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As globalization continues, companies around the world are diversifying their supply chains and exploring outsourcing options. Expectations for supply chains are steadily increasing. The goal is for consumers to receive goods at lower prices and higher qualities in a timely manner. However, these are all contingent upon the political atmosphere. A company's supply chain in a particular country depends heavily on the restrictions on market access, transport and logistic services infrastructure, and the business environment.
One example of a regulation that has impacted supply chains is the restriction of hazardous substances (RoHS). This law restricts the use of certain chemicals and components such as lead and mercury. Many electronic products are affected by this restriction, as they cannot contain more than 0.1 percent of the banned substances. This rule is strictly regulated by the European Union (EU); as a result, many appliance manufacturers are faced with the decision of whether to redesign their products or to forgo the entire EU market.
Political instability can also affect global supply chains. It brings damages to not only companies but also countries in the affected region. For example, in 2018, companies with operations in Crimea, Ukraine, reexamined their situation and initialized emergency plans in some severe cases.
Products are being processed and transported to all parts of the world. This collaboration among countries allows for specialization and lowers overall production costs. However, at the same time, it is also vulnerable to instability and trade wars. As more and more productions are taking place in developing countries, global supply chains are acting as links between the economic gaps. It is important for developing countries to implement policies that will stabilize their economy in order to create global supply chains that are more efficient and reliable.
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