Which statement regarding multiple suppliers is true?

The statement that multiple suppliers can help reduce total failure risk is true because having geographically dispersed suppliers provides a buffer against localized disruptions. If one supplier faces challenges—such as natural disasters, political instability, or logistical issues—having alternatives in different locations ensures that the supply chain can continue functioning. This strategy mitigates the impact of any single point of failure in the supply chain, thereby increasing overall resilience.

Additionally, sourcing from multiple suppliers allows firms to leverage competitive pricing and innovation. However, it is important to manage these relationships effectively, as having multiple suppliers can also introduce complexities in coordination and management. The advantages of risk reduction, particularly in a globally interconnected economy, highlight why firms often choose to diversify their supplier base rather than rely on a single source. This reduces the potential for disruptions that could impact the entire operation.