Extended Supply Chain

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1. The extended supply chain is a way where everyone contributes to a product. For example, to an automotive company, like Ford, its extended supply chain would include a factory where plastics are produced and another factory where glasses for windshields are molded. Therefore, it is very important to a company to monitor what would happen in its extended supply chain. Sometimes a supplier’s supplier could have an impact on you. For instance, if there is a fire happened in a rubber factory owned by Ford’s supplier’s contractor, Ford should ask another vender to provide tires because the original supplier may short for the raw material and can’t provide enough tires Ford needs. What kind of risks involved in extended supply chains? Actually it is a long list including natural disasters like Japanese earthquake and tsunami, economic crises like financial crisis in 2008, and global supply disruptions like the West Coast port workers strike. For example, in 2008 when the financial crisis took place, many Chinese printed circuit board (PCB) factories were shut down because of low liquidity and unstable order volume. Many big Taiwanese PCB companies suffered because in Taiwan, those first tier companies usually outsourced their orders to the second tier companies. However, those second tier companies opted to outsource those orders to Chinese PCB factories to gain the spread. Therefore, the closure of Chinese PCB factories has reduced Taiwanese PCB production capacity seriously.

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