Certified Supply Chain Professional (CSCP) Practice Exam

What is a stepwise lead strategy?

1. Expanding in steps behind demand

2. Expanding in steps ahead of demand

3. Expanding with no relation to demand

4. Expanding in a uniform manner regardless of demand

The correct answer is: Expanding in steps ahead of demand

A stepwise lead strategy involves expanding production or capacity in increments, staying ahead of anticipated demand. This approach allows a company to prepare for expected increases in demand by incrementally scaling operations up. The strategy takes into account forecasts and market trends to ensure that production capabilities align with future customer needs, thus mitigating risks of stockouts or losing sales opportunities due to insufficient capacity. Employing a stepwise lead strategy enables organizations to remain flexible and responsive to demand fluctuations while ensuring that they do not over-invest in capacity that may not be utilized. This method is particularly beneficial in industries where demand can be difficult to predict, allowing businesses to incrementally adjust to demand signals. By anticipating future demand and gradually ramping up operations, companies can better align their resources with market dynamics. In contrast, options that suggest expanding behind demand, with no relation to demand, or in a uniform manner, imply either a reactive approach to capacity that could result in lost sales or an inflexible response that doesn’t capitalize on potential growth opportunities. These methods do not effectively leverage the advantages offered by a stepwise lead strategy, which seeks to proactively align capacity increases with expected demand growth.