Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following is considered a cost factor in supplier selection?

1. Environmental impact

2. Supplier location

3. Lower total costs

4. Employee training programs

The correct answer is: Lower total costs

Lower total costs is indeed a crucial cost factor in supplier selection. This approach goes beyond just the initial price of goods or services; it encompasses all associated costs throughout the supply chain. When organizations assess suppliers, they often look at the total cost of ownership, which includes factors like transportation costs, inventory holding costs, and potential costs due to quality issues. By focusing on total costs, companies can make more informed decisions that lead to long-term savings and improved profitability. Other options, while they may influence the supplier selection process, do not directly classify as cost factors in the same way. For example, environmental impact is increasingly relevant for sustainability but doesn't directly quantify supplier costs. Supplier location can affect logistics and transportation costs, but it is just one part of the broader analysis of total costs. Employee training programs may reflect on the supplier's ability to deliver quality products or services, but they do not pertain to the cost evaluation in the vendor selection framework. Thus, lower total costs serves as the most comprehensive and directly relevant cost factor when selecting suppliers.