Question

3. Do you think that a significant reduction in fuel costs will affect the global supply chain networks?

Answer 1

Reduction in fuel costs affect the supply chain network:

We have seen in the recent years, that the oil prices have been reducing to a large extent and has been fluctuating widely in the past years which has an impact on the supply chain. As oil is considered to be a major component of supply chain, its changing price can have an impact on onshore as well as offshore production activities. Hence retaining the profits during fluctuating oil prices requires a balancing act between static and flexible supply chain management strategies.

To add, lower oil prices and fuel costs can add income to the consumers. This can create demand for the products which can strain supply chain management systems.

When there are fluctuating oil prices and prices are volatile, supply chain managers look for a flexibility supply chain.

When oil prices are less, there may be political and environmental factors can quickly lead to back up of prices which may create headaches to global supply chain management. Hence supply chain managers would like to create flexibility by segmenting their supply chains and embracing green initiatives. This can be done by choosing alternative fuel for vehicles that reduces the cost and also creating a good name in the eyes of the public