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

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).

The hierarchy extendsbeyond Black Belt, includingMaster Black BeltsandChampions, who provide leadership and strategic direction.

Short cited term: “Master Black Belt and Champion above Black Belt.” (L5M7 Study Guide, p. 153)

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)

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)

Quality assurance (QA)isproactive, including activities such assupplier approval/vetting;inspectionis reactive sampling of outputs. Short extract: “QA—proactive systems e.g., supplier approval; inspection—sampling outputs.” (L5M7 Study Guide, p.123)

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)

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)

Process mappingvisually defineshow processes operate, revealinginefficiencies, duplication, and waste, and clarifies thecurrent process flow and responsibilities.

Short cited term: “identifies inefficiencies and highlights process waste” (L5M7 Study Guide, p. 73).

Ahierarchical culturevaluesstability, control, and formal structure, with defined authority levels.

Short cited extract: “Hierarchy culture – stability, rules, and control mechanisms.” (L5M7 Study Guide, p. 60)

TheKraljic Matrixplotssupply riskagainstprofit (cost) impactto determine supplier strategy (leverage, bottleneck, routine, strategic).

Short cited extract: “Matrix axes – profit impact vs supply risk.” (L5M7 Study Guide, p. 83)

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)

BPRexamines and redesignsworkflows and processesto remove waste and maximise efficiency and customer value.

Short cited extract: “BPR – radical review of workflows to achieve major efficiency improvements.” (L5M7 Study Guide, p. 111)

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)

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)

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)

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).

Differentiation Strategyinvolves offering products withunique attributesthat customers value and are willing to pay more for, thus achieving competitive advantage.

Short cited term: “differentiation – unique product features at premium price.” (L5M7 Study Guide, p. 177)

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)

Non-critical itemsinvolve low value and low risk, usually managed viatransactional or arm’s-lengthrelationships where trust plays a minor role.

Short cited term: “non-critical = low trust required.” (L5M7 Study Guide, p. 221)

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)

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

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)

Local sourcingoffersenvironmental benefits(lower transport footprint) andeasier access for service or maintenance, enhancing responsiveness.

Short cited extract: “Local sourcing provides reduced environmental impact and proximity for support.” (L5M7 Study Guide, p. 70)