CPIM Practice Exam

What mechanism helps ensure an organization has multiple options when sourcing products?

1. Single sourcing

2. Multisourcing

3. Consignment

4. Sole sourcing

The correct answer is: Multisourcing

Multisourcing is the correct answer because it involves obtaining products or services from multiple suppliers. This approach provides organizations with a variety of options, which can enhance flexibility and reliability in supply chain management. By diversifying their supply sources, companies can mitigate risks associated with dependency on a single supplier, such as supply disruptions, price increases, or quality issues. Additionally, multisourcing fosters competitive pricing and helps organizations leverage different suppliers' strengths. It allows for better negotiation opportunities and can lead to improved innovation as suppliers vie to offer better solutions for the business. By having multiple options available, organizations can respond more effectively to changes in demand and market conditions. In contrast, single sourcing and sole sourcing limit the organization to one supplier, which can lead to increased risk if that supplier encounters issues. Consignment involves a specific inventory management arrangement, but it does not inherently provide multiple sourcing options.