Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following is a benefit of contracting?

1. Increased company size

2. Risk of over-dependence on suppliers

3. Access to advanced technology

4. Higher operational costs

The correct answer is: Access to advanced technology

Access to advanced technology is an important benefit of contracting. When companies enter into contracts with specialized suppliers or service providers, they often gain access to the latest technologies and innovations that the suppliers have developed. This can enhance a company's operational efficiency, productivity, and overall competitive advantage. By leveraging these technological advancements, organizations can improve their processes, reduce costs, and deliver better products or services to their customers. In contrast, increased company size may not necessarily result from contracting, as it often pertains more to mergers or acquisitions rather than contractual relationships. The risk of over-dependence on suppliers is a potential downside of contracting, where reliance on a third party could lead to vulnerabilities in the supply chain. Higher operational costs can be a concern if contracts do not optimize cost efficiency or if they impose additional expenses on the contracting company. Therefore, the access to advanced technology stands out as a distinct and valuable advantage of contracting arrangements.