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Supplier Risks Stand in the Way of Business Expansions

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Supply chains are an integral part of any business. They harness what the product is as well as the company’s vision while adhering to the demands of the consumers and business partners. There are, however, risks associated with a supply chain, especially if the supply chain is global.

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Consequences of Disasters

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In 2012, the disasters that struck the Far East brought more than broken homes and disastrous consequences to the front pages of papers. It also put a large crimp in a few global automotive supply chains. The companies were unable to produce the parts or continue the engineering of new car products and their counterparts. 

Yes, part of the appeal for a supply chain from a global standpoint is the cost of efficient labor and parts. But, if those parts and labor are impacted by a force such as natural disasters, political uproar, or some other form of unforeseeable disaster, the companies seeking the cost efficient methods could lose quite a bit in revenue and partnerships because their productivity has been halted for an indefinite amount of time.

Kaizen as Profit Motivation

There are several companies who are also looking to lower their cost of production while maximizing their profits. Some of these companies have taken a liking to finishing or beginning production at the very last second and have also taken to the method known as “Kaizen” as a means of profit motivation. While looking to capitalize on utilizing global supply chain, some may have found that they are putting themselves further into a hole.

Supply Chains and Global Market Changes

Image via Flickr by Nick Saltmarsh

Inadequate software and monitoring has also proven problematic for many companies. Some software for analyzing pieces of the supply chain has proven inadequate because of the changes constantly occurring within the supply chains and global markets. For example, RDC and Aviation Economics joined together in 2013. Aviation Economics developed software that enabled the monitoring of the basic supply chain at every step. RDC Aviation had a name and stronghold on capacities and system computing. By aligning, the two had software that was capable of reading and predicting supply chain anomalies within the current and forecasted trends. This hindered the supply chain risks and maximized the companies’ abilities to prepare for any damaging effects presented by the market.

Stale Business Models

Often times, companies will also adopt an attitude that sees the successes they have had in the past as a business. Some companies see no point in breaking down their current business model and scrutinizing it with an intensely critical eye. By allowing their model to remain untested and lacking analysis, they run the risk of removing themselves from the competition and running with inadequate software, inefficient technologies, and lack of market analysis.  Companies need to develop a plan to upgrade their models. They need to create a symbiotic relationship between their business model and the change occurring within their current and future markets.

Companies often run the risk of keeping themselves in the same rut and missing out on opportunities to expand as a whole by avoiding the risks associated with local and global supply chains. By breaking down, analyzing, and dividing their resources, the companies can expand without being caught completely off guard if something does happen at some level of their supply chain. [/show_to]

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