CIPS L4m3 Commercial Contracting · Free Practice Question Medium
Question 5
Krueger is implementing a just-in-time (JIT) mechanism for some categories. Which Key Performance Indicators (KPIs) should be included in their contract?
1. Delivery defect rate
2. Supplier lead time
3. Customer satisfaction score
4. Rate of return on investment
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A
2 and 3 only
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B
1 and 3 only
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C
2 and 4 only
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D
1 and 2 only
Reveal correct answer
Correct answer: D
Explanation
For a company like Krueger implementing a just-in-time (JIT) mechanism, the focus is typically on efficiency and minimizing waste in the supply chain. Therefore, the most relevant Key Performance Indicators (KPIs) to include in their contract would likely be:
Delivery defect rate: This measures the quality of the deliveries and is crucial for JIT as defects can cause significant disruptions.
Supplier lead time: This measures how long it takes for the supplier to fulfill an order, which is a core aspect of JIT to ensure timely production.
Given these considerations, the correct answer would be:
1 and 2 only. These KPIs directly impact the effectiveness of the JIT mechanism by ensuring high-quality, timely deliveries, which are essential for reducing inventory and waste. Customer satisfaction score and rate of return on investment are important metrics, but they are not as directly related to the operational efficiency of JIT implementation.
Reference: CIPS L4M3 study guide page 98-103 / The new syllabus 2024
LO 2, AC 2.2
Discussion
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