Module 1 Summative assessment 1.2
MODULE 1
SUMMATIVE ASSESSMENT 1.2
MODEL ANSWER
300 MARKS
THIS ASSESSMENT COVERS:
UNIT 336706 - ESTABLISH A COMPETITIVE SUPPLY CHAIN INFRASTRUCTURE
UNIT 336705 - DEMONSTRATE AN UNDERSTANDING OF THE FUNDAMENTALS OF INTERNATIONAL
TRADE AND EXECUTE INTERNATIONAL PURCHASES
UNIT 336713 - DEMONSTRATE AN UNDERSTANDING OF THE SUPPLY CHAIN ENVIRONMENT
UNIT 336719 - MANAGE RELATIONSHIPS BETWEEN SUPPLY CHAIN PARTNERS
UNIT 336709 - EVALUATE THE INFLUENCES OF KEY COMPONENTS IN A SUPPLY CHAIN
UNIT 252267- NEGOTIATE WITH SUPPLIERS
UNIT 336703 - DESIGN A DISTRIBUTION NETWORK
UNIT 336712 - OUTLINE THE PHILOSOPHY OF SUPPLY CHAIN MANAGEMENT
Please read the following case study and answer the 29 questions that follow.
supplymanagement.com

Articles
Featured - 09:00, 2nd September, 2013
SA wine industry lacks supply chain expertise
Version 1 - 27 September 2013
Page No: 1
Module 1 Summative assessment 1.2
Better understanding of supply chain management would make the South African wine
industry more competitive, according to research.
The study Wine Supply Chain Survey 2012 – Findings and Challenges was carried out
by academics at Stellenbosch University.
It concluded that most South African wine cellars lack skills and experience in the
supply chain.
“Many cellars don’t yet recognise the existence of supply chains in their organisation;
therefore they don’t have accurate quantitative supply chain information available. Very
few of the cellars engaged in the field of supply chain management, and most are thus
in the very early stages of supply chain maturity.”
The benchmarking study collected supply chain information from the country’s
Breedekloof, Robertson, and Worcester wine regions, which make up 41.5 per cent of
South African wine production.
The report said skills and experience to handle logistics activities such as packaging,
storage, transport and support service were lacking in many cellars
Please answer the following 29 questions:
1. How would you plan the site location with relevance to the wine industry in the Western Cape? (10
marks)
2. How would you design the facility layout with relevance to the wine industry in the Western Cape? (10
marks)
3. How would you design an effective and competitive logistics system with relevance to the wine industry
in the Western Cape? (10 marks)
Version 1 - 27 September 2013
Page No: 2
Module 1 Summative assessment 1.2
4. How would you initiate and participate in the establishment of supply chain organisational structures
with relevance to the wine industry in the Western Cape? (10 marks)
5. How would you analyse the fundamentals of international trade with relevance to the wine industry in
the Western Cape? (10 marks)
6. How would you assess the role of trade policy in facilitating or inhibiting international trade with
relevance to the wine industry in the Western Cape? (10 marks)
7. How would you analyse and apply the international purchasing process with relevance to the wine
industry in the Western Cape? (10 marks)
8. How would you analyse and apply the fundamentals of counter trade with relevance to the wine
industry in the Western Cape? (10 marks)
9. How would you interpret the organisational strategy and identify the issues and focuses to be included
in relationship management strategies with relevance to the wine industry in the Western Cape? (10
marks)
10. How would you analyse the relationship between supply chain partners and effective contract
management with relevance to the wine industry in the Western Cape? (10 marks)
11. How would you build and maintain good customer relationships with relevance to the wine industry in
the Western Cape? (10 marks)
12. How would you analyse ethical and professional issues relating to supplier and customer relations
with relevance to the wine industry in the Western Cape? (10 marks)
13. Can you with specify the difference between centralised and decentralised procurement relevance to
the wine industry in the Western Cape? (5 marks)
14. Can you analyse the components and application of total cost of ownership (TCO) principles with
relevance to the wine industry in the Western Cape? (10 marks)
15. How would you conduct a supply market analysis with relevance to the wine industry in the Western
Cape? (10 marks)
16. How would you identify and analyse the process of selecting and evaluating suppliers with relevance
to the wine industry in the Western Cape? (10 marks)
17. How would you evaluate key influences on a supply chain environment with relevance to the wine
industry in the Western Cape? (10 marks)
18. How would you analyse and implement stakeholder relationships within the supply chain with
relevance to the wine industry in the Western Cape? (5 marks)
Version 1 - 27 September 2013
Page No: 3
Module 1 Summative assessment 1.2
19. How would you obtain and analyse information on the supply chain with relevance to the wine
industry in the Western Cape? (5 marks)
20. How would you apply improvements to the supply chain with relevance to the wine industry in the
Western Cape? (10 marks)
21. Describe the processes & principles used when negotiating with the suppliers with relevance to the
wine industry in the Western Cape? (10 marks)
