge in this area encompasses:

1. Supplier selection a. Corporate social responsibility (CSR) b. Negotiations c. Internet-enabled sourcing d. Contract performance e. Alignment with supply chain needs

2. Developing and implementing SRM strategies a. Steps in implementing SRM b. Managing risk

3. Creating alliances with suppliers a. Characteristics of a successful

relationship b. Commitment required for a successful

alliance c. Steps in creating and maintaining an

alliance

4. Using technology to implement SRM a. Components of a SRM system b. Portals and trading exchanges c. Processes enabled by SRM d. Effects of SRM on the firm and its

suppliers

5. Measuring SRM

6. Challenges in implementing SRM

J. Inventory Planning and Control: Inventories throughout the supply chain must be planned, located, and controlled for effective supply chain management. Managing inventories in turn requires an understanding of the total costs of maintaining and not maintaining inventory and the techniques for planning and controlling


inventory. Knowledge in this area encompasses:

1. Inventory planning a. Locations of inventory b. Levels of inventory

2. Inventory control a. Determining order quantities b. Ordering systems c. Safety stock and safety lead time d. Organization of storage locations e. Methods of tracking inventory f. Methods for assessing inventory

accuracy

References: 1; 2 (5–10, 13–15, 17); 3 (1, 3–5, 8–11, 12–13, 17); 4 (1–9); 5 (2–12, 14–15)

III. Implementation and Operations

This section addresses managing and balancing supply and demand by measuring, analyzing, and improving supply chain processes. Exam questions will include elements related to the following:

A. Supply Chain Dynamics: Managing supply chains requires an understanding of the dynamics of supply and demand and the need to balance efficiency and responsiveness in the supply chain. It also requires a set of measures that are agreed upon and used by the organizations in the supply chain. Knowledge in this area encompasses:

1. Sources of variability in demand

2. Sources of variability in supply

3. Synchronizing supply and demand

4. Metrics

B. Managing Supply from Internal Sources: Managing supply from internal sources requires an understanding of the operations planning and control processes. Knowledge in this area encompasses:

1. Operations planning and control a. Implementation of the sales and

operations plan (S&OP) b. Controlling priorities c. Materials and inventory d. Capacity management

2. Communicating requirements and priorities

3. Measuring performance a. Operational measures b. Financial measures

C. Managing Supply from External Sources: Managing supply from external sources requires an understanding of the basic purchasing processes, selecting suppliers, and evaluating suppliers. Knowledge in this area encompasses:

1. Communicating requirements and priorities

2. Supplier performance management a. Ethical and legal considerations b. Negotiations c. Contract issues d. Internet-enabled sourcing e. Scorecards and performance metrics

3. Supplier certification a. Customer and supplier benefits b. Third-party certification c. Supplier certification process

D. Implementation of Demand Plans: Requires an understanding of the methods for prioritizing and fulfilling demand. Knowledge in this area encompasses:

1. Demand prioritization a. Time fences b. Allocation of supply c. Measures of customer service levels

i. Fill rates ii. Lead-time monitoring iii. Order status reporting

2. Capturing and communicating point-of-sale data a. Capturing data at point-of-sale b. Sharing demand data among trading

partners

E. Continuous Improvement: Enhancing the competitiveness of a supply chain requires an understanding of the techniques and tools of continuous improvement and the appropriate application of each. Knowledge in this area encompasses:

1. Continuous improvement philosophies a. Lean b. Six sigma


c. Theory of constraints (TOC) d. Total quality management (TQM)

2. Continuous improvement tools a. Basic seven tools of quality (B7) b. Seven new tools (N7)

References: 1; 2 (5–6, 15–16); 3 (9–11, 14–15); 5 (2, 4, 7, 12)

Key Terminology An understanding of the following list of terms is recommended. The list is intended to be thorough but not exhaustive. The candidate is also expected to be familiar with the definitions of terms identified in the content outline. A review of the list and study of the topics in the outline may reveal other important terms. Definitions of these terms can be found in the APICS Dictionary, 13th edition, or in the Supplemental Glossary.

