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Question 148 - CSCP discussion

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Which of the following strategies would increase overall supply chain risk?

A.
Single sourcing a product that makes the highest annual profit
Answers
A.
Single sourcing a product that makes the highest annual profit
B.
Outsourcing a product that is not well suited to your operations
Answers
B.
Outsourcing a product that is not well suited to your operations
C.
Identify multiple sources for a product that has a potential for supply chain disruption
Answers
C.
Identify multiple sources for a product that has a potential for supply chain disruption
D.
Internally manufacturing a product that has a high level of technical intellectual property
Answers
D.
Internally manufacturing a product that has a high level of technical intellectual property
Suggested answer: A

Explanation:

Supply Chain Risk: High-risk strategies often involve dependency on a single source, lack of flexibility, and vulnerability to disruptions.

Single Sourcing: Relying on a single supplier for a high-profit product increases risk because any disruption (e.g., natural disasters, financial issues, or quality problems) at that supplier can severely impact the company's profitability and operations.

Comparative Analysis:

Outsourcing Unsuitable Products: This can also be risky but generally not as impactful as single sourcing high-profit items.

Multiple Sources for Disruptive Products: Reduces risk by ensuring alternatives are available.

Internal Manufacturing for High IP Products: Protects intellectual property and ensures control over production, generally reducing risk.

Conclusion: Single sourcing a product that generates the highest profit increases overall supply chain risk the most due to the potential for significant disruption and financial impact.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. McGraw-Hill Education.

asked 16/09/2024
John Atkinson
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