Overall supply chain risk may be increased by implementing which of the following strategies?
Single sourcing a high-profit product increases overall supply chain risk due to several reasons:
Supplier Dependency: Relying on a single supplier for a critical product creates a high dependency, making the supply chain vulnerable to disruptions if that supplier faces issues (e.g., natural disasters, financial instability).
Lack of Alternatives: Without alternative sources, any disruption can lead to significant delays, shortages, and potential loss of revenue.
Negotiation Leverage: Single sourcing can reduce the buyer's negotiation leverage, potentially leading to higher costs or unfavorable terms.
Outsourcing unsuitable products, identifying multiple sources for risk-prone products, and internally manufacturing IP-sensitive products are strategies to mitigate risk, not increase it.
Chopra, Sunil, and Peter Meindl. 'Supply Chain Management: Strategy, Planning, and Operation.' Pearson.
Harland, Christine, Richard Brenchley, and Helen Walker. 'Risk in Supply Networks.' Journal of Purchasing and Supply Management.
Gilma
7 days ago