Supply Management — 2023

KNEC Diploma in Supply Chain Management, Module II. Original theory examination questions with explained model answers for revision.

March/April 2023

Paper codes: 2903/203
Time: 3 hours
Instructions: Answer any FIVE questions. All questions carry equal marks. Answer the questions in English.

Question 1(a) — 10 marks

The supplies management department is required to plan for materials used in the operations of an organization. Outline five objectives of this requirement.

Model answer

  1. Ensure materials are available when operations need them.
  2. Obtain suitable quality and quantities without excessive stock.
  3. Coordinate purchasing, production, storage and finance activities.
  4. Estimate expenditure and control materials-related costs.
  5. Reduce shortages, emergency purchases, waste and production interruptions.

Question 1(b) — 10 marks

Packaging may significantly increase the unit price of goods in an organization. Explain five measures that a supply manager may take to reduce costs associated with packaging.

Model answer

  1. Right-size packages: avoid excess material and empty space while retaining adequate protection.
  2. Standardise designs: use a limited range of suitable sizes to simplify purchasing and handling.
  3. Reuse and recycle: adopt economical returnable packs or recycled inputs where hygiene and performance allow.
  4. Buy economically: consolidate requirements and compare suppliers on total cost and consistent quality.
  5. Reduce damage and waste: train packers and improve design so savings do not create greater product-loss or transport costs.

Question 2(a) — 10 marks

Outline five operational activities that a supply manager may undertake when planning for in bound logistics for an organization.

Model answer

  1. Determine required materials, quantities and receipt dates.
  2. Coordinate supplier dispatch schedules and order follow-up.
  3. Select transport modes, carriers and inbound routes.
  4. Arrange receiving, inspection, unloading and suitable storage capacity.
  5. Prepare and exchange delivery documents and inventory information needed to record receipts.

Question 2(b) — 10 marks

The management of a distribution company is expected to regularly review the performance of its physical distribution system. Explain five benefits that may accrue to the company from this practice.

Model answer

  1. Cost control: comparing actual expenditure with targets reveals expensive routes, handling or storage activities.
  2. Better service: tracking timeliness, completeness and damage identifies problems affecting customers.
  3. Improved utilisation: vehicle, warehouse and labour data show where capacity is wasted or overloaded.
  4. Corrective action: early performance warnings allow managers to investigate causes and adjust plans.
  5. Better future decisions: reliable historical results support realistic budgets, targets and distribution-network improvements.

Question 3(a) — 10 marks

A recent audit report in Jopo Limited revealed existence of efficiencies its transport system. Outline five features of such an inefficient system.

Model answer

The scan prints “efficiencies its transport system”, but the question explicitly asks for features of an inefficient system. The answer follows that instruction.

  1. Frequent late or missed deliveries.
  2. High transport cost per unit or kilometre without corresponding service improvement.
  3. Low vehicle load factors and excessive empty running.
  4. Frequent breakdowns, accidents or cargo damage.
  5. Inaccurate schedules, poor tracking and repeated customer complaints.

Question 3(b) — 10 marks

Explain five ways in which the supply management function in an organization may enhance efficiency of the marketing department.

Model answer

  1. Maintain availability: dependable stock allows marketing to fulfil customer orders.
  2. Assure quality: suitable materials and supplier controls support the product claims made to customers.
  3. Provide cost information: accurate purchasing and logistics costs help marketing set viable prices.
  4. Coordinate promotions: demand forecasts and advance notice allow supply to prepare stock for campaigns.
  5. Deliver reliably: effective distribution improves customer satisfaction and supports repeat sales.

Question 4(a) — 10 marks

Outline five circumstances under which containers may be considered inappropriate for packaging goods.

Model answer

  1. The consignment is too small for economical container utilisation and consolidation is unavailable.
  2. Goods exceed the dimensions or weight limits of available containers.
  3. Products require conditions that an available container cannot safely provide.
  4. Routes or destinations lack suitable lifting equipment, terminals or access.
  5. Hire, repositioning, delay and empty-return costs exceed the protection and handling benefits.

