Opinions

Designing Supply Chain during a VUCA environment

By: Monsishka Gupta

“Depression isn’t always at 3am, sometimes it hits you when you’re with your friends or someone halfway through a laugh and you  suddenly stop. Remember that the success isn’t final, and the failure isn’t fatal, it’s the courage to continue that counts.”

In the terms of Business and Finance, SUPPLY CHAIN is typically a gaggle or system of organizations, people, resources, information that are involved in supplying a service or a product to the customer or consumer. The tactic by which an organization structures the provision chain and manages it so as that it can identify and maintain the proper balance between manufacturing cost, transportation and inventory.

Through reduced inventors, through shortened transit cycles and through streamlined production processes the global supply chain has achieved cost savings. But it may be more prone to the risks related to the natural disasters.

Natural disasters also results into Climatic changes. Climate change generally refers to any of the significant change in the measures of climate lasting for an extended period of time. In other words, it includes major changes in temperature, precipitation, or wind patterns, among other effects, that occur over several decades or longer. Although climat,weather and natural disasters have always unpredictable upto a certain degree, climate changes has made itsel more difficult to predict its timing and severity of these events. This also means that managing supply chains has become more challenging on several fronts.

We already heard that recently, the Northern Midwest of the US i.e. United States was slammed by the record-breaking levels of floods, hitting Nebraska particularly hard  the precipitation from a huge “bomb cycle” storm combined with the large amount of snow that is left over from a historically harsh winter. According to Nebraska Governor Pete Ricketts, the cost of damage in infrastructure caused by the flooding is estimated to be $439 million i.e.33,12,69,40,000.00 Indian Rupee .

It has been record amounts of snowfall that is occurring before it gets to the Great Plains, but indeed the winter as a whole — from December to February — was the wettest time on record for the United States, and this is exactly the thing that we do expect with these climate change,” Kevin Trenberth, a senior scientist at the National Center for Atmospheric Research told WCAI, an NPR station serving Nantucket, Martha’s Vineyard, and Cape Cod in Massachusetts.

These recent events that takes place serve as a reminder that warehouses, roads, railroads, power plants, and other critical facilities are extremely susceptible to the elements. “Extreme weather and climatic events can have a catastrophic effect on the production and transit of goods and products, thanks to phenomena such as excess rainfall, drought, wildfire, heat waves, and drought, to name a few,” Jake Rheude, director of business development and marketing at Red Stag Fulfillment, told Thomas.

This is the graph that showing the level of changes in the climate and weather at US.

In 2018, Nature Research published a report which detailing how extreme weather could ultimately make beer extremely expensive. The report aloso predicted that the remainder of the 21st century would be plagued by frequent number of periods of heat waves and drought, and negatively impacting barley production.

Although many of the beer insiders have dismissed this report as “an academic exercise” that does not fully capturing the scope and nature of the barley production, that report serves to illustrate an unsettling point: that our food supply chain is vulnerable to climate change.

Above mentioned is how climatic changes affect Infrastructure and how it Damages Raw material and Natural Resources.

All animals in the world play a role in their specific ecosystems, kept in check to maintain balanced food chain. Changes in the climate have that potential to wipe out entire species, which can automatically throw off the balance of the ecosystem.

For example, apex predator species, such as tigers and wolves, plays major role in various ecosystems by hunting herbivores; if they do not do so then, herbivore populations would increase exponentially, eventually it becoming so massive that the whole environment would no longer be able to support them or others.

Other creatures, such as bees, also play an important major role in our earth’s ecosystems. They are known as pollinators, these bees are responsible for the proliferation of plant life. Without these creatures in the ecosystem, plants would not be able to reproduce. Population of pollinator can be seriously compromised by changes to their environment, including habitat loss, air pollution, fluctuating temperatures, and shifting seasons.

Those  animals play such a major role in and our ecosystems,  have a direct impact on the environment, and therefore can indirectly affect supply chains as well.

This is all about how climatic changes affect the supply chain which generally includes infrastructure damage, raw material and natural resources damages , effects on animals life. Now understand the financial, legal risk in the supply chain and how it manages.

Enterprises generally depend on increasingly complexes and sophisticated supply chains in understand to assemble and deliver goods and services to the marketplace and to the ultimate consumers. Global supply chains, is the large components of which are outsourced to the variety of third parties that are increasingly under the threat from a wide range of risks including natural disasters, regulatory risks, financial crisis and terrorism. There are some other events which can takes place in the supply chain but they have wider ramifications higher up include bribery or can say that corruption, strike, theft, manufacturing problems and insolvency.

This risk to reputation cannot be understated. The tragic or sudden collapse of the Rana Plaza garment factory in Bangladesh in 2013 caused significant loss of life and nearly about 20 well-known brands including Walmart, Primark, Benetton, Monsoon and Mango, will always be associated with the disasters. Along with supply chains that typically comprising a huge number of actors across widespread functions that includes sourcing, manufacturing, logistics and distribution. With this there is an increased need to focus on the managing and mitigating the associated risks. However, a survey that is published by the University of Tennessee’s Global Supply Chain Institute in June 2014 founds that 89.9% of the firms surveyed didn’t quantify risk when the outsourcing production and whilst 66% did have the legal or compliance risk managers, supply chain risk was virtually ignored.

Supply chain management or SCM should enable companies to develop and execute their strategies that very efficiently integrate the managing system of all the players in a supply chain  that are suppliers, manufacturers, distributors, and customers .So that production and distribution are accomplished at the lowest possible total cost while meeting customer needs. Even in reality, though, companies struggle to achieve the success in managing their supply chains.

Among the many of the issues that will make supply chain effectiveness challenging are complexity in mass customization, product line proliferation, shorter product life cycles, pressure for faster innovation, stress from the quicker technology cycles, tougher and non-negotiable service levels, extended global supply chains, abundant channels and markets, and business cycle variability. With about 40 to 70 percent of costs that embedded in the typical supply chain, it is critical that the companies manage their supply chains optimally to achieve the highest returns now and in the future, as the business environment changes.

The hyperlocal-eCommerce business that provides goods ,products and services for the locally sourced, produced and designed goods. Think that food, medicine, consumer goods, retail products and services are valued on convenience. Only one distinct characteristic that sets a hyperlocal business apart from a large retailer is that the entire supply chain is located in the close proximity of the buyer and the seller.

So, finally supply chain management has many benefits such as Higher Efficiency Rate  , Reduce Cost Effects , Raise Output , Raised Your Business Profit Level , Boost Cooperation , Lowers Delay in the Processes and Enhanced Supply Chain Network. So , the Logisticians oversee the important phases of a product’s life, including their allocation, their distribution, and their delivery. The demands for the logistics is currently at all-time high, so if you all hope to find steady, high-paying work, this might be the career for you.

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