RISK MANAGEMENT

Risk Management



Risk Management

With the recent wave of outsourcing, risk management in the supply chain has come to the forefront. Most companies are under tremendous pressure to reduce costs. In addition to competitive pressure, the board of directors, shareholders and other interested parties to send a clear message to the administration to become more efficient and competitive. Today, the marketing of bracing (cross border supply) and international (ie, the marketing of products abroad through exports, licensing, franchising, joint ventures or subsidiaries) are more than ever as strategies main. The pressures are so intense to seize the opportunities of offshoring and international marketing of risk management is often the background.

For example, wages in China are approximately $ 100.00 per month for people who work hard for 60 to 70 hours per week. This is a huge motivation to coast to take advantage of this incredible group of labor. Available human resources in Asia are being leveraged at a rapid pace. There is an incredible activity in China and throughout Asia. It is estimated that by the year 2007, middle-class Chinese market would be larger than the entire U.S. market. Other low-income markets with a growing middle class, like Latin America and Eastern Europe are also seeing a lot of activity.

Ironically, in the management of the midline, there is a reluctance to adopt these initiatives enthusiasti global mind. There is an intuitive feeling that one is losing control, and assuming the risks are not fully understood. There is also the feeling that the conflict with other global initiatives tested as concepts of Lean and Six Sigma tools that have been sweeping the industry and are based on the reduction of average cycle time and variability.

In short, the dilemma facing management is how to balance all these factors and make the best decision for the future health and survival of the company. Most companies have yet to fully understand how to identify and manage risks associated with the complex trade-offs involved in making the right decisions worldwide.

There is little debate that global supply chains are significant sources of competitive advantage. The global configuration of firms providing access to cheap labor and raw materials, subsidized financing opportunities, large product markets, arbitrage opportunities, and additional incentives such as tax breaks offered by foreign governments to attract foreign capital. These benefits are available for businesses today due to the unprecedented mobility of transnational capital, information, people, products and services, huge leaps in information technology and communications, and increased opportunities and will participate in electronic commerce. But along with these benefits are the challenges that businesses need to overcome when operating worldwide. These challenges are related to foreign national economies, logistics, culture, competence and infrastructure. These challenges give rise to various risks in global supply chains. This chapter explores the risks of global supply chain and how to handle.

Risks lurk along the entire length of supply chains, and are as diverse as political instability, exchange rates, transport capacity, durability, and customer ...