Supply Chain Management Professional (SCMP) · Question
When assessing potential suppliers, what does 'due diligence' primarily involve?
Due diligence is the process of conducting a comprehensive investigation of a potential supplier to identify risks and ensure suitability.
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Question: When assessing potential suppliers, what does 'due diligence' primarily involve?
Answer options:
- Signing the contract immediately. ✅ Thoroughly investigating a supplier's capabilities, financial health, and reputation.
- Only considering suppliers with the lowest price.
- Relying solely on external ratings.
Correct answer: Thoroughly investigating a supplier's capabilities, financial health, and reputation.
Explanation: Due diligence is the process of conducting a comprehensive investigation of a potential supplier to identify risks and ensure suitability.
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