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ACME has finally decided to outsource the manufacturing of its entire N20 product line to Outside Manufacturing Corp. (OMC), based in Hungary. They have realized

ACME has finally decided to outsource the manufacturing of its entire N20 product line to Outside Manufacturing Corp. (OMC), based in Hungary. They have realized that the demand for the N20 is highly variable, and their current system did not allow them to respond to this changing demand without high levels of safety stock. Furthermore, their US supplier has asked for a cost increase to make up for the fluctuating orders from ACME. The N20 electronic range-finder product is designed as an integrated system, made up of components whose functionalities are tightly related, and are not assembled from off-the-shelf components. OMCs regular material suppliers, which they want to maintain in order to meet the costs in the contract, are in Asia and Africa. The ACME Operations Manager was tasked with identifying the operational risks involved in the strategy. Which of the following should she be concerned about?

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A lack of communication as the African suppliers dont speak Hungarian.

OMC insists that the costs of expedited shipping will not be part of the delivered price quoted. The quoted price will only include standard ocean shipping

The US supplier will learn of this strategy and drop their prices after the outsourcing contract is completed.

The increased length and complexity of the supply chain has the potential for supply disruption.

OMC will not pay the tariffs for import into the US

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