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ISM Exam LEAD Topic 4 Question 10 Discussion
Topic #: 4
A supply manager conducts a risk assessment of the company's top five suppliers. One of these suppliers---a sole source of an integral component---has just one database location and no cloud storage. Any calamity could put supply of the component at risk. In this situation, which of the following is the BEST long-term course of action for the supply manager to take?
Risk Assessment Overview: The sole source supplier has a single database location, creating a risk for the supply of an integral component.
Long-term Solution: Reducing the component's uniqueness to allow for alternate sources is a strategic approach. It mitigates the risk associated with dependency on a single supplier and enhances supply chain resilience.
Collaborative Approach: Working with engineering to modify the component design ensures compatibility with multiple suppliers, broadening the supplier base and reducing supply chain vulnerability.
Importance of Alternative Sources: Diversifying the supplier base is crucial in risk management to avoid disruptions caused by supplier-specific issues.
Reference: Supply chain risk management literature, such as 'The Resilient Enterprise' by Yossi Sheffi and guidelines from the Institute for Supply Management (ISM), supports the strategy of reducing dependency on single suppliers through component standardization.
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