The Power of Resilience: How the Best Companies Manage the Unexpected by Yossi Sheffi

Author:Yossi Sheffi
Language: eng
Format: azw3
ISBN: 9780262029797
Publisher: The MIT Press
Published: 2015-09-18T06:00:00+00:00

10

Planning for Scarcity and Price Shocks

Between 1994 and 2004, the price of diesel fuel varied from week to week by only an average of one cent per gallon. But between 2004 and 2009, weekly price volatility increased as the price of diesel fuel in the United States tripled from $1.50 per gallon to $4.75 per gallon and then slumped to $2 per gallon during the recession, but then rose again during 2011–2013 to around $4 per gallon.1 Such rapidly increasing prices created difficulties for supply chain designs and operating strategies that depended on low transportation costs. The markedly increased fuel price affected every company dependent on transportation for supply, internal operations, or distribution.

Nor was fuel the only commodity that experienced significant price increases. Metals, rubber, and agricultural commodities all saw rapid price rises as well as spot shortages, affecting both materials producers and manufacturers. “Commodity prices have gotten more volatile,” said Gerard Chick of the Chartered Institute of Purchasing and Supply. According to Mr. Chick, the situation is “potentially fatal for some organizations. Think of airlines procuring fuel—do you go for the long or short term? How do you outguess the market?”2 Extreme volatility in energy and agricultural prices was ranked as a top-five global risk by the World Economic Forum in 2012.3

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.