An organization’s supply chain is greatly impacted by globalization and its comp

Question

An organization’s supply chain is greatly impacted by globalization and its complexity. This has resulted in having risk beyond just the demand and supply variability, limited capacity, and quality issues that domestic companies have traditionally faced. Traditionally, Inventories were the hedge against risk of supply variability. Trends today, such as greater customer expectations, global competition, longer and more complex supply chains, increased product variety with shorter life cycles, security, and political and currency risks, are making it much more difficult to decide how much inventory to carry, what type of inventory to carry and/or how long to hold the inventory.

Choose two of these seven specific risks and provide specific examples of each.

Explanation / Answer

The supply chain of any organization is greatly impacted by the complexities of globalization which resulted in the risk beyond the variability of demad and supply, limired resources and quality maintaining which domestic organizations faced. The present day trends of greater expectations of customers and increase in the product variety with shorter life cycle have posed difficulties to determine how much invemtory to carry, what are the types of inventory and till what time period to hold the inventory.

The two risks which are considered in this aspect are globalization and the product variety with shorter life cycle. Globalization

The landscape of business is widely growing and is becoming more globalised. People are easily communiated all throughout the world instantly due to the advancement in technology like smart phones, internet, online Skype facilities. Globaliation has impacted the techniques of businss in sphere of managing and transaction. Globalization has affected the business more crucially than that of supply chain. The trends of people ever-changing choices and increasing demand due to globalizaion have led to difficulties in managing and supply stocks as per requirements. Every aspect of inventory management like manufacturing, channelizing, maintaining stocks, order keeping, maintaining delivery and invoicing and the returns of the inventories are impacted by the integration due to globalization. Maintaining regular supplies of raw materials and creating good customer base and CRM on the global sphere has been impacted due to globalization as the new technologies are unable to give flexibility as required. The designing of the suitable supply chain is also critical for the managing of the changes which occurs due to globalization. There is also competition from other similar brands and pressure of price due to globalization. With the availabilities of commoditization of numerous products there is need for the companies to be distinguished among others. Innovation in products and equity of brand no longer allows to command higher price in the market and it is required to continuous commiditized the product and cost improvements with supply chain redesigning by the use of updated technology.

Product varieties and shorter life cycle of the product has also increased the risk of inventory determination of how much to produce and what amount should be kept as stock. The different groups of customers belonging to different age, income and culture have increased the demand for different varieties for the same product. Ordering through online and offline scope with passion for availing the latest trend at less time have impacted inventory drastically. In addition the shorter life cycle of inventory has increased the risk of its stocking and keeping aside and waiting or higher price offer for sale. The change in the pattern of demand for every product in every season and every occasion has led to the accumulation of the already manufactured products.

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