As I'm sure most of you have noticed, the price of crude oil has been trending significantly downward recently. I think it's fair to say that prices remain pretty volatile. What does this mean for our recent discussion on how high oil prices will affect supply chain strategy?
Certainly the recent dip in oil prices (and therefore diesel prices) has likely provided a temporary reprieve from the seemingly ever increasing transportation costs that people have been coping with. However, how long can we expect prices to remain relatively low? If I knew the answer to that, I would switch careers.
To me, the volatility only strengthens the argument for frequent use of optimization and supply chain decision support tools. Supply chain planners need to be prepared to answer questions and adjust strategy as conditions outside of their control change. Oil prices can rise and fall, currency exchange rates can fluctuate, ports can close, labor rates can change, markets can move, etc., etc. Being able to model the supply chain, and test different scenarios will enable companies to more quickly adapt their strategies to take advantage of new opportunities and adjust to new challenges.