A supplier of non-critical items has a low credit score, Which of the following actions should be taken? Select TWO options.
- replace the supplier as quickly as possible with a more financially stable supplier
- conduct a benchmarking exercise
- create a risk assessment and mitigation plan
- inform the CEO of the company
Answer(s): B,C
Explanation:
The correct answers are conduct benchmarking and create a risk assessment. This supplier provides low value and low risk products - therefore the fact they have a bad credit rating isn't too much of a risk to your company. It's worth doing a benchmarking exercise to compare their position to others in the market to see if there are any industry-wide trends, and to create a risk assessment and mitigation plan. This could involve working with the supplier to help them improve their credit score, for example by using more favourable payment terms so they have a better cash flow. There's no need to replace them immediately, and there's no need to tell the CEO- they probably have more important things to think about than a singular supplier of non-critical items See p.81