Supply Chain Sourcing, Manufacturing and Logistics
Domain 3 covers source-to-deliver execution: sourcing strategy and supplier selection, manufacturing systems and quality, and logistics mode and Incoterms decisions. Questions test trade-offs, not definitions in isolation.
Sourcing
Start with make/buy and category strategy. Use RFI for capability, RFQ for defined specifications, RFP for solutions. Evaluate with a weighted scorecard, then calculate total cost of ownership (TCO): price, freight, duty, inventory, quality, warranty, administration, risk, and disposal. Contract type should match uncertainty: fixed-price for stable specifications; cost-reimbursable or incentive contracts when scope is uncertain.
Manufacturing and quality
Lean focuses on value-stream waste, pull/Kanban, takt, setup reduction, and JIT. Theory of constraints focuses on the bottleneck: identify, exploit, subordinate, elevate. Quality tools include SPC control charts, process capability, acceptance sampling (AQL), and Six Sigma DMAIC. Master scheduling and finite/infinite capacity planning connect demand to the shop floor.
Logistics
Mode choice trades speed, cost, reliability, capacity, and emissions. Incoterms 2020 allocate cost, risk, and obligations. Under FOB, risk passes when goods are on board; under CIF, the seller pays freight and insurance but risk still passes at origin; under DDP, the seller bears import duty and delivery. Pipeline inventory is part of the logistics cost.
Worked example: Weighted supplier scorecard: price 40%, quality 25%, delivery 20%, sustainability 15%. Supplier A scores 80, 90, 70, 60 = 32 + 22.5 + 14 + 9 = 77.5. Supplier B scores 70, 95, 85, 80 = 28 + 23.75 + 17 + 12 = 80.75. B wins despite a weaker price score. If the buyer instead used lowest price only, A might win; the scorecard makes the trade-off explicit.
Traps: confusing Incoterms cost transfer with risk transfer; choosing the lowest price over TCO; applying lean pull to highly variable demand without buffers; ignoring pipeline and safety inventory in mode choice; forgetting that DDP shifts import compliance to the seller.