Description
Statement of problem & motivation
Definitions
Risk management for supply chains
Stabilization on the different management levels
Conclusion
Ways to develop a robust supply chain
Jens Schumacher
FHV
Content
! Statement of problem & motivation
! Definitions
! Risk management for supply chains
! Stabilization on the different management levels
! Conclusion
Statement of problem & motivation
Statement of problem
! Increasing number of natural disasters
! 2011:Tsunami Japan, Flood Thailand, Drought East
Africa, Typhoon Philippines, Storms USA
! They lead to disruptions in production & trade
! Flood Thailand 2011- Example: Sony
! Flooded the factories for (external) hard disk drives away
! Worldwide increase of prices & delivery delays of hard disks
! Product introductions had to be postponed (components have
not been available)
! Loss of 25 billion Yen (233 million !) due to flood and weak Yen
! And still not recovered
! Disruptions become of greater impact
! For a single company
! For its supply chain
! For its market & consumers
How and in which manner can a SC be
stabilized? And how is intelligent cargo
influencing on this positively?
! Find holistic approach
! On strategic, tactical,
operational level
! Interaction of each
management level
! Outline reasons and
ways how intelligent
cargo can lead to "
! Stabilization
! General and competitive
advantages
! Optimization
! Sustainability
Motivation
Stabilized SC
SC
controlling
SC risk
management
Methods on
management
levels
Definitions
The supply chain
Stabilization
Robust, reliable, resilient
The Supply Chain
! Linkages
! Supplier
! Manufacturer
! Consumer
! Transport in-between
! Environment
! International
! Information exchange
! Dynamic & changing
! Complex
Supplier Manufacturer Consumer Transport Transport
! Stabilization
! Stability = The absence of strong fluctuations (as
opposed to foreign influences)
1
! minimize influences; strengthen again influences; measure
fluctuations and act when necessary
! Against internal, micro and macro risks influencing the SC
! Make the supply chain robust, reliable and resilient!
1 DWDS-Projekt, Berlin-Brandenburgische Akademie der Wissenschaften. (2011). Digitales Wörterbuch der deutschen Sprache. Retrieved
04 01, 2012, fromhttp://www.dwds.de/?kompakt=1&qu=Stabilität
Aim is to have a supply chain that is"
• SC performs well with respect to uncertain future
conditions
1
• For example, costs or travel times
Robust
• SC performs well when parts of the system fail
2
• For example, when a distribution center becomes
unavailable because of poor weather
Reliable
• Ability to, and speed at which they can, return to their
normal performance level following a disruption
3
• Not only continue operating, but also to turn this
resilience into competitive advantage
Resilient
1 Investopedia. (n.s.). robust. Retrieved 03 22, 2012, from Investopedia:http://www.investopedia.com/terms/r/robust.asp#ixzz1vDKFUgZF
2 Snyder, L. V. (2003). Dissertation: Supply Chain Robustness and Reliability: Models and Algorithms. Evanston: n.s.
3 Sheffi, J. (2006). Resilience reduces risks. Logistics Quarterly, 12-15
Risk management for supply chains
Introduction
Residual risk
Occurrence of risk in a supply chain
Aim and procedure
Generic strategies
Types of risks
Risks in logistics on management levels
General
! What is risk management
for supply chains?
! „The management of
supply chain risk through
coordination and
collaboration among the
supply chain partners so as
to ensure profitability and
continuity“
1
! How is this risk defined?
! A damage that is weighted
with its probability of
occurrence and this
damage affects more than
one company of the supply
chain. The causes of such
damages can be within a
company, within the supply
chain or in their
environment
2
! For the assessment of risks
two dimensions are taken
into account: The extent of
damage and the
probability
3
1 C.S. Tang (2006). Perspectives in Supply Chain Risk Management: A Review. Los Angeles: UCLA Anderson School
2 Dipl.-Kfm. Kemmerling, R. (2008, 04 17). European Association for Defence Public Private Partnership. Retrieved 04 15, 2012, fromhttp://www.eppp.org/cms/attachments/
087_Vortrag_Kemmlering.pdf
3 ISCM. (n.s.). Institute for Supply Chain Management . Retrieved 05 18, 2012, fromhttp://www.ebs.edu/smi/2520.html
Residual risk
1
! selecting a suitable risk appearing encounter in
implementing the strategy and subsequent action
! Risk is always # 0 !!