A ABC analysis active tag advanced planning and scheduling (APS) agent alliance development anticipation inventories assemble-to-order automatic identification and data capture (AIDC) available inventory available-to-promise (ATP)

B backlog backorder balanced scorecard balance sheet bar coding benchmarking bill of material (BOM) blanket purchase order bottleneck buffer business intelligence business plan business process management business-to-business commerce (B2B) business-to-consumer sales (B2C)

C capable-to-promise (CTP) carrying cost cash flow cash-to-cash cycle time changeover chase strategy collaborative planning, forecasting, and

replenishment (CPFR) competitive analysis consignment consortia trade exchanges (CTX) constraint content management applications continuous replenishment cost of goods sold cost of quality cross-docking cross-selling cumulative lead time customer relationship management (CRM) customer service customer service ratio cycle cycle counting cycle stock cycle time

D database management system (DBMS) data cleansing data dictionary data normalization data warehouse decoupling define, measure, analyze, improve, control

(DMAIC) process demand demand forecasting demand management demand planning demand pull demand shaping dependent demand design for the supply chain distribution inventory distribution requirements planning (DRP) distributor


E electronic commerce (e-commerce) electronic data interchange (EDI) electronic document electronic product codes (EPCs) end-of-life management engineer-to-order enterprise resources planning (ERP) extensible markup language (XML) extranet extrinsic forecasting method

F feedback file transfer protocol (FTP) fill rate fluctuation inventory forecast error forecasting

G general and administrative expenses (G&A) global strategy glocalization graphical user interface (GUI) gross margin

H harmonized system classification codes horizontal marketplace hypertext markup language (HTML) hypertext transfer protocol (HTTP)

I income statement incoterms independent demand information system architecture information technology Internet interplant demand intranet in-transit inventory intrinsic forecast method inventory management inventory optimization software inventory turnover inventory turns inventory valuation inventory velocity

inventory visibility ISO 26000 Guidance on Social Responsibility ISO 31000 Risk Management-Principles and

Guidelines

J joint replenishment system joint venture Just-in-Time (JIT)

K kaizen kaizen event kanban keiretsu key performance indicator (KPI)

L landed cost lead time lean legacy systems level of service level strategy linear programming line haul costs load leveling local area network (LAN) logistics

M make-to-order make-to-stock manufacturing resource planning (MRP II) market demand market driven market research market share master planning master production schedule (MPS) material requirements planning (MRP) materials management mathematical programming metrics middleware mix forecast modular design strategy modular system multicountry strategy multisourcing


N network

O obsolescence optimization ordering cost order losers order qualifiers order winners outsourcing

P package to order Pareto analysis Pareto’s law partnership passive tag pipeline inventory planning horizon portal private trading exchange (PTX) process chart process map procurement product differentiation product family product life cycle profit profit margin pull system purchasing push system

Q quality function deployment (QFD) quick response program (QRP)

R radio frequency identification (RFID) tag rapid replenishment relational database resource management return on assets (ROA) return on investment (ROI) reverse auction reverse logistics reverse supply chain risk pooling

S safety stock sales and operations planning (S&OP) seasonality semipassive tag service industry service-oriented architecture (SOA) simulation single-source supplier six sigma software-as-a-service (SaaS) sole-source supplier sourcing spend management standard costs stockkeeping unit (SKU) stockout costs strategic alliance strategic planning strategic sourcing subcontracting supplier supplier certification supplier-input-process-output-customer (SIPOC)

diagram supplier relationship management (SRM) supply chain supply chain event management (SCEM) supply chain management (SCM) Supply-Chain Operations Reference-model

(SCOR®) supply chain risk supply chain visibility sustainability synchronized production

T tactical buying tactical planning target costing tariff third-party logistics (3PL) total cost of ownership (TCO) trade bloc trading bloc transportation management system (TMS) trend triple bottom line (TBL)


U United Nations Global Compact (UNGC) universality

V value-added value-added network (VAN) value chain value stream value stream mapping variance vendor vendor-managed inventory (VMI) virtual trading exchange

W warehouse management system (WMS) waste web services

X XML (extensible markup language)

Supplemental Glossary The following concepts, not found in the APICS Dictionary, 13th edition, will be helpful in preparing for the CSCP examination.

Business process management (BPM): A business discipline or function that uses business practices, techniques, and methods to create and improve business processes. BPM is a holistic approach to the use of appropriate process-related business disciplines to gain business performance improvements across the enterprise or supply chain. It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. Most process improvement disciplines or activities can be considered as BPM.

