Which of the following helps reduce risk by avoiding reliance on a single source?

• A. Diversifying suppliers reduces competition
• B. Increases lead times
• C. Reduces reliance on a single source
• D. Increases cost without benefits

Answer: (C)

Spreading purchasing across multiple suppliers reduces the risk of disruption by avoiding dependence on any single source. If one supplier runs into problems—like shutdowns, quality issues, or price spikes—other suppliers can continue supplying, helping to keep operations smooth and avoid shortages. This approach creates buffers and alternatives, which is at the heart of prudent risk management in procurement.

The idea that diversifying suppliers inherently reduces competition isn’t accurate, and increasing lead times or costs without clear benefits would raise risk or expense rather than mitigate it.