Supply Chain Management
What to know
Supply chain management spans the flow of materials, information, money, and risk from suppliers to customers. The exam focuses on how quality management extends outside the plant.
Supplier management is a lifecycle: identify needs, evaluate potential suppliers (quality system, capability, capacity, financial health, delivery, ethics), select, qualify, monitor performance, develop, and exit. Selection on lowest price alone is almost always the wrong answer; total cost of ownership - price plus freight, inspection, inventory, rework, downtime, and risk - is the correct lens.
Know the difference between supplier certification (you trust the system, so you reduce or eliminate incoming inspection) and routine inspection (you screen output but build no capability). Supplier development means helping a struggling but strategically important supplier improve rather than simply switching.
Monitoring tools: supplier scorecards weighted on quality, delivery, cost, and responsiveness; supplier audits; first article inspection; PPAP for production part approval in automotive-style chains. Sourcing strategy: single source (leverage and partnership, but risk) versus multiple sources (resilience, less leverage).
Chain-level concepts: just-in-time and kanban pull, the bullwhip effect (demand distortion amplified upstream), inventory types, lead time, logistics, and risk management - single-source exposure, counterfeit parts, and ESG issues such as conflict minerals.
Traps: answering 'increase incoming inspection' when the question asks how to improve a supplier's capability; forgetting that the customer's customer is part of the chain.
Worked example
One supplier prices at $4.10 versus $3.85 for an alternative, but the cheaper source has a 3% incoming reject rate and adds $0.30 per unit in inspection and rework. At 100,000 units, the incumbent wins on total cost of ownership.