Recent studies and polls have shown that the common outlook on their economic future is the lowest it has been since the most recent financial crisis. The three main issues cited as the cause for this is a fear of war, natural disaster, and IT data mismanagement. Indeed, the current state of global affairs feels as if something major could happen at any time. With the rise of the new Covid-19 virus, the constant threat of war with Iran and its middle eastern allies, as well as the ever-escalating trade war with China it is not surprising that people hold a somewhat tepid view of future world affairs.
Businesses around the world are constantly evaluating their supply chain risks. At any moment a world event can limit or altogether cut off their access to a particular resource, part, or service that they require to function. Here we will look at what are the major concerns for businesses in 2020 regarding their supply chain management.
With coronavirus severely affecting the potato supply chain, a farm in Idaho is giving away about 2 million potatoes so they don't go to waste. First come, first served. https://t.co/ie7q8fUkrL
— CNN (@CNN) April 16, 2020
What Is The Supply Chain: The supply chain can be loosely thought of the sequence of productive steps that finish with the creation or delivery of a product or service. For example, a company that sells their brand of Coffee in North American supermarkets goes through many steps in order to deliver the packaged roasted beans to consumers.
They must begin by sourcing the raw coffee beans from somewhere. This is usually done by buying beans from farms in either Africa or Central America. The beans then have to be processed, packaged, shipped, and then finally stocked on the shelf. This whole process is broadly referred to as the ‘Supply Chain’. Political strife or uprisings in the area where the beans are sourced, along with any disruptions in logistical paths are all considered as part of supply chain risk management.
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Another good example would be gold and silver mines. Investors may be more likely to invest in a project with less gold resources located in traditionally stable areas than one with larger gold reserves but located in an area that has been prone to political instability.
Major Issues For Supply Chain Risk
War: Some individuals and analysts believe the world is very close to experiencing some type of large scale conflict. This concern is not entirely baseless as 2019 and the first quarter of 2020 has seen major tensions rising between the US and its allies and Iran in the middle east. Things got very testy when there were two cases of ships being sabotaged in the Strait of Hormuz. This strait is a central chokepoint for the transfer of oil out of the middle east and on to ports in the rest of the world. Should the Strait of Hormuz be closed or limited access granted by the Iranian government the price of oil will surely rise.
This rise would create a major issue for most businesses since the cost of oil is always a major expense. “Consider for a moment how many businesses rely on the transportation, or themselves are involved in transportation, of products and services from one area to another. Many businesses would suddenly become significantly less profitable or potentially go out of business should oil prices rise by any notable amount.” writes Harry Quaid, a writer at State Of Writing and Academized. With people concerned about war it is no wonder 2020 has started with a somewhat cautious attitude towards supply chain risks.
Natural Disaster/Virus Epidemic: Natural disasters or viral outbreaks are particularly daunting because they are hard to predict and nearly impossible to prevent. The recent outbreak of the Covid-19 virus has wreaked havoc on the Chinese manufacturing industry and has bought at least one province to a near stop. “People’s fears that the Covid-19 virus could have major effects on world trade is already being reflected in the market.” writes Shane Goodwill, a journalist at Paper Fellows and Do My Assignment.
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Cyber Attack: The reality of Cyberattacks has never been more real. The world recently saw a North Korean attack on tech giant Sony. When employees tried to log into their employee work stations they were greeted with a message saying they had been hacked. Many people fear that this type of attack can be carried out on a much larger scale, paralyzing entire areas and causing major disruptions in the supply chain.
Beatrice Potter is a professional content writer at Essay Writer and Essayroo Review. She is also highly skilled at repurposing boring, old, content to add life and charm to a blog or website, like Essay Service. Beatrice fully believes the way to create quality content is by delivering real-world value to the reader.
The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.