22. Design a plan to negotiate with the suppliers with relevance to the wine industry in the Western
Cape? (10 marks)
23. Discuss how you would negotiate and review negotiations with the suppliers with relevance to the
wine industry in the Western Cape? (10 marks)
24. What way would you establish distribution relationships with different stakeholders with relevance to
the wine industry in the Western Cape? (10 marks)
25. How would you design a distribution network with relevance to the wine industry in the Western
Cape? (15 marks)
26. How would you analyse the difference between distribution channels and distribution networks with
relevance to the wine industry in the Western Cape? (15 marks)
27. How would you interrogate the inter-relationship between the concept of Supply Chain Management
and Demand, Acquisitions, Distribution and Logistics with relevance to the wine industry in the Western
Cape? (15 marks)
28. How would you map the Supply Chain and describe the benefits of applying the philosophy with
relevance to the wine industry in the Western Cape? (15 marks)
29. How would you identify areas within a supply chain that require improvements with relevance to the
wine industry in the Western Cape? (15 marks)
*********************************************************************************
Version 1 - 27 September 2013
Page No: 4
Module 1 Summative assessment 1.2
Marking weighting - in respect of the weighting of the assessments - the Assessor should
determine that the key knowledge criteria has been expressed and described within the
responses to equal approximately 50% of the marks and thereafter award the balance of 50% of
the marks to the application of that knowledge by virtue of analysis, comparison, critique and any
other.
The Blooms Taxonomy Rose herewith may be utilised to identify the appropriate verb for the
application of knowledge.
MODEL ANSWER
Q1. The student must assess the lean supply model as a prescription for supply relationships
The student must decide on the site location by utilising specific tools and methods in
accordance with general procedures.
The student must identify and evaluate critical factors to determine their influence a site location
decision.
The student must use a structured rational process to facilitate the decision regarding site
location using a simulated or real scenario.
Q2. The student must analyse the objectives of facility layouts to inform decisions on the tools
and methods to use for the design process.
The student must identify and evaluate processes and products that will impact on facility layouts
The student must design facility layouts in accordance with materials handling requirements and
by illustrating traditional or modern layouts to suit specific product and process requirements.
Q3. The student must evaluate concepts of logistics systems to determine their influence on
design processes (Concepts include but are not limited to logistics and a logistics system, role of
transportation in logistics, relationship with marketing, alternative transportation modes,
intermodal combinations and other transportation options, impact of regulation and deregulation
on carriers and shippers, cost of transportation, measuring the performance and effectiveness of
transportation, international dimensions of transportation, major transportation management
activities of carriers and shippers, computer technology in facilitating the effectiveness of
transportation, modes of transport and designing transportation networks and system, resource
requirements planning, control of the movement of material and products, distribution networks)
The student must design an effective and competitive logistics system in line with the
organisational strategy, resource requirements planning and in accordance with parameters of
the site location.
Version 1 - 27 September 2013
Page No: 5
Module 1 Summative assessment 1.2
Q4. The student must identify and source information requirements for effective supply chain
management (information requirements include but are not limited to the evaluation of the
relationship between data and information).
The student must determine key elements that define organisational structures to evaluate their
impact on supply chain infrastructure.
The student must evaluate concepts of supply chain infrastructure to determine their influence on
the establishment of supply chain organisational structures (Concepts include but are not limited
to characteristics of a bureaucracy, matrix organisational structure, characteristics of a virtual
organisation, benefits of a boundary-less organisation, mechanistic and organic organisational
structures, behavioural implications of different organisational designs.
The student must develop an organisational structure in a given scenario that will facilitate
effective supply chain management.
Q5. The student must analyse the concept of international trade to reflect its importance, purpose
and implications for a country (Analysis includes points of departure of traditional and modern
trade theories, advantages and disadvantages, impact on current and future needs, Incoterms,
such as FOB, FOR, FAS, CIF; counter trade and forward cover on pricing).
