Supply Chain Risk Management

Abstract

"Logistics" encompasses the management of the movement of materials and services throughout their supply chains, from their raw state to their final form as finished products. To enhance customer value and gain a competitive advantage, businesses should adopt supply chain management strategies aimed at optimizing their supply-side operations. Manufacturers utilize supply chain management (SCM) to plan and execute cost-effective and efficient supply chains.

A supply chain comprises all the stages of the production process, from product creation to the oversight of supporting IT systems. Typically, SCM aims to consolidate all production and distribution stages within a single framework. By streamlining their supply chains, companies can achieve cost savings and enhance operational efficiency (Baldwin, 2012). Enhancing the precision with which the company monitors production, distribution, and sales is critical to attaining this level of efficiency. Globalization has not only affected contemporary businesses but has also accelerated the pace, intensity, and complexity of corporate processes, as it impacts the inventories of suppliers. Hence, effective supplier management is of paramount importance.

Some of the global market forces include the growth of the global economy, which serves as a primary driver for increasing consumer demand. According to the International Monetary Fund, the GDP of both developed economies such as the United States, Japan, and Europe, and developing economies like Brazil, Russia, India, and China, is expected to continue growing in 2019, albeit at a slower pace than in 2018. When demand rises, the supply must also expand to meet it. The rising cost of labor has, over time, contributed to pricing and supply challenges in recent years (Baldwin, 2012). The high labor costs have repercussions for international trade.