The role of supply chain management on the exposure to exchange rate

3480 palabras 14 páginas

This paper investigates the direct connections between supply chain management scope and the exposure of firms to exchange rate changes. It takes into consideration the configuration of the supply chain as a direct hey driver over the endogenous exposure of companies and intends to categorize them according to the nature of their operations. In addition, it explores the role of supply chain management over the application of operational hedging and the implications financial hedging decision over supply chain management departments. In any case, it remarks that the collaboration between decisions makers of financial
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The rationality of management therefore, might not consider this type of risk as a strategic issue to define decision making. But some authors have suggested that even companies with majority of local supply and domestics sales in fact have some level of exposure (Adler & Dumas, 1984) (El-Masry & Abdel Salam, 2007). However, they refer mainly to general exposure levels of the company but not directly related to supply chain operations so for sure part of this exposure could be assigned to non-operational activities directly e.g. liabilities in foreign currencies

No often, the supply chain of the company might also be exposed in indirect ways to exchange rates volatility. There might be cases when foreign competitor’s competiveness increases due to strong local currency giving them bigger margins. And more directly related both suppliers and customers of the firm might have operations in other

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