The student must identify the current and past direction of international capital flows are
identified and evaluated to determine trends.
The student must evaluate international trade to reflect the fundamental principles underlying
foreign exchange markets and exchange rates.
The student must assess the basics of balance of payments accounting to reflect the process of
classification and the functioning of balance of payments.
The student must analyse the South African current international trade situation to reflect it
impacts on economic growth and the challenges facing SA in terms of international trade.
Q6. The student must assess the role of trade policy indicating how current South African trade
policy is impacting on current and future international trade and on economic growth.
The student must evaluate fundamental concepts of trade policy to determine their influences on
and implications for international trade (fundamental concepts include but are not limited to
protectionism, optimum tariff theory, market failures, micro-economic implications of trade policy,
impact of regionalisation).
Version 1 - 27 September 2013
Page No: 6
Module 1 Summative assessment 1.2
The student must evaluate the application of volume restrictions on trade to determine its impact
on economic growth.
Q7. The student must produce a flow diagram of the international purchasing process to reflect its
elements.
The student must identify the key role players to determine their roles in the international trade
process.
The student must utilise the documentation relevant to the different role players in accordance
with their purpose.
The student must apply the international trade process whilst dealing with the legal implications
for the organisation, supply market and country.
The student must make recommendations of suitable precautionary measures to limit risks.
Q8. The student must analyse the concepts and aims of counter/reciprocal/barter trade to
determine their advantages and disadvantages.
The student must execute counter trade transactions to exchange goods, services, or ideas for
money.
The student must examine the impact of forward cover on pricing to determine the impact on
consumption, investment and growth and apply forward cover in accordance with specific
purposes and principles.
Q9. The student must interpret the overall business strategy of an organisation to inform the
development and strengthening of strategic supply chain partner relationships.
The student must analyse the importance of the various supply chain components to determine
their effect on the business strategy.
The student must identify various internal and external stakeholders to determine their role in the
supply chain.
The student must identify key relationship issues that must be addressed to optimise profit
Q10. The student must analyse the need for better contracts management to ensure improved
corporate governance.
Version 1 - 27 September 2013
Page No: 7
Module 1 Summative assessment 1.2
The student must examine the process that will facilitate effective contracting to improve turnaround times.
The student must evaluate various processes and tools for contract management to reflect the
advantages and disadvantages of each.
The student must assess processes for the effective monitoring and controlling of supplier
performance.
The student must recommend additional approaches to improve supplier relationships to ensure
optimal utilisation of supplier networks.
Q11. The student must discuss ways in which suppliers can be assisted to reflect how they could
maximise their effective contributions within the supply chain (the discussion needs to include
aspects related to strategic importance of supplier development, World Class Supplier
Development, best practice applications of this process, advantages and pitfalls, limitations).
The student must follow practical processes for ensuring effective customer relationships within
the supply chain.
The student must produce and negotiate Service Level Agreements to reflect the interests of both
the organisation and the customer.
The student must implement customer relationships through processes and strategies that
facilitate the building and maintaining of effective long term relationships.
The student must identify internal and external customers to determine activities required for
building and maintaining relationships.
Q12. The student must interrogate and examine ethical and professional dilemmas to ensure
compliance to the Codes of Ethics.
The student must analyse benchmarks regarding the establishment of policies and procedures to
ensure ongoing ethical conduct.
The student must examine ethical and professional issues to reflect their relationship to corporate
governance and legal requirements.
The student must make recommendations to reflect actions that will enhance relationships within
ethical parameters.
Version 1 - 27 September 2013
Page No: 8
Module 1 Summative assessment 1.2
Q13. The student must show the differences between centralised and decentralised procurement
through a flow diagram of both approaches.
The student must list the advantages/disadvantages of both centralised and decentralised
procurement to reflect their impact on supply chain.
The student must indicate the different circumstances under which to purchase centrally and decentrally.
The student must analyse centralised and decentralised procurement in relation to their impact on
supply chain management.
Q14. The student must analyse the TCO philosophy and principles to understand the true cost of
doing business with a supplier, going well beyond price.
The student must analyse purchasing prices to reflect its influence on TCO.
The student must analyse the process of purchasing cost analysis in order to reflect the cost
elements.
The student must evaluate potential areas of cost inefficiencies to determine the effect on the
bottom line and where spend can be optimised.
