Answers:
Hedging in this context means protecting the existing
or expanding supply chain position. Hedging caters to risk scenarios related to
high price fluctuations. Hedging helps the purchasing department in
transferring and managing risks. Using hedging strategies, a company can design
supply chain in a way that any loss incurred in one part of the supply chain
can be offset by the gains obtained in another part. A company which has
adopted this strategy is Volkswagen. Volkswagen has its operating plants spread
over a wide geographical area.