Certified Supply Chain Professional (CSCP) Practice Exam

What could be a consequence of contracting out functions in supply chain management?

1. Increased market share

2. Loss of valuable experience and knowledge

3. Reduced overall costs

4. Improved supplier relationships

The correct answer is: Loss of valuable experience and knowledge

Contracting out functions in supply chain management can lead to a loss of valuable experience and knowledge within the organization. When functions are outsourced, the internal team may no longer engage in specific processes or expertise required for that function. This shift means that over time, the organization may become increasingly reliant on external providers for knowledge and skills, diminishing its capabilities and understanding in critical areas. Additionally, losing in-house expertise may result in difficulties in maintaining sufficient oversight and control over contracted services, further complicating the ability to innovate or respond to changing market demands. As the organization's core competencies shift with outsourced functions, it may struggle to retain a competitive edge or effectively train new employees, who lack the historical knowledge base formerly retained within the company. This drawback highlights the importance of balancing outsourcing with the internal retention of critical skills and knowledge.