Global Logistics and Risk Management

Topics: Supply chain management, Supply chain, Risk Pages: 4 (1037 words) Published: August 31, 2008
Global supply chain enables companies to expand beyond their domestic markets and expand globally .International supply chain could be viewed as an extension of the domestic supply chain if managed well .There are several forces which determines the success of international supply chain. Global market forces involves pressures and opportunities created by the foreign companies and customers .Overseas business sometimes is a defensive mechanism to defend domestic markets .Another reason for expansion is because of the increased opportunities in emerging markets and the facilities provided by information technology and internet. Regional expertise in technology is another reason why firms look for overseas locations for production and research. This helps firms to improve the production facilities and use the best technology available across the world for better and effective production cycles. Cheap labor and lower costs could be a valid reason for global manufacturing locations .But the manufacturing supply chain in this case should be well integrated to avoid other operating costs which might increase due to remote locations .Political and economic factors like trade agreements, tariff rates, export restrictions and inflation,could positively or negatively affect the efficiency of global supply chain. Supply Chain Risk refers to an uncertainty or unpredictable event affecting one or more of the parties within the supply chain or its business setting, which can (negatively) influence the achievement of the business objectives. Unpredictable and unquantifiable risks are known as unknown-unknown .where as quantifiable risks are known as known-unknown.

To manage the unknown –unknown risks a required level of redundancy needs to built in the supply chain .This can be one through careful analysis of supply chain cost trade-offs. Sensing and responding quickly can also help the firm overcome unexpected...
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