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These cookies enable us to show you ads and other content that we think is most attuned to your interests and digital behavior. To properly experience our LG. The LG. In order to get the best possible experience our LG. Organizations also need to consider supplier relationships two or three levels deep. If any of those partners have ties to the unstable region, a reverberation can be felt at every link in the chain. The complexity and trickle-down effect of this issue can make it difficult to address, but its impact is undeniable.

The first step to reducing risk to the global supply chain is understanding the nature of the political risk. Conversations with local government leaders, as well as, influential non-government organizations can yield valuable insight. It is important to separate rhetoric from true problems that will adversely affect the supply chain. After an initial probing conversation with local sources, an organization can determine if there is a credible threat to its global sourcing strategy.

Depending on the specific political scenario, there are different ways to mitigate risk:. There are several principle-based tips that can help organizations reduce risks linked to their global sourcing strategy:. Typically, lower supply chain costs come with greater risks, and adverse relationships can result. The challenge is to create a global sourcing strategy that aligns with organizational goals and embraces these calculated risks, but also adjusts periodically.

Strong supplier partnerships and relationships with local government and non-government entities are extremely helpful if political volatility occurs. Creating a balanced strategy that mixes global, low-cost suppliers with near-sourced suppliers also helps mitigate risk.

Performing due diligence and being abreast of current global events related to political change prior to sourcing strategy design helps protect organizations from the potential of a devastatingly negative impact. In the end, political instability is a very serious threat to global sourcing that organizations must address in a way that considers today and well into the future. Did you enjoy this article?

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