Global Sourcing Logistics: How to Manage Risk and Gain Competitive Advantage in a Worldwide Marketplace

CURRENCY ISSUES

Money has to be moved between the United States and a

company’s foreign manufacturing partners. Stability of cur-

rency provides “ease” of trade. Instability makes it more

complex, which introduces risk. If the money changing

hands amounts to tens of millions of dollars, a .5% devia-

tion could affect the profitability of the supply chain or the

specific transactions involved. A 4% deviation could prove

disastrous.

Larger companies have specific personnel in their finan-

cial departments who watch and manage information on

currency valuations. A smaller company that may not have

specific personnel still must set up systems, internally or

outsourced, that protect and hedge against currency fluctu-

ations. The opposite of risk is also present ...