! For the residual risk once again, a risk strategy
meeting will be elected until the risk of volume
reduced to an acceptable level for the company
! Individual for each company (e.g. risk appetite of
managers)
1 BITKOM. (n.s.). BITKOM Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V. Retrieved 5 8, 2012, fromhttp://www.bitkom.org/de/publikationen/38337_39864.aspx
Occurrence of risk in a supply chain
Supplier Manufacturer Consumer Transport Transport
Supplier risk Manufacturer risk Consumer risk
Control risk Control risk
I
n
t
e
r
n
a
l
M
i
c
r
o
M
a
c
r
o
C
u
l
t
u
r
e
I
n
t
e
r
e
s
t
r
a
t
e
s
F
o
r
e
i
g
n
c
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m
p
e
t
i
t
i
o
n
G
o
v
e
r
n
m
e
n
t
Aim and procedure of SCRM
! It is the aim of supply
chain risk management
to recognize potential
damages from the
supply side for the
company at an early
stage and to counteract
them
1
.
! Expenses for SCRM
must be relative to the
prevented risk / loss!
! Procedure
2
Risk
identification and
modeling
Risk analysis,
assesment and
impact
measurement
Risk mangement
Risk monitoring
and evalutation
1 ISCM. (n.s.). Institute for Supply Chain Management . Retrieved 05 18, 2012, fromhttp://www.ebs.edu/smi/2520.html
2 Zsidsin, B. R. (2009). Supply Chain Risk – A Handbook of Assessment, Management, and Performance. New York: Springer Science +
Business Media
Generic strategies for SCRM
1
! Risk reduction / avoidance
! Risk transfer
! Risk control
1 Institut für Logistik und Unternehmensführung. (n.s.). Technische Universität Hamburg-Harburg. Retrieved 04 06, 2012, from http://
www.logu.tu-harburg.de/de/forschung/supply-chain-risk-management
Types of risks
1
Natural
disasters
Accidents Disasters
perpetrated by
humans
Nature of global
trade
Hurricanes
Earthquakes
Tsunamis
In any form Terrorist attacks
Sabotage
Labour disputes
Border
inspection
delays
Traffic
congestions
1 Sheffi, J. (2006). Resilience reduces riks. Logistics Quarterly, 12-15.
Risks in logistics on management levels
Strategic
risks
Tactical
risks
Operational risks
Technical-related risks
Smooth functioning of material, product and information flows and trouble-
free operating of logistic infrastructure
Personnel-related risks
Qualifications of staff and process control by employees
Organization-related risks
Scheduling and feasibility of logistic processes
Environment-related risks
Risks from the corporate strategy
Risks of expansion and growth strategies; risks of location and capacity
strategies
Risks from the corporate logistics strategy
Risks arising from strategic decisions of the procurement, production and
distribution logistics; risks from non-optimal tuning of parameters of the
logistical process
Risks from the company's overall logistics strategy
Configuration of the logistics chain / logistics network; Coordination and
control mechanisms in the supply chain / in Logistics network; IT structures in
the supply chain / logistics network
Technical-related risks
Guarantee functioning of all flows and logistic infrastructure
Quality-related risks
Guarantee quality of products, services and processes
Personnel-related risks
Qualifications of staff and managerial behaviour
Organization-related risks
Scheduling and control security of logistic processes
Problems and importance of robustness
on the management levels
Strategical, tactical & operational
Strategic
• Cost-effective design
• Lay-out of entire network and individual logistic systems
• Evaluation of investment decisions
• Choosing right partners and linkages
• Right way and depth of communication
• Map strategies for corporate, logistics and overall logistics
Important tasks
• Results from strategic decisions like
• JIT concepts
• Global sourcing, single sourcing or combination of both
• Have far-reaching impact on company and supply chain members, too