Question 4(b) — 10 marks

Explain five ways in which the supply management function may enhance efficiency in the supply logistics system of an organization.

Model answer

  1. Coordinate demand and supply plans to reduce shortages and excess inventory.
  2. Select reliable suppliers and carriers to improve continuity and delivery performance.
  3. Share accurate stock and order information across departments.
  4. Standardise packaging and handling arrangements to reduce movement time and damage.
  5. Monitor total logistics cost and service results and correct recurring weaknesses.

Question 5(a) — 10 marks

A supply officer intends to establish a monitoring plan for the distribution system in your organization. Advise on five aspects of the system that should be included in the monitoring plan.

Model answer

  1. Delivery reliability: on-time and complete order fulfilment.
  2. Distribution cost: transport, warehousing, order-processing and handling expenditure.
  3. Asset utilisation: vehicle load factors, empty running and storage-capacity use.
  4. Product condition: damage, loss, returns and delivery errors.
  5. Customer service: order lead time, complaints and response to delivery problems.

Question 5(b) — 10 marks

A warehouse manager in Bendo Limited intends to evaluate the performance of the warehousing system in the company. Explain five aspects of the system that the manager would cover when carrying our the task.

Model answer

  1. Inventory accuracy: compare physical quantities and locations with stock records.
  2. Space utilisation: assess effective use of floor and cubic storage capacity without unsafe congestion.
  3. Order-processing performance: measure picking accuracy, throughput and dispatch lead time.
  4. Cost and productivity: review cost per unit handled and output per employee or equipment hour.
  5. Safety and stock protection: assess accidents, damage, theft, deterioration and compliance with storage requirements.

Question 6(a) — 10 marks

Explain five factors that may hinder the management from adopting the integrated materials handling system in the operations of an organization.

Model answer

  1. High investment cost: equipment, facilities, systems and integration may exceed available funds.
  2. Limited skills: staff may lack the technical ability to design, operate or maintain the system.
  3. Incompatible processes or infrastructure: existing layouts and technologies may not connect effectively.
  4. Resistance to change: departments or employees may oppose altered responsibilities and working methods.
  5. Uncertain operating requirements: unreliable data, variable volumes and supply disruption make system design and coordination difficult.

Question 6(b) — 10 marks

Amb Limited has been experiencing challenges in reducing its stock levels leading to inefficiencies in the company. Outline five such challenges.

Model answer

  1. Unpredictable customer demand requiring larger safety stocks.
  2. Long or unreliable supplier lead times.
  3. Large minimum order quantities or quantity-discount commitments.
  4. Inaccurate stock records and weak demand forecasting.
  5. Obsolete, slow-moving or excess stocks that cannot readily be sold, returned or used.

Question 7(a) — 10 marks

Nomo Manufacturing Limited intends to construct a new warehouse for its goods. Outline five safety features that should be incorporated in the construction of the warehouse.

Model answer

  1. Adequate fire detection, firefighting provision and unobstructed emergency exits.
  2. Strong level floors and structures designed for the intended loads.
  3. Clearly separated pedestrian, vehicle and loading routes.
  4. Adequate lighting, ventilation and suitable control of hazardous storage areas.
  5. Safe access, protective barriers, secure loading bays and suitable escape signage.

Question 7(b) — 10 marks

Quota Enterprises has decided to adopt a team approach when designing its stock control system. Explain five reasons that may account for this decision.

Model answer

  1. Combined expertise: purchasing, production, stores, finance and users contribute different requirements.
  2. Better coordination: shared design reduces conflicting targets and disconnected records.
  3. More reliable decisions: members can challenge assumptions and identify overlooked risks.
  4. Greater acceptance: staff are more willing to use controls they helped develop.
  5. Faster problem solving: joint ownership makes it easier to resolve implementation issues across departments.
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