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Question 145 - CSCP discussion

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Which of the following actions is most likely to increase total supply chain risk?

A.
Standardizing components used in a product family
Answers
A.
Standardizing components used in a product family
B.
Expanding operations to multiple locations
Answers
B.
Expanding operations to multiple locations
C.
Consolidating manufacturing locations
Answers
C.
Consolidating manufacturing locations
D.
Reducing the supplier base for commodity-type components
Answers
D.
Reducing the supplier base for commodity-type components
Suggested answer: D

Explanation:

Supply Chain Risk: The total supply chain risk refers to the likelihood of disruptions and the potential impact those disruptions can have on the supply chain's ability to function effectively.

Reducing Supplier Base: When a company reduces the number of suppliers for commodity-type components, it becomes more dependent on a few suppliers. This increases vulnerability because any disruption at one of these suppliers (e.g., financial instability, natural disasters, or quality issues) can have a significant impact on the company's operations.

Comparative Analysis:

Standardizing Components: This can reduce risk by simplifying inventory management and improving flexibility.

Expanding Operations: This can distribute risk across multiple locations.

Consolidating Manufacturing Locations: This might increase risk but usually for specific events like regional disruptions.

Conclusion: Reducing the supplier base for commodities is most likely to increase total supply chain risk due to increased dependence on fewer suppliers, leading to higher exposure to supply disruptions.

Chopra, S., & Sodhi, M. S. (2004). Managing Risk to Avoid Supply-Chain Breakdown. MIT Sloan Management Review, 46(1), 53-61.

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

asked 16/09/2024
Mykhailo Vavilov
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