Risks
• Finding good partners
• Holding relationship
• Profit of a partnership
• Internal up- and downwards as well as external horizontal and vertical information exchange
Problems
Tactical
• Creation and execution of robust supply chain
• Risk mitigation strategies
• Increase flexibility in transportation and supply
Important tasks
• Corporate strategy and supply chain strategy as well as their execution need to be linked (for
all members of supply chain)
• Communication and motivation may differ between members of supply chain
• Too less trust between members of supply chain
Risks
• Develop network may be situated in uncertain conditions
• The bigger the network the more the effect can be far-reaching, extensive, complex and
beyond one’s control
Problems
Operational
• Coordination and control of the movements in the supply chain in real-time
• Focus on smoothly running processes
Important tasks
• All risks associated with the daily business
• Transport risk, e.g. loss or damage of the goods by accident or other events
• Seasonality (problematic for utilization rates)
• Other liability-related issues
Risks
• React and respond quickly on problems
• Too less integration of supply chain with no improved communication and too less flexibility
makes not resilient and transparent
Problems
Stabilization on the different
management levels
Strategical, tactical & operational
Management levels
Strategic
risks
Tactical
risks
Operational risks
! Multisourcing
! Simulations
! Synchroshipping/ Multimodal
! Intelligent cargo
Bottom
Up
Approach
Certify origin
and transit rights
Verify customs
authorisation
Identify shipment
Qualify content
Track cargo conditions
EURIDICE:
Service Combination on the Fly
! Combine required
services :
! Cargo observation
! Customs handling
! Transport controlling
! ...
EURIDICE:
Virtual representation of cargo
Real world
Virtual world
truck
container
item
item
item
Position
Speed
Latency
"
Cargo
Temp.
Erruptions
"
ID
Condition
Humidity
"
"
= Sensors / Devices / RFID
! De-coupling of business-specific services from the
distributed Multi-Agent-System
! decouple from communication problem
! Robustness (+)
! decouple from concurrent behavior problem
! robustness (+), maintainability (+), complexity (-)
! Share Cargo-specific knowledge also on server-side (see
example)
! Decrease communication amount
! Performance (+), communication-costs (-)
! Overcome connection problems
! Performance (+), robustness (+)
EURIDICE:
Intelligent Cargo Network - Benefits
The legacy of EURIDICE
! EURIDICE showed that
! intelligent cargo can provide a unified concept for taking
decisions at a local level
! intellient cargo and its role in the modern supply chain
can play a central role in achieving customer satisfaction
and a robust supply chain
! The EURIDICE vision of the future implies that
! to achieve the full potential of intelligent cargo data and
information needs to be securely detached from its owner
! ICT, esp. the cloud, can enable ubiquitious information
storage and retrieval
iCargo: Approach (1)
Common
Framework
New low-CO2 services offer,
Better utilization of resources
Less GHG emissions,
Less traffic
Optimized solutions for
environmental
efficiency
Higher penetration of ICT-
based services in the
logistics market
Logistics
Companies
Community
ICT for
Transport
Research &
Industry
Logistics
users
No. 30 © Logica 2010. All rights reserved
iCargo: The idea visualised
Real-time automated event management
Interoperable cargo, vehicle and infrastructure
Dynamic multi-actor plans
Cooperative freight business ecosystem
Origin Destination
Terminal Carrier
Truck
Planner
Pallet Shipment
Ship
Carrier
Container
Forwarder
Truck
Terminal
Customs
Package
Distr.
Center
Container Truck
Traffic
Mgmt
Infra-
structure
Field
operator
Package
Local
Carrier
Distributor
Distrib.
