What is a major drawback of relying on a single supplier?

What is a major drawback of relying on a single supplier?

• A. Higher risk of supply disruption
• B. Lower cost and better price
• C. Increased supplier diversity
• D. Greater flexibility in scheduling

Answer: (A)

Relying on one supplier concentrates all your supply risk in a single source. If that supplier encounters a disruption—factory problems, strikes, quality issues, or transportation delays—you have limited or no immediate alternatives to keep production and deliveries on track. That lack of redundancy is the biggest downside, because it can trigger stockouts, missed deadlines, and unhappy customers. Diversifying suppliers or keeping backup options, as well as safety stock, are common ways to soften this risk. The other statements describe potential benefits or outcomes associated with multiple sources—lower costs can be achievable with volume, diversity reduces risk, and scheduling flexibility tends to improve when you have more than one supplier.

Relying on one supplier concentrates all your supply risk in a single source. If that supplier encounters a disruption—factory problems, strikes, quality issues, or transportation delays—you have limited or no immediate alternatives to keep production and deliveries on track. That lack of redundancy is the biggest downside, because it can trigger stockouts, missed deadlines, and unhappy customers.

Diversifying suppliers or keeping backup options, as well as safety stock, are common ways to soften this risk. The other statements describe potential benefits or outcomes associated with multiple sources—lower costs can be achievable with volume, diversity reduces risk, and scheduling flexibility tends to improve when you have more than one supplier.