Paper on Purchasing and Supply Chain Management

Added on - 21 Apr 2020

  • 6

    pages

  • 954

    words

  • 14

    views

  • 0

    downloads

Showing pages 1 to 3 of 6 pages
Running head: PURCHASING AND SUPPLY CHAIN MANAGEMENTPurchasing and Supply Chain ManagementName of the Student:Name of the University:Author Note:
1PURCHASING AND SUPPLY CHAIN MANAGEMENTContentsIntroduction......................................................................................................................................2Discussion........................................................................................................................................2Conclusion.......................................................................................................................................3References........................................................................................................................................4
2PURCHASING AND SUPPLY CHAIN MANAGEMENTIntroductionHedging strategies are the options which are exercised in relation to the price, demandand exchange rate contingencies that are faced by the firm in the supply chain context. These areregarded as the supply chain networks which are derived through global co-ordination of theproduction and sourcing decisions. This paper will explain hedging in relationship to strategicpurchasing policies in a manufacturing context. In a supply chain environment, the firms willfind themselves exposed to the price risks and the supply chain which is related to the price riskof the partner. Moreover, the supply chain firms cannot control the price risk through the processof hedging alone (Inderfurth, Kelle & Kleber,2013).DiscussionIn a supply chain, increase in price can result in the financial loss of the suppliers. Thesituation will become worsen to such a point in the supply disruption that the suppliers cannotmake the products profitably. For example, in 2011, steelmakers have tried to increase the priceby six times and this led to a total increase in the revenue by 30%. On the other hand, accordingto the extant theory there are many car and appliance manufacturers who did not pay muchattention to the increase in the steel price. This is because they do not purchase the steel from thesteelmakers directly. However, this has become a massive problem for the financial weakersuppliers for whom the cost of the steel was a greater concern. This situation will become worsento the point of supply disruption because the suppliers cannot profitably manufacture productsfor their buyers(Chaudhry et al., 2014).
desklib-logo
You’re reading a preview
card-image

To View Complete Document

Become a Desklib Library Member.
Subscribe to our plans

Download This Document