Certified Supply Chain Professional (CSCP) Practice Exam

What obstacle may arise concerning distributor integration?

1. Increased product variety

2. Ownership of inventory

3. Improved customer service

4. Higher technology costs

The correct answer is: Ownership of inventory

Distributor integration deals with the challenges associated with effectively incorporating distributors into the supply chain system. A critical obstacle in this integration process is the issue of ownership of inventory. When companies collaborate with distributors, the question of who owns the inventory—whether it’s the manufacturer or the distributor—can lead to complications. Questions surrounding inventory ownership can impact financial arrangements, responsibilities for stock management, and the efficiency of supply chain operations. If ownership isn't clearly defined, it could create disputes over inventory levels, fulfillment responsibilities, and liabilities for unsold products. In contrast, while increased product variety can complicate inventory management, it doesn't directly relate to integration challenges as the question specifies. Improved customer service typically results from better integration efforts rather than being an obstacle. Higher technology costs may be a consideration in terms of investment for upgrading systems to enable integration, but they don't inherently obstruct the integration of distributors in the way that ownership issues do. Thus, the correct answer reflects a significant and practical challenge encountered during distributor integration efforts.