Planner
Vehicle
Infrastructure Field user
Logistic Services
Authority Shipper
Cargo
Shipment from factory In-city delivery Long haul transport
Road transport
Conclusion
Conclusion
! Robust supply chains become more attractive as
the lead to a better utilization of the existing
resources
! An integrated approach is needed to build
interdisciplinary tools for robust supply chains
! At the operational level intelligent cargo can be
used to support a coherent holistic towards
environmental friendly robust supply chains
Thank you for your attention
doc_266245472.pdf
Statement of problem & motivation
Definitions
Risk management for supply chains
Stabilization on the different management levels
Conclusion
Ways to develop a robust supply chain
Jens Schumacher
FHV
Content
! Statement of problem & motivation
! Definitions
! Risk management for supply chains
! Stabilization on the different management levels
! Conclusion
Statement of problem & motivation
Statement of problem
! Increasing number of natural disasters
! 2011:Tsunami Japan, Flood Thailand, Drought East
Africa, Typhoon Philippines, Storms USA
! They lead to disruptions in production & trade
! Flood Thailand 2011- Example: Sony
! Flooded the factories for (external) hard disk drives away
! Worldwide increase of prices & delivery delays of hard disks
! Product introductions had to be postponed (components have
not been available)
! Loss of 25 billion Yen (233 million !) due to flood and weak Yen
! And still not recovered
! Disruptions become of greater impact
! For a single company
! For its supply chain
! For its market & consumers
How and in which manner can a SC be
stabilized? And how is intelligent cargo
influencing on this positively?
! Find holistic approach
! On strategic, tactical,
operational level
! Interaction of each
management level
! Outline reasons and
ways how intelligent
cargo can lead to "
! Stabilization
! General and competitive
advantages
! Optimization
! Sustainability
Motivation
Stabilized SC
SC
controlling
SC risk
management
Methods on
management
levels
Definitions
The supply chain
Stabilization
Robust, reliable, resilient
The Supply Chain
! Linkages
! Supplier
! Manufacturer
! Consumer
! Transport in-between
! Environment
! International
! Information exchange
! Dynamic & changing
! Complex
Supplier Manufacturer Consumer Transport Transport
! Stabilization
! Stability = The absence of strong fluctuations (as
opposed to foreign influences)
1
! minimize influences; strengthen again influences; measure
fluctuations and act when necessary
! Against internal, micro and macro risks influencing the SC
! Make the supply chain robust, reliable and resilient!
1 DWDS-Projekt, Berlin-Brandenburgische Akademie der Wissenschaften. (2011). Digitales Wörterbuch der deutschen Sprache. Retrieved
04 01, 2012, fromhttp://www.dwds.de/?kompakt=1&qu=Stabilität
Aim is to have a supply chain that is"
• SC performs well with respect to uncertain future
conditions
1
• For example, costs or travel times
Robust
• SC performs well when parts of the system fail
2
• For example, when a distribution center becomes
unavailable because of poor weather
Reliable
• Ability to, and speed at which they can, return to their
normal performance level following a disruption
3
• Not only continue operating, but also to turn this
resilience into competitive advantage
Resilient
1 Investopedia. (n.s.). robust. Retrieved 03 22, 2012, from Investopedia:http://www.investopedia.com/terms/r/robust.asp#ixzz1vDKFUgZF
2 Snyder, L. V. (2003). Dissertation: Supply Chain Robustness and Reliability: Models and Algorithms. Evanston: n.s.
3 Sheffi, J. (2006). Resilience reduces risks. Logistics Quarterly, 12-15
Risk management for supply chains
Introduction
Residual risk
Occurrence of risk in a supply chain
Aim and procedure
Generic strategies
Types of risks
Risks in logistics on management levels
General
! What is risk management
for supply chains?
! „The management of
supply chain risk through
coordination and
collaboration among the
supply chain partners so as
to ensure profitability and
continuity“
1
! How is this risk defined?
! A damage that is weighted
with its probability of
occurrence and this
damage affects more than
one company of the supply
chain. The causes of such
damages can be within a
company, within the supply
chain or in their
environment
2
! For the assessment of risks
two dimensions are taken
into account: The extent of
damage and the
probability
3
1 C.S. Tang (2006). Perspectives in Supply Chain Risk Management: A Review. Los Angeles: UCLA Anderson School
2 Dipl.-Kfm. Kemmerling, R. (2008, 04 17). European Association for Defence Public Private Partnership. Retrieved 04 15, 2012, fromhttp://www.eppp.org/cms/attachments/
087_Vortrag_Kemmlering.pdf
3 ISCM. (n.s.). Institute for Supply Chain Management . Retrieved 05 18, 2012, fromhttp://www.ebs.edu/smi/2520.html
Residual risk
1
! selecting a suitable risk appearing encounter in
implementing the strategy and subsequent action
! Risk is always # 0 !!
