Certified Supply Chain Professional (CSCP) Practice Exam

What potential shift in manufacturing strategy can occur during the decline stage?

1. From make-to-stock to make-to-order

2. From make-to-order to make-to-stock

3. From custom-made to standardized production

4. From sales-driven to cost-driven production

The correct answer is: From make-to-stock to make-to-order

During the decline stage of a product's life cycle, market demand typically experiences a significant reduction, leading companies to reassess their production strategies. At this point, shifting from a make-to-stock strategy to a make-to-order strategy can be effective because it allows manufacturers to respond more flexibly to remaining customer demands without incurring excess inventory costs. When utilizing a make-to-order approach, manufacturers can produce goods only in response to specific customer orders, thereby minimizing the risks associated with overproduction and excess inventory that can occur during a product's decline. This strategy is particularly advantageous when the market is uncertain, and demand is unpredictable. By aligning production more closely with actual orders rather than anticipated demand, companies can maintain efficiency and cost control, while also being able to provide more customized solutions to customers who are still willing to buy. In contrast, the other strategies involve managing production levels based on existing inventory or sales forecasts, which can lead to wasted resources during a time when demand is sharply declining. Hence, the shift towards make-to-order during the decline stage is a strategic move to align production with actual market needs and consumer preferences.