What about an environmental risk

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Reference no: EM13833307

NOTES: writer your personal opinion with the essay below .

Answer this question and put it in the last paragraph.

1) what about an environmental risk, can these be mitigated? For example, what if a suppler over in Japan has an earthquake?

Expanding a supply chain to the global level has many benefits. The added complexity of a global supply chain comes with additional risks as well. There are four major categories of risks associated with the global supply chain. These risks are: environmental, geopolitical, economical, and technological.

Environmental - Environmental risks include natural disasters and extreme weather. These types of incidents have a relatively high probability and are not controllable. Floods, earthquakes, hurricanes, and tornadoes can all cause a disruption to the supply chain. A tsunami in the East could wipe out a companies suppliers, leaving them with no way to get critical components.

Geopolitical - These risks include political instability, terrorism, trade restriction, and corruption. All of these have the potential to affect a supply chain negatively. Poor relations between two countries can cause problems when it comes to business. Along with environmental risks, geopolitical risks are very uncontrollable.

Economical - Demand shocks, price volatility, and currency fluctuations are all economical risks to the supply chain. Changes in demand are another uncontrollable risk. With the short attention span that consumers seem to have today, it is nearly impossible to predict when demand for a product will skyrocket and when it will seemingly become undesirable overnight.

Technological - Computers, communications, and IT. Technical difficulties can be crippling to companies. Say demand in a company's product spikes and they need to manufacture %50 more products than last month. No problem, just call the suppliers and have them send more supplies immediately. But wait, the ordering system just crashed. Computers and phone lines are down. There is no way to contact the supplier and now sales are lost.

Although there are many risks to operating in a global supply chain, there are ways to help mitigate these risks. When it comes to environmental and geopolitical risks having multiple suppliers is crucial. By having suppliers spread out in different countries, if one supply is experiencing some of the issues mentioned above there will be other suppliers that are still able to fulfill a company's orders.

Rodrigue, J., & Comtois, C. (2013). The geography of transport systems ([Third ed.). New York: Routledge. Retrieved From:

https://people.hofstra.edu/geotrans/eng/ch9en/conc9en/supply_chain_risks.html

Reference no: EM13833307

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