M4-A2 -OPERATIONS MANAGEMENT Essay Example | Topics and Well Written Essays - 250 words

M4-A2 -OPERATIONS MANAGEMENT - Essay Example 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. A 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). Increased 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. The 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). An 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). Global supply chains that