SHOCKS TO THE SUPPLY CHAIN

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Description: Today, the biggest problem -- faced not only by manufacturers but also by service companies like restaurants -- is the rising cost of the supply chain. This is not necessarily because of the manufacturing piece of the chain, which can be performed in low-wage countries, but because of the rapid rise in transport costs. Obviously, the price of oil hovering above $90 a barrel boosts cost of production. But it also means a huge increase in the expense of transporting parts and completed goods. And the issue goes beyond energy costs. Part of the problem in today's global business environment is that supply chains can be 10,000 miles long. Not only does that increase the risk of something going wrong somewhere along those 10,000 miles, but with oil prices pushing $100 a barrel, transport expenses tumble out of control because at every mile more energy is being used.
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