M4-A2 -OPERATIONS MANAGEMENT - Essay Example

Operations Management Introduction Global supply chains entail network developed by different worldwide organizations; producing, handling or distributing certain goods or services. The supply chain keeps increasing due to globalization and increasing offshore production (Manuj & Meotrez, 2008).Importance of Global Supply ChainsThe most significant aspect of global supply chains involves optimizing the cost and availability of capital within an international buyer-supplier supply network. This is done through effective analysis of information generated by supply chain activities, and aligning this information with the actual control of goods.

Physical control and information generation enables the lenders to reduce the financial risks and uncertainties in the global supply chains. Risk mitigation ensures effective generation of capital.Threats of Global Supply ChainsA report published by the Aberdeen Group in 2008, 58% of multinationals suffered financial losses in 2007 due to disruptions in the global supply paths. Supply chains disruption sat the global level were caused by mostly financial and political instabilities. There is also the risk associated with forecasting errors that result in overstocks or inventory shortfalls (Welborn & Kasten, 2007).

Effect of the Threats on Companies and CustomersIncreased financial losses impact negatively on company’s operations. Companies usually scale down their production processes as a result of financial constraints. Decreased production leads to reduced supplies in the global market. The customers experience reduced sat6isfaction, if supply of products is limited. Forecasting errors leads to poor prediction of market requirements. This leads to low levels of customer satisfaction.Impacts of Threats to Companies and CustomersThe threats lead to low profits margins of companies.

For instance, the financial threats leads to low sales levels hence reduced profits. Low profit margins lowers the operation levels of the company, hence low production of products to meet global market requirements. Inadequate commodities in the market, leads customers to purchase substitute products, or products of competitors. Forecasting errors leads to wastages of resources, especially during overproduction. This can drive companies to high loss levels (Manuj & Meotez, 2008).Mitigating Risks of Global Supply ChainsAn effective selection criteria should adopted so as to assess a global supply chain partners on issues like quality, quality, geographical presence, and reliability.

Certain logistic service providers should be outsourced. This ensures risk reduction and appropriate adoption of innovation; for instance, adopting information technology solutions (Welborn & Kasten, 2007). ConclusionGlobal supply chains that minimize challenges and risks are more capable of solving volatile conditions in the global market; for example embracing information, so as to realize resource efficiency in the supply chain process. ReferencesManuj, I. & Meotrez, T. (2008). Global Supply Chain Risk Management.

Journal of Business Logistics.Welborn, R. & Kasten, V. (2007). Securing Global Supply Chains. Employment Relations Today.