Certification in Supplier Diversity Practice Exam

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What is a primary advantage of decentralization in supply management?

Enhanced competition among suppliers
Greater communication with internal customers
Reduced costs across all units
Uniform decision-making authority

The correct answer is: Greater communication with internal customers

A primary advantage of decentralization in supply management is the greater communication with internal customers. In a decentralized structure, individual units or departments are given more autonomy to make decisions specific to their own needs. This allows those units to develop closer relationships with their internal customers, ensuring that their unique requirements and preferences are effectively understood and addressed. Decentralization empowers various teams to interact directly with suppliers and make tailored purchasing decisions based on local insights and demands. This responsiveness can lead to improved service levels and a better alignment of supply strategies with the specific objectives and operational realities of different departments or geographic locations. Conversely, while enhanced competition among suppliers and potential cost reductions might be outcomes seen in certain decentralized systems, these are not the primary advantages. Uniform decision-making authority, typically associated with centralization, does not align with the concept of decentralization, which inherently promotes distributed decision-making.