Certified Supply Chain Professional (CSCP) Practice Exam

What is a potential risk of offshoring?

1. Expansion of market reach

2. Failure to deliver on time

3. Enhancement of brand recognition

4. Lower labor costs

The correct answer is: Failure to deliver on time

The answer regarding the potential risk of offshoring highlights the importance of supply chain reliability and meeting customer expectations. Offshoring can lead to complexities such as longer lead times and challenges in communication due to time zone differences or cultural misunderstandings. These factors can impact the ability of a company to deliver products or services within the promised timeframe, leading to delays that frustrate customers and can harm the company's reputation. In contrast, options like market reach, brand recognition, and lower labor costs are typically viewed as benefits of offshoring. Expansion of market reach comes from the ability to enter new markets and tap into international demand, while enhancement of brand recognition can be achieved by leveraging a global presence and scale. Lastly, lower labor costs are one of the primary motivators for offshoring, as companies often seek to reduce expenses by utilizing cheaper labor in different regions. Thus, while offshoring has strategic advantages, the risk of failing to deliver on time is a significant concern in the management of global supply chains.