The student must analyse cost drivers to determine their impact on the TCO and make process
recommendations that relates to sourcing in terms of TCO.
Q15. The student must assess supply market conditions to determine market segmentation that
informs the sourcing strategy.
The student must categorise company spending in different supply market conditions.
The student must use a model to do an industry/supply market analysis resulting in a sourcing
strategy.
The student must evaluate the types of buyer-supplier relationships to inform strategies for
growing customer value and profitability.
Q16. The student must assess the characteristics of a good supplier to determine their suitability
against business needs and buyer specification.
Version 1 - 27 September 2013
Page No: 9
Module 1 Summative assessment 1.2
The student must determine sources of information for finding suppliers using a variety of
resources including supplier/buyer matching systems.
The student must analyse a systematic process to select the right supplier for its capability to
deliver against business and market needs.
The student must evaluate various sourcing policies to reflect their influence on the selection of
suppliers.
The student must use various methods to evaluate the performance of suppliers and identify
those key performance areas for the evaluation of suppliers' performance.
The student must identify areas of ongoing development of suppliers in order to create value for
money and an awareness of the interdependency of the relationship.
Q17. The student must discuss the principles of physical distribution management and logistics
to reflect their role in and impact on supply distribution networks (Key influences include but are
not limited to physical distribution and logistics, procurement function, materials management
function, strategic supply network).
The student must analyse the procurement management function to reflect its relationship with
different aspects influencing supply chain (Aspects include but are not limited to the concept of
procurement, supplier selection, purchasing and valued supplier-partners, features of supplierpartnerships, global sourcing, purchasing policies and procedures).
The student must analyse the materials management function to reflect its relationship with
different aspects influencing supply chain (Aspects include but are not limited to the concept of
materials management, inventory management systems, ROP and lot sizes, EoQ, ERP/MRP
systems).
The student must analyse the criteria for the design of a strategic supply network to reflect their
influence on the purchasing environment (Strategic supply network include but are not limited to
supply network perspective, outsourcing, location decisions, facility layout).
Q18. The student must analyse the importance of working with suppliers to determine the impact
of relationships on purchasing contracts.
The student must obtain and analyse information on the supply chain through the utilisation of
operational relationships.
Version 1 - 27 September 2013
Page No: 10
Module 1 Summative assessment 1.2
The student must maintain and improve operational relationships within the supply chain through
clear communications and options to improve supply chain processes.
The student must make and communicate recommendations to stakeholders regarding
opportunities to develop operational relationships to benefit the supply chain.
The student must identify and communicate problems with supply chain relationships according
to organisational procedures.
The student must monitor supply chain processes to ensure operational relationships are suitable
for maintaining the performance of the supply chain.
Q19. The student must identify the processes that comprise the supply chain in order to reflect
the information that needs to be obtained (Processes include but are not limited to procurement,
logistics, operations management, transportation, and export and import systems).
The student must identify the processes that comprise the supply chain in order to reflect the
information that needs to be obtained (Processes include but are not limited to procurement,
logistics, operations management, transportation, and export and import systems).
The student must access suitable sources of data in order to collate and prepare data for the
analysis.
The student must analyse the prepared data on the organisation's supply chain using agreed
analysis methods and procedures.
The student must identify key findings and provide results according to agreed formats and
schedules.
The student must identify and communicate problems with the supply chain in accordance with
organisational procedures.
Q20. The student must obtain information on the improvements being introduced to the supply
chain in accordance with organisational procedures.
The student must apply improvements to the supply chain according to the implementation plan.
The student must collate and prepare data to reflect the impact of improvements to the supply
chain.
Version 1 - 27 September 2013
Page No: 11
Module 1 Summative assessment 1.2
The student must analyse data on the impact of improvements to the supply chain by utilising
agreed analysis methods and procedures.
The student must identify and communicate problems relating to the application of the
improvements to the supply chain in accordance with organisational procedures.
Q21. The student must explain the philosophy of negotiation in terms of the values and approach
of the organisation.
The student must describe the various circumstances for negotiations along with their objectives
as it applies to the organisation.
The student must describe the relevant negotiation processes used in the organisation according
to the process for negotiating with suppliers.
Q22. The student must determine the objectives of the negotiation in terms of required outcomes
as determined by the organisation.
The student must identify factors that are/are not negotiable in terms of the negotiation to take
place.
