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What does velocity indicate in supply chain management?

  1. The speed of individual transactions

  2. The relative speed of all transactions across the supply chain

  3. The overall efficiency of the manufacturing process

  4. The average time taken for goods to be produced

The correct answer is: The relative speed of all transactions across the supply chain

In supply chain management, velocity primarily refers to the relative speed of all transactions across the supply chain. This concept encompasses not just the rate at which goods move but also the speed at which information and materials flow through the entire supply chain network. A high velocity indicates that the supply chain is functioning efficiently, with quick turnaround times for order processing, inventory replenishment, and overall responsiveness to customer demand. This holistic view allows managers to evaluate the effectiveness of supply chain operations comprehensively, taking into account each stage—from procurement to production to distribution. In contrast, focusing solely on the speed of individual transactions or the average time for goods to be produced does not provide the complete picture needed to understand the broader dynamics of supply chain performance. Thus, recognizing velocity as a measure of relative speed across the supply chain enables organizations to optimize their processes and improve customer satisfaction.