What effect does product proliferation have on supply chains?

Product proliferation refers to the introduction of a wide variety of products within a company's offerings. While this strategy can sometimes cater to diverse customer preferences, it significantly impacts supply chains by increasing complexity and variability.

With more products to manage, companies face challenges in inventory control, forecasting demand, and managing supplier relationships. Each product can have different storage, handling, and transportation requirements, which can complicate logistics operations. Furthermore, with a larger array of products, the demand for individual items can become more unpredictable, introducing variability into the supply chain. This unpredictability can lead to situations where some products are overstocked while others are understocked, potentially resulting in lost sales or increased holding costs.

Ultimately, the increased complexity makes it more challenging to maintain efficiency within supply chains, impacting overall operational performance. Therefore, choosing the option that highlights the increase in complexity and variability accurately captures the primary effect of product proliferation on supply chains.