The student must plan the strategy to be used in terms of the required information and resources
required as it applies to the organisation.
The student must explore possible strategies of the other parties along with responses that might
be required from the negotiator in order to plan for negotiations.
The student must determine fallback positions and options as per planned negotiations as
required by the organisation.
Q23. The student must set the negotiating atmosphere in terms of the negotiating strategy of the
organisation.
The student must present proposals and counter proposals in a way that is clear and
understandable to all parties in line with organisation's strategy for suppliers.
The student must record the negotiation process and follow up points as required by the
organisation.
Version 1 - 27 September 2013
Page No: 12
Module 1 Summative assessment 1.2
The student must review the negotiation process and results in terms of the original objective set
by the organisation and to identify strengths and weaknesses in the negotiation process
The student must use the review to identify areas for development and make recommendations
for future improvement
Q24. The student must identify the various stakeholders involved in a distribution channel in
terms of their role in ensuring the effectiveness of the distribution process.
The student must evaluate the types of relationships that can exist within the distribution channel
to determine their purpose in a distribution network.
The student must establish distribution relationships in accordance with the benefits for the
organisation.
The student must link distribution relationships to specific supply chains within the organisation.
Q25. The student must design a distribution network through estimating the impact of the various
demand and supply strategies on the distribution network (demand and supply strategies include
centralised vs. decentralized).
The student must utilise the design process including the characteristics of centralised and
decentralized distribution through utilising the advantages and addressing the disadvantages of
each of these strategies for the organisation.
The student must include in the design process other strategies to optimise the effectiveness of
the distribution network (other strategies include but are not limited to direct shipping,
consolidation, bulk breaking).
The student must evaluate the financial impact of various distribution alternatives to determine
their influence on the success of the organisation.
The student must define and analyse various ownership options in distribution to reflect how they
would contribute to the success of the distribution network (options include but not limited to Full
ownership, lease, sub-contracting, consignment stock).
The student must show how the design process includes the financial and business advantages
and disadvantages of the various ownership options within distribution.
The student must select the types of distribution centres in accordance with distribution
requirements.
Version 1 - 27 September 2013
Page No: 13
Module 1 Summative assessment 1.2
Q26. The student must analyse the difference between distribution channels and networks to
indicate how each fits into the distribution process.
The student must show how the analysis process reflects the requirements of a distribution
channel and network that is appropriate for specific market conditions.
The student must complete the analysis process in accordance with a given organisational
strategy and marketing plans.
The student must communicate the results to all stakeholders within the supply chain
management environment.
Q27. The student must analyse the definition of Supply Chain Management in order to
demonstrate an understanding of the challenges facing organisations when they attempt to
implement a supply chain.
The student must analyse the evolution of the concept of supply chain management to inform
recommendations on a possible change process that would benefit organisations.
The student must analyse the concepts of demand, acquisition, distribution and disposal
The student must analyse the logistics function in order to demonstrate an understanding of
change processes facing organisations.
The student must evaluate supply chain management to determine its impact on organisational
objectives.
Q28. The student must identify the strategic, tactical and operational issues in supply chain
management to describe the relationship of each to the philosophy.
The student must discuss the importance of information exchange across the supply chain to
highlight its impact on reaching strategic business imperatives.
The student must outline key steps to determine potential challenges in creating an effective
supply chain.
The student must analyse the purchasing function in organisations to reflect its importance for
the supply chain.
Version 1 - 27 September 2013
Page No: 14
Module 1 Summative assessment 1.2
The student must conduct a value analysis to provide guidelines for ethical behaviour in
purchasing.
The student must examine supplier partnerships to reflect how they are advantageous to an
organisation.
The student must produce a map of a supply chain to indicate its location within a specific
organisation.
The student must evaluate relationships between the various processes in the supply chain in
order to reflect ways of applying the supply chain philosophy.
Q29. The student must measure improvements against their benefits and possible drawbacks to
the supply chain
The student must examine the typical challenges facing each of the supply chain processes to
determine improvement requirements.
The student must identify possible ways in which the process challenges can be addressed
through the application of the supply chain philosophy.
The student must assess the application of a Supply Chain Management Philosophy to determine
how it contributes to addressing specific challenges faced by demand, acquisition, distribution
and disposal.
Version 1 - 27 September 2013
Page No: 15
Module 1 Summative assessment 1.2
Version 1 - 27 September 2013
Page No: 16