Managing risk in a global supply chain in many cases requires accounting for and bridging the differences in culture, language, values and organizational behaviour
A supply chain may not be quite as dynamic or complex as capital markets, but when it comes to managing supply chain risk the challenge is, arguably, can be as formidable as managing risk for instruments such as mortgage-backed securities or credit default swaps. Perhaps that is because of all the moving parts that there are in a supply chain, which we define as a network of companies that cooperate to convert ideas into goods or services for their customers.
Culture Gaps
There are other possible difficulties in this model, such as legal risk, political risk, etc, but our primary challenges are as noted above. The correct way – the only way – to deal with the level of uncertainty and risk in the production environment of a project like this is with significant resources and investment, needed to eliminate the direct risk from the developing supplier. The importance and urgency of the project for the car maker suggested that short-term cost savings should not dictate the supply-chain strategy.
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