APICS Certified Supply Chain Professional (CSCP) — Question 417

Which supply chain activity would improve the cash flow cycle time of a manufacturing firm?

Answer options

• A. The manufacturer increases both revenue and profit by adding additional customers in regions not served in the past.
• B. As part of a strategic alliance, the manufacturer agrees to decrease net payment terms on the supplier's contracts.
• C. The manufacturer takes ownership of the inventory at the customer's retail outlet via a customer mandated vendor-managed inventory (VMI) program.
• D. The manufacturer reduces transit time on inventory owned by the firm through an effective lean program.

Correct answer: D

Explanation

The correct answer, D, is accurate because reducing transit time directly impacts cash flow by allowing faster turnover of inventory. Options A and B focus on revenue and payment terms, which do not directly improve cash flow cycle time. Option C, while beneficial for inventory management, does not enhance cash flow cycle timing as effectively as reducing transit times.