Infrastructural products. Without a sustainable source and

Infrastructural Risk focuses mainly on the physical aspects of a business which contributes to its advancement through new/current investments made in order to ensure further efficiency in the business’s progress. Risk is found when production (depending on the industry) affects the general core processes. It is found internally within the company; infrastructural risk can be seen upon different various scenarios depending on the company’s actions from the past to potential actions that are implemented. The risks will gradually be more obvious in the long run, causing the company to resolve this issue quickly before it incurs a huge loss.

A case in 2015 shows a large, prominent risk that H&M faced due to its action as a company in keeping a clean record in terms of their safety for production. In Bangladesh, where their factories dealing with the sewing of their products are located at, are not in a proper and checked environment. Matter of fact in 2010, 21 workers died in a fire at their supplier factory due to the lack of proper emergency exits and safety procedures.

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Due to a disruption of the process of making their products, it would cause inefficiencies to the company’s output. (Clean Clothes, 2015)Risk is also found upon climate changes that can definitely affect the production outcome, even to deliveries when it comes to retail companies. H’s line of clothing heavily relies on cotton which is naturally harvested and then used to produce clothes alongside with other types of materials used in products. Due to Global Warming, natural materials are varying which caused fluctuations to their source of products. Without a sustainable source and a mindset for alternatives, this can cause a critical blow to the company’s profits and long term advancement. A company must strike a balance among supply chain speed, efficiency and variability. With H’s focus on efficiency and variability, 80% of its suppliers are in Asia to maintain competitive pricing. However, the lack of focus in speed has caused multi-month lead times for many of its products.

This resulted in H&M’s incapability to respond to any sudden shifts in weather. The poor inventory control and supply chain management has led to the increment of excessive inventory as well as lengthened the timing for products to reach every store. On contrary, its competitor Zara, has 65% of its production from Spain, Portugal, Turkey and North Africa which therefore allowed the company to lead multi-weekly and increase its agility. (Supply Chain Dive, 2016)


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