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The global supply chain

The global supply chain has been discussed many times up to this point. And along every point of a supply chain we have seen many kinds of risks that impede the flow of goods along the various routes of these many supply chains for companies such as Walmart and Dell that we begin this journey. When you see the new on TV or newspapers or magazines or the Internet, you already see these risks play out often on a daily basis due to events like hurricanes or fires or pandemics raging across a country.
For this week, give a hypothetical example of each of the six types of risk to a global supply chain, as described in this chapter. While this is being asked to be hypothetical, it can be a real example. Given what is happening in the world today, you may pull a real example from the news headlines and talk about these six risks. The choice is yours to make.

Full Answer Section

Real Example: Climate change-related events, like droughts in various agricultural regions, that are impacting crop yields and water availability. This is leading to increased food prices and concerns about food security.

6. Security Risk:

Hypothetical Example: Piracy increases in a major shipping lane, leading to delays and increased insurance costs for companies transporting goods.
Real Example: Geopolitical tensions, like the war in Ukraine, that have disrupted trade routes, increased security concerns, and led to sanctions. This has impacted the flow of energy, food, and other commodities.

Sample Answer

Alright, let's break down the six types of global supply chain risks with both hypothetical and real-world examples, considering the current global landscape:

1. Supply Risk:

Hypothetical Example: A major rare earth mineral mine in a politically unstable region suddenly closes due to local protests over environmental concerns. This halts the supply of crucial components for electric vehicle batteries, impacting manufacturers worldwide.
Real Example: The ongoing semiconductor shortage, exacerbated by factors like increased demand, factory fires (e.g., Renesas fire in Japan), and geopolitical tensions. This has severely impacted automotive, electronics, and other industries.

2. Demand Risk:

Hypothetical Example: A viral social media trend causes a sudden, massive surge in demand for a specific toy, overwhelming manufacturers and retailers. This leads to stockouts, price gouging, and consumer frustration.
Real Example: The unexpected surge in demand for home office equipment and electronics during the COVID-19 pandemic lockdowns. Retailers struggled to keep items in stock, and prices for certain products increased.

3. Process Risk:

Hypothetical Example: A cyberattack targets a major shipping port's computer systems, disrupting cargo tracking and causing significant delays in the movement of goods.
Real Example: The Ever Given container ship blocking the Suez Canal in 2021. This caused a massive bottleneck in global shipping, disrupting the flow of goods and highlighting the fragility of critical transportation routes.

4. Control Risk:

Hypothetical Example: A company discovers that a supplier in a foreign country is using child labor, violating ethical sourcing standards and damaging the company's reputation.
Real Example: Concerns about forced labor in the Xinjiang region of China, particularly in the cotton and solar panel industries. This has led to increased scrutiny of supply chains and import restrictions.

5. Environmental Risk:

Hypothetical Example: A series of extreme weather events, such as floods and droughts, disrupts agricultural production in key food-producing regions, leading to food shortages and price increases.