Certified Supply Chain Professional (CSCP) Practice Exam

When a company offshores its operations, it often seeks to achieve what goal?

1. Consistent product lineup

2. Implementation of expensive technologies

3. Reduced production costs

4. Maintaining local labor force

The correct answer is: Reduced production costs

When a company offshores its operations, the primary goal is typically to reduce production costs. Offshoring allows companies to take advantage of lower labor costs, favorable exchange rates, and other economic factors in different countries, which can lead to significantly lower overall expenses in manufacturing and production processes. Reducing production costs is appealing as it can enhance a company's competitiveness in the market, allowing it to offer lower prices for its products or increasing its profit margins. Companies often evaluate potential offshore locations not only for cost savings but also for the capacity to maintain quality and efficiency in production. While consistency in product lineup and the implementation of advanced technologies can be beneficial outcomes of offshoring, they are not the primary goal. Maintaining a local labor force is generally contrary to the idea of offshoring, which involves relocating operations away from the company's home country to achieve the main goal of cost reduction.