! For the residual risk once again, a risk strategy
meeting will be elected until the risk of volume
reduced to an acceptable level for the company
! Individual for each company (e.g. risk appetite of
managers)
1 BITKOM. (n.s.). BITKOM Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V. Retrieved 5 8, 2012, fromhttp://www.bitkom.org/de/publikationen/38337_39864.aspx
Occurrence of risk in a supply chain
Supplier Manufacturer Consumer Transport Transport
Supplier risk Manufacturer risk Consumer risk
Control risk Control risk
I
n
t
e
r
n
a
l
M
i
c
r
o
M
a
c
r
o
C
u
l
t
u
r
e
I
n
t
e
r
e
s
t
r
a
t
e
s
F
o
r
e
i
g
n
c
o
m
p
e
t
i
t
i
o
n
G
o
v
e
r
n
m
e
n
t
Aim and procedure of SCRM
! It is the aim of supply
chain risk management
to recognize potential
damages from the
supply side for the
company at an early
stage and to counteract
them
1
.
! Expenses for SCRM
must be relative to the
prevented risk / loss!
! Procedure
2
Risk
identification and
modeling
Risk analysis,
assesment and
impact
measurement
Risk mangement
Risk monitoring
and evalutation
1 ISCM. (n.s.). Institute for Supply Chain Management . Retrieved 05 18, 2012, fromhttp://www.ebs.edu/smi/2520.html
2 Zsidsin, B. R. (2009). Supply Chain Risk – A Handbook of Assessment, Management, and Performance. New York: Springer Science +
Business Media
Generic strategies for SCRM
1
! Risk reduction / avoidance
! Risk transfer
! Risk control
1 Institut für Logistik und Unternehmensführung. (n.s.). Technische Universität Hamburg-Harburg. Retrieved 04 06, 2012, from http://
www.logu.tu-harburg.de/de/forschung/supply-chain-risk-management
Types of risks
1
Natural
disasters
Accidents Disasters
perpetrated by
humans
Nature of global
trade
Hurricanes
Earthquakes
Tsunamis
In any form Terrorist attacks
Sabotage
Labour disputes
Border
inspection
delays
Traffic
congestions
1 Sheffi, J. (2006). Resilience reduces riks. Logistics Quarterly, 12-15.
Risks in logistics on management levels
Strategic
risks
Tactical
risks
Operational risks
Technical-related risks
Smooth functioning of material, product and information flows and trouble-
free operating of logistic infrastructure
Personnel-related risks
Qualifications of staff and process control by employees
Organization-related risks
Scheduling and feasibility of logistic processes
Environment-related risks
Risks from the corporate strategy
Risks of expansion and growth strategies; risks of location and capacity
strategies
Risks from the corporate logistics strategy
Risks arising from strategic decisions of the procurement, production and
distribution logistics; risks from non-optimal tuning of parameters of the
logistical process
Risks from the company's overall logistics strategy
Configuration of the logistics chain / logistics network; Coordination and
control mechanisms in the supply chain / in Logistics network; IT structures in
the supply chain / logistics network
Technical-related risks
Guarantee functioning of all flows and logistic infrastructure
Quality-related risks
Guarantee quality of products, services and processes
Personnel-related risks
Qualifications of staff and managerial behaviour
Organization-related risks
Scheduling and control security of logistic processes
Problems and importance of robustness
on the management levels
Strategical, tactical & operational
Strategic
• Cost-effective design
• Lay-out of entire network and individual logistic systems
• Evaluation of investment decisions
• Choosing right partners and linkages
• Right way and depth of communication
• Map strategies for corporate, logistics and overall logistics
Important tasks
• Results from strategic decisions like
• JIT concepts
• Global sourcing, single sourcing or combination of both
• Have far-reaching impact on company and supply chain members, too
Risks
• Finding good partners
• Holding relationship
• Profit of a partnership
• Internal up- and downwards as well as external horizontal and vertical information exchange
Problems
Tactical
• Creation and execution of robust supply chain
• Risk mitigation strategies
• Increase flexibility in transportation and supply