Demand shaping: The practice of using the 4 Ps (product, pricing, placement, promotion) and other market variables to influence the demand of a product or service so that the demand better matches the available supply.

Glocalization: A combination of “globalization” and “localization.” When used in a supply chain context, glocalization is a form of postponement where a product or service is developed for distribution globally but is modified to meet the needs of a local market. The modifications are made to conform with local laws, customs, culture, or preferences.

ISO 26000 Guidance on Social Responsibility: ISO 26000 or ISO SR is an international standard adopted by the International Standards Organization to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility. ISO 26000 is not a management system standard and it’s not intended or appropriate for certification purposes or regulatory or contractual use.

ISO 31000 Risk Management: Principles and Guidelines: A standard adopted by the International Standards Organization that outlines principles and a set of guidelines to manage risk in any endeavor. The standard outlines guidelines for understanding risk, for developing a risk management policy, for integrating risk management into organizational processes (including accountability and responsibility), and for establishing internal and external risk communication processes. ISO 31000 is not a management system standard and it’s not intended or appropriate for certification purposes or regulatory or contractual use.

Trade bloc or trading bloc: A trade bloc is an agreement between countries intended to reduce or remove barriers to trade within member countries. Frequently, but not always, those countries are geographically close. Examples of trade blocs are the European Economic Community and the North American Free Trade Agreement (NAFTA).

United Nations Global Compact: A voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anticorruption.


Bibliography All test candidates should familiarize themselves with the following references for this examination. The recommended references pertaining to the diagnostic area are listed at the end of each section of the content outline. All of these references are available from the APICS Bookstore.

1. APICS Dictionary, 13th ed., 2011.

2. Bowersox, Donald, David Closs, and M. Bixby Cooper. Supply Chain Logistics Management, 3rd ed., McGraw-Hill, 2010.

3. Crandall, Richard, William Crandall, and Charlie Chen. Principles of Supply Chain Management, CRC Press, 2010.

4. Ross, David F. Introduction to Supply Chain Management Technologies, 2nd ed., CRC Press, 2010.

5. Simchi-Levi, David, Philip Kaminsky, and Edith Simchi-Levi. Designing & Managing the Supply Chain, 3rd ed., McGraw-Hill Irwin, 2008.

Sample Questions The following 10 questions are similar in format and content to the questions on the CSCP exam. These questions are intended for practice—that is, to enable you to become familiar with the way the questions are asked. The degree of success that you have in answering these questions is not related to your potential for success on the actual exam and should not be interpreted as such.

Read each question, select an answer, and check your responses with the explanations on pages 20–21.

1. Which of the following is the primary advantage of using web-based electronic data interchange (EDI) for communication of transactions?

(A) There is more flexibility in transaction formats.

(B) It lowers the cost per transaction. (C) It eliminates translation of transactions. (D) A larger number of transactions are

supported.

2. Quality remains an elusive concept in most organizations because:

(A) it depends on customer perception. (B) there are many quality philosophies.

(C) it is everyone’s responsibility. (D) quality targets change frequently.

3. An example of the use of a third-party logistics (3PL) company would be when a company contracts with another company to:

(A) perform its shipping and receiving functions. (B) produce and deliver a major subassembly. (C) provide payroll services. (D) act as a sales agent in another country.

4. Which of the following is an expected benefit of implementing supply chain event management?

(A) It will reduce the need for supply chain performance reporting.

(B) It will improve forecasting accuracy. (C) It notifies partners when a deviation from

plans occurs. (D) It reduces the cost of communications

between partners.

5. Which of the following applications would enable a company to detect patterns in the preferences of a customer segment?

(A) Business intelligence (B) Advanced planning system (C) Sales force automation (D) Artificial intelligence

6. Cash-to-cash cycle time is a measure of how efficiently a company:

(A) recovers its investment in plant and equipment

(B) manages assets to generate cash flow (C) converts inventory into sales (D) collects on sales to customers

7. Which of the following types of inventory is used to protect against variations in supply and/or demand?

(A) Cycle stock (B) Transportation inventory (C) Safety stock (D) Anticipation inventory

8. Which of the following is typically a characteristic of strategic sourcing?

(A) It includes automation of contract management processes.

(B) It reduces the price of goods and services.


(C) A supplier receives all of the company’s orders for a product or product family.

(D) The focus of the relationship is on large transactions.

