If a company uses several sources of supply to mitigate risk, which strategy?

• A. One source of supply
• B. Several sources of supply
• C. Outsourced part of production
• D. Combination of all other 3 supply strategies to maximise the benefit of each

Answer: (B)

Diversifying sourcing by using multiple suppliers reduces the risk of disruption. When you rely on several sources, problems at one supplier—such as delays, quality issues, or financial trouble—are less likely to halt production because other suppliers can fill the gap. This approach also supports competitive pricing and better service through supplier competition, though it requires stronger supplier management and coordination.

Choosing a single source would increase risk because a problem with that sole supplier could stop supplies. Outsourcing part of production shifts work to external firms but isn’t the same as spreading inputs across multiple suppliers; it changes the ownership of production rather than the risk profile of input sourcing. The idea of combining all other strategies attempts to maximize benefits from multiple approaches, but the scenario described directly aligns with reducing risk through multiple sourcing.