It can be riskier to own parts of the supply chain than to rely on external supply chains.True false question.TrueFalse

Answer:

This statement is True.

Explanation:

Owning parts of the supply chain, often referred to as vertical integration, can present several risks. These include:

1. High Fixed Costs: Owning and maintaining production facilities can lead to significant fixed costs, which may become a burden if demand fluctuates.

2. Reduced Flexibility: Companies that control their supply chain may find it challenging to pivot or adapt to new market conditions since they are tied to their own assets and processes.

3. Market Risks: By relying solely on their own production capabilities, companies are exposed to the risks associated with their specific operations, such as operational inefficiencies or lack of innovation.

4. Dependence on In-House Quality: If internal processes or outputs do not meet required standards, it affects the entire production cycle.

On the other hand, relying on external supply chains can provide agility, lower costs, and access to specialized skills or technologies. However, it also comes with risks like supply disruptions or quality inconsistencies.

In conclusion, while ownership of supply chains can offer control and efficiencies, it inherently carries more risk compared to a well-managed external supply chain.