Global Nature And Systemic Impact On The Firm 's Financial Performance

Decent Essays

Due to its global nature and systemic impact on the firm’s financial performance, the supply chain arguably faces more risk than other areas of the company. Risk is a fact of life for any supply chain, whether it’s dealing with quality and safety challenges, supply shortages, legal issues, security problems, regulatory and environmental compliance, weather and natural disasters, or terrorism. There’s always some element of risk. Companies with global supply chains face additional risks, including, but not limited to, longer lead times, supply disruptions caused by global customs, foreign regulations and port congestion, political and/or economic instability in a source country, and changes in economics such as exchange rates. The scope and reach of the supply chain cries out for a formal, documented process to manage risk. But without a crisis to motivate action, risk planning often falls to the bottom of the priority list. Furthermore, the repercussions of supply chain disruptions to the financial health of a company can be far-reaching and devastating. A study by Hendricks and Singhal as cited by ( the Supply Chain Management Faculty at the University of Tennessee, 2014) emphasizes the negative consequences of supply chain disruptions (Production and Operations Management, Vol. 14, No. 1, Spring 2005). The study analyzed over 800 supply chain disruptions that took place between 1989 and 2000. Firms that experienced major supply chain disruptions saw the following

Get Access