Avoiding risk when a supply chain relies on an extreme location

While most companies try to ensure their supply chains are as free from potential disasters, sometimes it's impossible for a firm to guarantee its sourcing or manufacturing are completely safe. Depending on a product being manufactured, or destination for products, it can be necessary for a company to encounter some risk in its processes. In these instances, having disaster preparedness business solutions in place is even more critical, and these alternative methods have to be effective to stop a corporation from experiencing financial loss, a shortage of product or reputation problems. 

When firms rely on risky supply chain components 

Even though business leaders may have no intention of sourcing from risky, war-torn areas, they may have no other choice when trying to procure an uncommon or valuable natural resource. Similarly, circumstances may require a firm to ship its materials or products through a dangerous country or an area known for natural disasters that could disrupt the entire production process. While unusual for a company to only be able to rely on these areas, the situation can occur. 

While some companies have to deal with these risks, they're common for disaster-relief organizations or humanitarian groups that frequently need to get food, medical supplies and other goods to dangerous, remote or devastated areas. According to Supply Chain Digital, when faced with problems, these groups frequently try to get their supplies in by reassessing transportation methods, determining which nearby areas could work to their advantage for receiving shipments or figuring out how local warehouses or storage areas can help them distribute essentials. 

Companies that are forced to rely on similar areas for their procurement or logistical processes could do well to use some of these strategies when faced with an impending disaster that could threaten their supply chains. While advance planning is critical, quick organizational adaptability can prove essential for firms trying to mitigate the effects of a major problem and save their supply chains. 

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  1. Is this perhaps why the principles of External Economies of Scale, Clustering and the Global Value Chain critical? http://procureinsights.wordpress.com/2007/08/28/public-sector-procurement-practice-and-the-principles-of-external-economies-clustering-and-the-global-value-chain/