Certified Supply Chain Professional (CSCP) Practice Exam

What are the two key performance indicators (KPI) for inventory in supply chain management?

1. Reduced inventory costs of holding

2. Achieve customer service targets related to quality and on-time delivery

3. Maximize supplier relationships

4. Enhance production efficiency

The correct answer is: Reduced inventory costs of holding

In supply chain management, the two key performance indicators (KPIs) for inventory primarily focus on the effectiveness and efficiency of inventory management in supporting overall business goals. Reduced inventory costs of holding directly relate to the efficiency of managing inventory levels while minimizing expenses associated with storage, insurance, and risk of obsolescence. By closely monitoring and striving to reduce these holding costs, organizations can improve their financial performance and resource allocation. While achieving customer service targets related to quality and on-time delivery is indeed critical for overall supply chain performance, it is not specifically limited to inventory management as a KPI. Instead, it reflects broader objectives of customer satisfaction and operational effectiveness, which, while influencing inventory practices, do not focus purely on inventory as a separate metric. Additionally, maximizing supplier relationships and enhancing production efficiency, while valuable objectives in supply chain management, do not serve as direct KPIs for assessing inventory performance specifically. These factors interact with inventory management but do not constitute the primary focus of inventory KPIs in the same direct way as the costs of holding inventory.