CTSC practice question 1 of 25

When developing risk plans for supply chain segments, which of the following product categories should have the most complete and thorough risk mitigation plans?

Full set: 151 questions

Answer options

A: Important products that require ocean transport for delivery

B: Important products that must be kept cold

C: Important products where there is a single available supplier Correct answer

D: Important products that are government regulated

Correct Answer:

C. Important products where there is a single available supplier

Explanation

A single available supplier creates a single point of failure (SPOF), which is one of the most severe risks in a supply chain. Any disruption to that supplier (e.g., natural disaster, bankruptcy, quality failure) can completely halt the supply of the product, leading to catastrophic impacts on revenue and customer satisfaction. Due to this high potential impact, the risk associated with a sole-sourced product demands the most complete and thorough mitigation plans, such as qualifying an alternate source, holding strategic inventory, or engaging in joint business continuity planning.

Why Incorrect

A. Important products that require ocean transport for delivery: While risky, alternative transport modes or routes often exist, making it a less critical point of failure than a single supplier.
B. Important products that must be kept cold: Cold chain risks are manageable with established technologies, redundant systems, and standard operating procedures.
D. Important products that are government regulated: Regulation adds compliance risk and complexity but does not inherently create a supply vulnerability like a single source does.

References

1. Chopra, S., & Sodhi, M. S. (2004). Managing Risk to Avoid Supply-Chain Breakdown. MIT Sloan Management Review, 46(1), 53-61. The article identifies dependency on a single source as a major disruption risk that requires proactive mitigation strategies.

2. Zsidisin, G. A., & Wagner, S. M. (2010). Do perceptions become reality? The moderating role of supply chain resiliency on disruption occurrence. Journal of Business Logistics, 31(2), 1-20. https://doi.org/10.1002/j.2158-1592.2010.tb00140.x. This research highlights the vulnerability created by supplier-related issues, especially in single-source contexts.

Question breakdown

Tests: Prioritize risk mitigation planning by supply chain segment
Difficulty: Easy

Key idea: Risk exposure is highest where an important product has no alternative source of supply, because a single disruption can halt the whole flow.

How to reach the answer

Look for the factor that removes all fallback options if something goes wrong.
Ocean transport, cold chain, and regulation each add risk, but each can be managed with alternate carriers, routes, or compliance processes.
A single available supplier means any supplier failure, quality problem, or geopolitical event cuts off supply completely.
The clue 'single available supplier' signals the greatest vulnerability, so that category needs the most thorough plans.

Each option

AIncorrect. Ocean transport adds lead-time and disruption risk, but alternate carriers, ports, or modes can usually be arranged.
BIncorrect. Cold-chain products need careful handling, but multiple providers and contingency logistics normally exist.
CCorrect. With no alternative source, an important product is fully exposed to one supplier's failure, so it demands the most complete mitigation planning.
DIncorrect. Regulation adds compliance work, but it does not by itself remove sourcing alternatives.

Common trap: Cold-chain or regulated products seem highest risk because they are operationally complex, but complexity is not the same as having no fallback.

In practice: Risk teams map single-source and sole-source items first and build plans such as qualifying second suppliers, holding safety stock, or securing capacity contracts.

Remember: Lack of alternative supply sources for important products is the strongest driver of risk exposure in segment risk planning.

Drafted with AI assistance and checked against the answer key.

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