Important tasks
• Corporate strategy and supply chain strategy as well as their execution need to be linked (for
all members of supply chain)
• Communication and motivation may differ between members of supply chain
• Too less trust between members of supply chain
Risks
• Develop network may be situated in uncertain conditions
• The bigger the network the more the effect can be far-reaching, extensive, complex and
beyond one’s control
Problems
Operational
• Coordination and control of the movements in the supply chain in real-time
• Focus on smoothly running processes
Important tasks
• All risks associated with the daily business
• Transport risk, e.g. loss or damage of the goods by accident or other events
• Seasonality (problematic for utilization rates)
• Other liability-related issues
Risks
• React and respond quickly on problems
• Too less integration of supply chain with no improved communication and too less flexibility
makes not resilient and transparent
Problems
Stabilization on the different
management levels
Strategical, tactical & operational
Management levels
Strategic
risks
Tactical
risks
Operational risks
! Multisourcing
! Simulations
! Synchroshipping/ Multimodal
! Intelligent cargo
Bottom
Up
Approach
Certify origin
and transit rights
Verify customs
authorisation
Identify shipment
Qualify content
Track cargo conditions
EURIDICE:
Service Combination on the Fly
! Combine required
services :
! Cargo observation
! Customs handling
! Transport controlling
! ...
EURIDICE:
Virtual representation of cargo
Real world
Virtual world
truck
container
item
item
item
Position
Speed
Latency
"
Cargo
Temp.
Erruptions
"
ID
Condition
Humidity
"
"
= Sensors / Devices / RFID
! De-coupling of business-specific services from the
distributed Multi-Agent-System
! decouple from communication problem
! Robustness (+)
! decouple from concurrent behavior problem
! robustness (+), maintainability (+), complexity (-)
! Share Cargo-specific knowledge also on server-side (see
example)
! Decrease communication amount
! Performance (+), communication-costs (-)
! Overcome connection problems
! Performance (+), robustness (+)
EURIDICE:
Intelligent Cargo Network - Benefits
The legacy of EURIDICE
! EURIDICE showed that
! intelligent cargo can provide a unified concept for taking
decisions at a local level
! intellient cargo and its role in the modern supply chain
can play a central role in achieving customer satisfaction
and a robust supply chain
! The EURIDICE vision of the future implies that
! to achieve the full potential of intelligent cargo data and
information needs to be securely detached from its owner
! ICT, esp. the cloud, can enable ubiquitious information
storage and retrieval
iCargo: Approach (1)
Common
Framework
New low-CO2 services offer,
Better utilization of resources
Less GHG emissions,
Less traffic
Optimized solutions for
environmental
efficiency
Higher penetration of ICT-
based services in the
logistics market
Logistics
Companies
Community
ICT for
Transport
Research &
Industry
Logistics
users
No. 30 © Logica 2010. All rights reserved
iCargo: The idea visualised
Real-time automated event management
Interoperable cargo, vehicle and infrastructure
Dynamic multi-actor plans
Cooperative freight business ecosystem
Origin Destination
Terminal Carrier
Truck
Planner
Pallet Shipment
Ship
Carrier
Container
Forwarder
Truck
Terminal
Customs
Package
Distr.
Center
Container Truck
Traffic
Mgmt
Infra-
structure
Field
operator
Package
Local
Carrier
Distributor
Distrib.
Planner
Vehicle
Infrastructure Field user
Logistic Services
Authority Shipper
Cargo
Shipment from factory In-city delivery Long haul transport
Road transport
Conclusion
Conclusion
! Robust supply chains become more attractive as
the lead to a better utilization of the existing
resources
! An integrated approach is needed to build
interdisciplinary tools for robust supply chains
! At the operational level intelligent cargo can be
used to support a coherent holistic towards
environmental friendly robust supply chains
Thank you for your attention
doc_266245472.pdf