Russia’s violent invasion of Ukraine disrupted supply chain worldwide

The uncertainties created by the Russian military have had a detrimental effect on exchange rates, which will continue to rise. Russia’s rubble is rapidly losing value

Supply chain management in trouble:

As part of globalization, the world has become increasingly entrenched by the supply chain, and the supply chain network is becoming even more global due to the use of computers and digital technology. Companies around the world are focusing on the core competencies of their products, with the exception of a number of companies (sub-manufacturers) around the world producing and distributing potters and processes. Lets hand over. For this, the company needs minute-to-minute information from its potters and manufacturers of other services. That information has been made possible by modern information technology. But Russia’s attacks on Ukraine have halted this process to some extent.

Just in time inventory:

Japan was the first country to invent and implement the concept of Justin Time Inventory. Just in time inventory means that when a craftsman is working on a motor car and he wants to put the engine in the car, at the same minute I want him to come by the truck entering the engine factory. This may be an exaggeration by the workers but the world has adopted the principle of just in time inventory from Japan and now every company is giving importance to ‘inventory management’. These inventory consists of four types of raw materials, supplies, potters and finished goods and Most companies keep it ‘overstocked’ for about three months so that there is no crisis in the supply of goods. The principle of supply chain management applies to all three areas: input, processing and output of materials. Prices of biscuits, electricity, water supply, vegetables, etc. skyrocketed.

Trouble of suppliers:

Companies in India, and especially government accounts and government companies, spend a lot of time paying goods to suppliers. Millions of sugarcane farmers deliver their sugarcane to the sugar mills and these manufacturers take a long time to pay the price of sugarcane to the farmers so in the meanwhile the farmers have to take loans from the lenders at high interest rates to cover the household expenses. When there are millions of farmers (like millions of farmers in grain and sugarcane or cotton and vegetables) and few companies selling their crops, the factory owners wield immense power over such farmers. This situation is not called monopoly by economists but monopsony which means that there are only one or two buyers and thousands of suppliers.

Rise of Logistics:

The science of moving goods and passengers in English is called logistics, and the field of linear, nonlinear and integer programming has evolved since World War II (16-19) when it was in its infancy. The mathematical rigor of the science of evolution, which was previously based on conjecture or conjecture, came to be. Management and thus companies in the field of transportation (railways, trucks, airlines etc.) took full advantage of this and reduced the cost of transportation. Even within the company, manufacturing departments began to reap the benefits of ‘logistics’. Factories began to use small trucks, trailers, etc. for transportation and storage of goods. Now that Russia has cut off Ukraine’s transportation and rail or road services, and many countries around the world have imposed rules against Russian airlines entering their countries’ borders, the supply chain, which is a logistical system, is crumbling.

Currency Problem:

The biggest question is the exchange rate. Like stock markets, exchange rates are more volatile. The uncertainties created by the Russian military have had a detrimental effect on exchange rates, which will continue to rise. Russia’s rubble is rapidly losing value.

This will have the opposite effect on Russia’s imports and exports. One advantage for Russia is that it has huge oil and gas reserves. Saudi Arabia ranks first, followed by Russia in terms of gas and fuel oil production. But at the same time, it should be noted that the United States has accumulated billions of barrels of gasoline through its shell-production system. America has reserved this huge reserve in its true sense.

Conclusion:

Although the current invasion of Russia by Ukraine will break the backs of the general public, leading to which petrol-diesel-gas prices are going up and down with a bang. This will have a detrimental effect on India’s stock markets as well as the entire financial system as well as the budgets of the central and state governments. The amount allocated in the budget will be worth dwarf size

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COURTESY : GUJARAT SAMACHAR DHAVAL MEHTA 20032022