Certified Supply Chain Professional (CSCP) Practice Exam

What is the result of consumption-driven replacement?

1. Inventory is maintained at low levels

2. Sale triggers order to arrive in next delivery

3. Orders are processed without customer input

4. Automatic replenishment occurs based on historical data

The correct answer is: Sale triggers order to arrive in next delivery

Consumption-driven replacement focuses on aligning inventory levels with customer demand and order fulfillment processes. This approach allows companies to effectively manage inventory by ensuring that stock levels are replenished based on actual consumption patterns rather than predictions or forecasts. When an item is sold, it triggers a reorder of that item to ensure that inventory levels are maintained in accordance with current usage rates. This means that as soon as a sale occurs, an order is initiated to replenish the inventory, ensuring that the necessary stock is available for future customers. This mechanism helps in managing inventory efficiently by directly linking sales activity to procurement actions. In contrast, the other options do not accurately describe the essence of consumption-driven replacement. Maintaining inventory at low levels does not inherently lead to consumption-driven orders; it could result from various inventory management strategies. While automatic replenishment based on historical data may seem related, it implies a reliance on past data rather than real-time sales data to trigger orders. Lastly, processing orders without customer input does not align with the principles of consumption-driven replenishment, which relies on actual consumption signals generated by customer purchases.