Uncertainty, to a business, is any sort of change in regular protocol, or expected occurrence, that could disrupt the normal business flow. Uncertainty in a global supply chain can break a company, by decreasing profits made or increasing costs, if the company is not fully prepared for any backlash the change may bring. Factoring in contingency plans to battle uncertainty can save a company from hardship in the brink of a meltdown.
Battling uncertainty can be a challenge for some companies. A common technique for battling uncertainty in supply chains consists of breaking up the supply chains into smaller supply chains. Instead of making a supply chain a one size fits all chain; many companies break up their chains into smaller sections. This can help battle any impact that may a result, be it indirect or direct, of a change in the uncertainty of the business world.
When preparing for uncertainty in a business setting it is important to keep in mind the political, financial, logistics, cultural, natural, and technological factors that play a role in preventing uncertainty from hurting a business. Politically, a company has to watch out for any sort of elected official that would implement tax breaks, new taxes, or more strict standards of production. Also, a company has to hope that an elected official won’t become involved in a war with a country that is home to a company whom shares business interests. Culturally, if war were to break out, trade could become illegal between the two countries, or the company could start to develop nationalistic tendencies and refuse to do business. This whole process would hurt a company financially, meaning the business will now have to take its money elsewhere to a company that may charge the business more. Technology plays a role as well. Companies need to keep up to date with technology, as to not fall behind. Logistically, keeping up with technology could mean increased productivity and profits. Finally, businesses need to research where the supply chain is being formed, as to not compete with nature.
These major forces can help or hinder any business, but preparation keeps a business from bankruptcy. Preparation keeps business afloat and profits increasing.
- Malik, Y., Niemeyer, A., & Ruwadi, B. (2011). Building the supply chain of the future. McKinsey Quarterly. Retrieved from http://www.mckinseyquarterly.com/Building_the_supply_chain_of_the_future_2729
- A simulation based optimization approach to supply chain management under demand uncertainty. (n.d.). A simulation based optimization approach to supply chain management under demand uncertainty. Retrieved April 13, 2014, from http://www.sciencedirect.com/science/artic
