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ACCA Strategic Professional · Strategic Business Leader · E-business: value chain

Tessaro Components, a manufacturer, integrates its suppliers' systems into its own through an extranet so that inventory levels are shared and replenishment orders are triggered automatically. Which is the most significant risk that this integration creates for Tessaro?

The main risk is dependence on partners and exposure to their security or system failures. Extranet integration gives shared stock visibility and automated replenishment, but a breach or outage at a supplier can pass directly into Tessaro's own operations.

  1. AGreater dependence on a few partners and exposure of its systems to security breaches or failures originating in partner systemsCorrect
  2. BLoss of the ability to benefit from economies of scale in purchasing
  3. CReduced visibility of stock levels across the supply chain
  4. DAn inevitable increase in the number of intermediaries in the supply chain

Explanation

Linking systems with suppliers improves visibility and cuts costs, but it increases interdependence and opens a route through which security incidents or outages at a partner can affect Tessaro. The other options contradict the benefits of integration: visibility improves and intermediaries typically reduce.

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