CPIM Practice Exam

What does the term 'physical supply' refer to in supply chain management?

1. The movement and storage of goods from suppliers to manufacturing

2. The financing of supply chain activities

3. The marketing strategies for delivering products

4. The wages paid to workers in the supply chain

The correct answer is: The movement and storage of goods from suppliers to manufacturing

The term 'physical supply' in supply chain management specifically refers to the processes involved in the movement and storage of goods as they transition from suppliers to manufacturing facilities. This encompasses various activities, including transportation, warehousing, and inventory control, all critical for ensuring that the right materials are available at the right time for production. Effective management of physical supply is vital for maintaining production schedules, minimizing costs, and maximizing efficiency within the supply chain. By focusing on this aspect, organizations can better coordinate their logistics, leading to improved service levels and operational performance. The other options focus on different facets of supply chain management. Financing deals with managing the economic aspects of supply activities, marketing strategies are concerned with how products are promoted and sold, and wages pertain to labor costs rather than the flow of goods. These elements, while important, do not embody the core idea of physical supply, which is centered around the logistics of transporting and storing materials.