SUPPLY CHAIN MANAGEMENT

Increased Risk in Global Supply Chain

[Name of the Institute]

Increased Risk in Global Supply Chain

Introduction

The process of supply chain got comprised of people, technology and resources involved in moving goods or service from manufacturer to end consumer. This process starts from transforming raw material and finished at product usage by the end consumer. However, sometimes, used products also get re-entered in the supply chain process, to get recycle treatment. This is an extremely broad process and numerous companies come across with several issues in managing their supply chain process. There are also several risks involved in the process, which could affect the business strategies of various industries. However, to secure business, companies usually adopt different business models to strength their market position, however, in doing, so they often cause critical damages to their supply chains.

Risks associated with Supply Chain Process

There are several risks associated with supply chain process, which in various aspects can affect the business strategies of the company. There are two types of risks associated with Supply Chain Process, Internal and External risks (Clark, G., 2012). Internal risks got associated within the business, whereas, external risks got related to the outside environment of the organization. External Risk can be caused by the changes in the environment that causes disruptions and problems in the complete supply chain. Major catastrophes have been seen in the past decade ranging from the Tsunami in the Indian Ocean to the floods in Thailand. These are risks that can be controlled and predicted. Toyota was not able to produce 20,000 of its cars on schedule due to the Kobe Earthquake (WEF, 2011).

Figure 1 http://www3.weforum.org/docs/WEF_SCT_RRN_NewModelsAddressingSupplyChainTransportRisk_IndustryAgenda_2012.pdf

According to the report of the World Economic Forum, the above mentioned risks have been identified in accordance with their priorities. Most organizations have a risk management program, but because of the complexity of the global supply chain and transport systems, new age businesses are mostly dependant on thousands of independent suppliers and vendors based across many countries of the world. As both parties affect and are affected by risk at many stages, which range from procuring raw materials, to transporting goods and services, and the risks are not in the control of the companies. The key players that are affected by the risk are:

Producers and merchants

Logistics operators, transport services, and transport/manufacturing/consumer markets

Retailers

Consumers and traveler

Ordinary Citizens

Government and Regulatory authorities.

Each of these entities, the absorption of risk must be equal to the risk exposure, which often needs the risk management functions to meet the imposing business needs.

The result of the deviances in the supply chain and transport systems is does not only affect the financial performance. The reputation of the organization can also get damaged due to the delays and breakdowns in deliverance of products and services and poor quality of transporting the goods. The business will lose it value in the eyes of the end customers if they are not delivered the products effectively.

There are several risks associated with supply chain process, which in various aspects ...