9. Which of the following measures would be most appropriate for trading partners to use to assess the delivery performance of the manufacturer of items built to forecast?

(A) Percentage of items shipped within the final assembly lead time.

(B) Percentage of orders shipped complete within 24 hours of their receipt.

(C) Number of items shipped within 24 hours of their receipt.

(D) Revenue from orders shipped in a week.

10. Which of the following is an expected benefit of collaborative supply chain management?

(A) Maximizing the performance of the firm (B) Reducing the number of competitors (C) Increasing scope of operations (D) Synchronizing supply and demand

(Answers listed on pages 20–21.)


Answers to Sample Questions Note: References to the content outline appear in parentheses.

1. B (IIF1) B is the best choice because a web-based EDI system would eliminate the cost of a private or value-added network. A is not the best choice because the EDI transaction formats are independent of the network used for transmission. C is not the best choice because the transactions still must be translated to and from the standardized format. D is not the best choice because the standards are independent of the transmission method used.

2. A (IIIE) A is the best choice because the customers are the ultimate judges of quality and they may have differing requirements and priorities. B is not the best answer because the philosophies have similar definitions of quality and address how to improve it. C is not the best choice because the fact that it is everyone’s responsibility has nothing to do with the concept of what is quality. D is not the best choice because targets should change once they have been achieved.

3. A (IE2) A is the best choice because a 3PL company is a company that manages part or all of a company’s product delivery operations and shipping is part of the product delivery operations. B is not the best choice because neither producing the subassembly nor delivering it is part of the company’s product delivery operations. C is not the best choice because payroll services are not a part of the company’s product delivery operations. D is not the best choice because selling does not necessarily include any delivery operations.

4. C (IIF2) C is the best choice because supply chain event management monitors the supply chain and notifies designated individuals when specified events or exceptions occur or when trends are recognized. A is not the best choice because it enables performance reporting but does not reduce the need for it. B is not the best choice because supply chain event management itself does not affect any specific application. D is not the best choice because supply chain event management does not directly affect the amount or cost of communications among partners.

5. A (IIH2) A is the best choice because business intelligence applications collect, organize, and analyze information. Use of these applications on customer data would allow the company to detect patterns in the data. B is not the best choice because advanced planning systems address operations rather than customers. C is not the best choice because sales force automation does not capture or organize the data required to detect patterns in customer preferences. D is not the best choice because artificial intelligence applications are intended to learn and reason like humans to address specific problems.

6. B (IA5) B is the best choice because the definition of cash-to-cash cycle time is that it is an indicator of how efficiently a company manages assets to improve cash flow. It is the inventory days + accounts receivable days – accounts payable days. A is not the best choice because cash-to-cash cycle time does not consider the investment in plant and equipment. C is not the best choice because it is limited to the inventory days component of cash-to-cash cycle time. D is not the best choice because it is limited to the accounts receivable component of cash-to-cash cycle time.

7. C (ID) C is the best choice because safety stock is maintained to protect against variability in either supply or demand. A is not the best choice because cycle stock is related to lot sizing. B is not the best choice because transportation inventory is inventory that is in transit between locations. D is not the best choice because anticipation inventory is inventory held to cover trends or planned events, such as promotions or plant shutdown.

8. A (II) A is the best choice because strategic sourcing focuses on the long-term relationship and, from an information technology perspective, typically includes automation of contract management. B is not the best choice because the focus is on the total cost of ownership rather than on the quoted price. C is not the best choice because strategic sourcing can include contracting with more than one partner for a part or family of parts to reduce the risk of disruptions. D is not the best choice because the focus of the relationship is on a long-term relationship between the partners rather than on individual transactions.


9. B (IIIB3) B is the best choice because the items are being produced to forecast and should be shipped from stock shortly after receipt of the order. A is not the best choice because the final assembly lead time should not be needed before shipment because the items are produced to forecast. C is not the best choice because it is a measure of the number of items shipped and there is no indication of the actual number of items that were ordered. D is not the best choice because revenue is a financial measure, but does not indicate delivery performance.

10. D (IIIA) D is the best choice according to the APICS Dictionary definition of supply chain management. A is not the best choice because SCM should improve the performance of the entire chain, not a single member of the chain. B is not the best choice event though it may be an outcome of collaborative supply chain management. C is not the best choice because there is no direct relationship between collaborative supply chain management and the scope of operations for one of the partners.