The defense industry crushes the risks found within supply chains by tackling three key aspects of the industry. Experts look at supplier risk, narrowing profit margin, and demand risk. Controlling these prevents the market from crumbling and counterfeit products from even coming in.
Supplier risk comes with product failures that can lead to disastrous events. This is why quality control Is essential for the aviation industry. Products need to be tested out to prove to work as intended. Buying from suppliers who have not been in the market for long is risky. They may not be quality products or just bad imitations. To battle this, buyers need to purchase from well-established suppliers who have demonstrated their products work.
Narrowing profit margins is the second aspect looked at.
To deal with profit and job losses that come from renegotiating contracts because of budget cuts, some suppliers compromise the quality of the parts they sell. This leads to inferior products to enter the market without notice. Congress has failed to act thus far, and a long-term strategy has to be established soon to prevent this from continuing, especially when there is little room for error in this industry.
Demand risk come from budget cuts and a natural fluctuation in the market. Manufacturers find ways to offer protection for suppliers to avoid financial burdens when there is a deficiency in demand. Rising cost is one way companies prevent their profits from diminishing ever further. Aging programs also offer a risk, as continuing to invest in a program may no longer yield as much profit as originally anticipated.
Focusing on this at once is not possible- or smart. Each risk has to be tackled separately through a series of strategies, not just one. If any problems arise, managing each glitch one at a time turns out to be more efficient- as the entire plan does not collapse at once.
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