Supply Chain Management Interview Questions and Answers

Q1. What is the definition of supply chain management?

Ans: Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.

Q2. What are the key elements of supply chain management?

Ans: Supply chain management also covers coordination and collaboration with channel partners, such as customers, suppliers, distributors and service providers.

• Demand Management. ...
• Communication. ...
• Integration. ...
• Collaboration.

Q3. What is the main goal of supply chain management?

Ans: Goal 1: Achieve Efficient Fulfillment. On the most basic level, the purpose of supply chain management is to make inventory readily available in customer facing positions to fulfill demand. ... Such steps will help the organization reduce waste, drive out costs, and achieve efficiencies in the supply chain.

Q4. What is Logistics?

Ans: Logistics is used more broadly to refer to the process of coordinating and moving resources – people, materials, inventory, and equipment – from one location to storage at the desired destination. The term logistics originated in the military, referring to the movement of equipment and supplies to troops in the field.

Q5. What are the Logistics Components

Ans: The management of logistics can involve some or all of the following business functions, including:

• Inbound transportation
• Outbound transportation
• Fleet management
• Warehousing
• Materials handling
• Order fulfillment
• Inventory management
• Demand planning

Q6. Why Logistics is Important

Ans: Although many small businesses focus on the design and production of their products and services to best meet customer needs, if those products cannot reach customers, the business will fail. That’s the major role that logistics plays.
But logistics also impacts other aspects of the business, too.
The more efficiently raw materials can be purchased, transported, and stored until used, the more profitable the business can be. Coordinating resources to allow for timely delivery and use of materials can make or break a company.
And on the customer side, if products cannot be produced and shipped in a timely manner, customer satisfaction can decline, also negatively impacting a company’s profitability and long-term viability.

Q7. Difference between Logistics vs. Supply Chain Management

Ans: Logistics and supply chain management are terms that are often used interchangeably, but they actually refer to two aspects of the process.

Logistics refers to what happens within one company, including the purchase and delivery of raw materials, packaging, shipment, and transportation of goods to distributors, for example. While supply chain management refers to a larger network of outside organizations that work together to deliver products to customers, including vendors, transportation providers, call centers, warehouse providers, and others.

Q8. What is affreightment?

Ans: Affreightment (from freight) is a legal term used in shipping. ... The charterer agrees to pay a specified price, called freight, for the carriage of the goods or the use of the ship. A ship may be let, like a house, to a person who takes possession and control of it for a specified term.

Q9. What are the activities performed at operational level in logistics?

Ans: The major activities can be divided in three parts – pick-up from supplier, storage or warehousing & distribution to end customer as per demand. The sub activities include in the whole operations are;

• pick-up of the goods from supplier
• packaging
• transportation via air, sea and road
• customs clearance
• delivery of the goods
• warehousing
• Quality Control/ Quality Assurance
• Sorting of the goods
• inventory management
• stock replenishment
• distribution of the stores
• return shipment handling

Q10. Explain procedure to pay to pay cycle?

Ans: Procure to pay (purchase to pay or P2P) is the process of obtaining and managing the raw materials needed for manufacturing a product or providing a service. It involves the transactional flow of data that is sent to a supplier as well as the data that surrounds the fulfillment of the actual order and payment for the product or service. According to the Chartered Institute of Purchasing and Supply, procure to pay should be a seamless process from point of order to payment. Technology can assist this process.

The goal of a procure-to-pay software system is to automate processes by introducing efficiency controls. For instance, to enforce buying controls, the software might cross-reference purchasing budgets to ensure compliance with pre-defined buying limits. A requisition that was within pre-defined limits would be programmatically routed for approval, converted into a purchase order once approved and immediately sent to the correct supplier by email.

A sophisticated procure to pay system is capable of extracting invoice and payment data from a general ledger, enterprise resource planning (ERP) or customer relationship management (CRM) systems while also accepting transaction data from banks, vendors, shipping and other outside sources and reconciling complex and multiple supplier statements to payments and good received.

Q11. What is a SKU in supply chain?

Ans: In the field of inventory management, a stock-keeping unit or SKU refers to a specific item stored to a specific location. The SKU is intended as the most disaggregated level when dealing with inventory. All units stored in the same  SKU are supposed to be indistinguishable.

Q12. What is compliance labels?

Ans: A label for a product which complies with the standards set for that industry, or in the case of an import, which meets the label specifications set by the applicable government agencies of the importing and exporting countries.