Multiple contracting is also a type of hedging strategy which saves companies against supplier monopoly.
Controlling
Some companies make use of vertical integration in order to reduce the supply chain risks. Partial integration is also a strategy which enables the company to transfer higher risks to the supplier end while also ensuring complete utilization of its resources. Flexible clauses in supply chain contracts that account for these structural changes are also an important part of risk management and need to be catered to.
Risk Sharing Supply chains operating on a global scale make use of a plethora of risk sharing strategies such as outsourcing and off-shoring. Outsourcing allows the company to distribute its risks to its suppliers across borders. Off-shoring on the other hand is used to focus on core functions while outsourcing riskier options. A common application of off-shoring is found in treasury services in order to avoid foreign exchange rate risks.
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