Certified Supply Chain Professional (CSCP) Practice Exam

What is one way supply chains can increase their resilience?

1. Reducing inventory levels

2. Implementing safety stock

3. Decreasing supplier diversity

4. Limiting product lines

The correct answer is: Implementing safety stock

Implementing safety stock is a strategy that enhances supply chain resilience by providing a buffer against uncertainties in demand and supply. Safety stock serves as a reserve of extra inventory that can be tapped into when actual demand exceeds forecasts or when there are unexpected disruptions in supply. This additional inventory cushion can help prevent stockouts and maintain service levels during fluctuations such as supplier delays, sudden increases in customer demand, or other disruptions in the supply chain. By holding safety stock, companies can maintain greater flexibility and responsiveness to changing market conditions, thus ensuring continual operations even in times of uncertainty. This approach is particularly important in industries where demand can be volatile or where supply chain disruptions are common. The presence of safety stock allows for smoother operational flow, ultimately supporting customer satisfaction and business continuity. In contrast, other strategies like reducing inventory levels or limiting product lines can actually increase vulnerability to disruptions by creating less buffer to absorb shocks. Decreasing supplier diversity can also pose risks, as relying heavily on a limited number of suppliers may lead to greater exposure to supply interruptions.