Certified Supply Chain Professional (CSCP) Practice Exam

What is one benefit of using common components in manufacturing?

1. Higher variety of products leads to increased costs

2. Less variety results in low purchase costs

3. Increased complexity in storage

4. More workforce needed for individual parts

The correct answer is: Less variety results in low purchase costs

Using common components in manufacturing offers the benefit of lower purchase costs. When manufacturers standardize certain parts across multiple products, they can take advantage of economies of scale. By producing or purchasing these common components in larger quantities, manufacturers can reduce material costs, negotiate better prices with suppliers, and minimize the overall expenditure associated with sourcing individual components for each unique product. This standardization also simplifies inventory management, as fewer distinct parts need to be stocked. Consequently, manufacturers can streamline their operations and improve efficiency, which further contributes to cost reductions in production. Lower purchase costs ultimately enable businesses to allocate resources more effectively, potentially leading to increased profitability.