Read the Article from The Economist
Recently an article was published in The Economist, titled, OPEC Reached a Deal to Cut Production. This article states that OPEC as final decided the amount to which they are going to cut back production on oil and for a duration of 6 months. It has been said that the cut in production may drive the price per barrel of oil upwards of $60. If this does in fact occur, we will see a drastic rise in the price of gas at the pump. While this will impact those who rely on a vehicle for transportation, it will indirectly affect the world market.
With a rise in gas prices we will see a rise in cost of all goods. Suppliers will be paying more for fueling for transportation and production –industry dependent. While the impact may be relatively small, increases in transportation cost like this present new challenges for supply chain leaders to analyze. With a small increase, it may be worthwhile to simply pay additional cost incurred during production. On the contrary, with oil being non-replenishing natural resource, people can consider alternative methods to use in production. From this I see two main implications in the supply chain.
First, people may be looking at more fuel efficient trucks or even alternative fueled vehicles to lower costs of production. Or secondly, there will be, and already are, jobs out there for people working in these developing fields. There will be demand for people in supply chain to keep these businesses organized. In reflection, supply chain management is a great field to be getting into at this point because of all the technological advances demanded of our economy.
Finally, searching for more efficient alternative fuels is a great platform in regards to corporate social responsibly. We know that oil is a limited resource, and large companies should recognize their consumption, and limit that in order to preserve our environment. Also in looking for alternative fuels, they can choose options that have a significantly lesser impact on the environment, ultimately decreasing their carbon footprint.