APICS Certified Supply Chain Professional (CSCP) — Question 219

Which of the following risks is most likely to occur when implementing a global sourcing strategy?

Answer options

• A. Internal operating costs will increase due to the additional time to process purchase orders across time zones and cultural barriers.
• B. Achieving economies of scale will be difficult if global shipments are not consolidated at shipping origin.
• C. Inventory carrying costs will increase along with freight costs due to increasing delivery transit times.
• D. Customers could purchase their products and materials elsewhere due to the fact that core operations were outsourced abroad.

Correct answer: C

Explanation

The correct answer, C, highlights that as delivery transit times increase, both inventory carrying costs and freight costs also tend to rise, impacting overall expenses. Option A is incorrect because while internal costs may rise, it doesn't directly relate to the global sourcing strategy's risks. Option B discusses economies of scale but does not specifically address the risks of increasing costs. Option D, while a valid concern, is more about customer choice than direct costs associated with global sourcing.