Risk Hedging Supply Chain

Because of low costs in component manufacturing and assembly, most companies prefer to locate these two major processes in the EE. However, to hedge against supply side risk, they may choose to import some of the components from ME at higher cost (Blanco 2009). By assembling the imported components in EE and exporting the finished products to the ME, the manufacturer can take advantage of economic incentives such as the duty-drawback and local-content rules in EE. On the other hand, if the company chooses to use locally produced 

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Jammemegg W, Paulitsch M (2004) Portfolio Procurement Strategies and Speculative Inventory for Risk-Hedging Supply Chains. Proceedings of the Eu-rOMA Conference INSEAD Fontainebleau 323-332. 

One of the major effects of the Internet on supply chain practices is in the area of procurement. Firms now utilize the Internet not only to diversify the supply base and hedge the risk but also to obtain lower costs through auctions. Several new firms such as FreeMarkets have built their business model around business-to-business supply auctions. Several other firms like Ariba and Com-merceOne have added auction capabilities to their product suite. In this section we present several papers that address important issues related to supply chain management... 

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