The paper “ The Impact of Uncertainty on Organizations in a Supply Chain, Actions to Be Taken to Reduce the Possibility of Major Losses" is a fascinating example of an assignment on management. The supply chain could be defined as a system of suppliers, producers, distributors, and consumers. These elements in the supply chain are engaged in a long term business relationship. For better management of the business, the relationship among these elements should be effective (Sharman et al, 2010, pg 97). In the course of business transactions, the business must deal with many different types of uncertainty.
These may include competitors’ actions, share prices, petrol prices, floods, droughts, workers strikes, bomb threats, shortage of raw materials and labour, or sudden increases or decreases in demand for products or services. Research has indicated that the impact of uncertainty on organizations in a Supply Chain is always enormous and requires a good approach in order for the company to gain resilience. These uncertainties can be grouped into either being physical mobility and flows, financial, informational rational or resource segments. This section of the paper will look at the impacts of these uncertainties to the success of any organization. Considering demand and supply, it has been suggested that uncertainty in either of them will impact on the performance of an organization.
This is observed in both the product as well as the service-based business entities. Taking a comparison of organizational performance at different levels of demand and supply uncertainty, it is apparent that in both the service sector as well as the product based firms, performance will be affected. Business performance is way better when businesses operate in conditions with reduced supply and demand uncertainty.
This is because; reduced demand uncertainty will enhance better delivery. On the other hand, heightened demand uncertainty leads to likely or actual interruption to the flow of the product or service; the information, as well as money (Xu et al, 2007, pg 50). This will ultimately affect the organization’ s operations. In as much as these risks cannot be controlled by the business particularly those that are external, the only way forward is to minimize them (Xu et al, 2007, pg 51). Taking an example of a terrorist attack, its effect on the supply chain is adverse.
In incidences of terrorism, major transport modes like airports are closed down and this directly affects the supply chain for those transactions that are internationally based. In addition, borders are usually closed down in fear of bomb blasts which hinders the free movement of products within and between countries. It is therefore imperative that such uncertainties are checked within a supply chain to minimize loses for most organizations. Effects of Internal and External Factors across Businesses in a Supply ChainWithin the supply chain, uncertainties usually occur as a result of both internal and external environmental factors.
The combination of these two areas makes the movement of goods and services along a supply chain to slow down hence the ultimate impact on the organization’ s profitability. External factors in the supply chain uncertainties include the macro-environmental factors that the business may not have control over but can only work to minimize the impacts. This has a collection of political-legal factors within a specific region, economic factors of the market, and socio-cultural beliefs of the consumers, technological advancement, populations and finally competition between companies (Sharman et al, 2010, pg 67).
On the other hand, the internal factor may include suppliers along the chain, distributors, employees, wholesalers, and other shareholders.