05: Risk handling I Proactive Flashcards
What are the two areas of risk management in the 3. step risk handling
- Proactive: cause-oriented or proactive approaches
- Reactive: Effect-oriented or reactive approaches
–>Both require prior prepartion!
What are the 4 areas of proactive supply risk. mgmt approaches?
- Supply chain security
- operational strategies
- Relationship management
- risk transfer
What is supply chain security?
Supply chain security: application of policies, procedures and technology to protect suply chain assets from:
- Damange
- Crime (theft, terrorism, espionage, sabotage)
–>Practice: most implemented in transportation and logisticts
What is the goal of supply chain security?
Goal is not to avoid the risky activities but to Safeguard them —>so that the severe event will be less likly to emerge (reduce probability)
What are domains of technology enabled supply chain security?
–>smart technologies have become an integral part modern supply chain security initiatives
Domains:
- Sensors (tamper notification, temperatures, condensation)
- Communication (e.g., WLAN, Bluetooth, mobile communication networks)
- Identification (e.g., RFID) of products, containers, or vehicles.
What is the “dilemma of security inspections”?
security inspections are costly and decrease the flow of materials –>which reduces the supply chain productivity
How can solve the “dilemma of security inspections”?
similar to quality management methods:
focus on prevention (instead of inspections) through:
- Education of human agents
- Safety cultur
- Maybe interfirm collaboration
What is important about safety measures?
Safety measures need to be layered and balanced
What is an example of a layered safety?
Layered safety: automobile´s safety design to ensure drivers survivability in a head on collision is based on multi-layered defensive measures
What is an example for balanced safety?
Balanced safety: investing in a highly secure front door to deter house burglas is not effective if the back door is vulnerable
What are “defense in depth” in the Pattagon model (cheese)?
Defense in dept::
-
cascading safety layers
(Hard: technical, soft: administratvie procedures)
What are the two issues where operational strategies can focus on?
- Reduce supply chain complexity
- Reduce tight-coupling
What is meant with reduce tight-coupling?
–>build slack into the supply chain:
- increase Flexibility: ability of a system to respond or react to a change with little penlity in time, effort, or cost
- increase Redundancy: the duplication of critical components of a system with the intention of increasing reliability of the system
How to reduce supply chain complexity? (Structural complexitiy)
Horizontal:
- reduce number of elements (supply base reduction)
- increase homogeneity of suppliers (e.g., supplier development)
Vertical:
- eliminate supply chain tiers (e.g. vertical integration, direct deliveries)
Spatial: reduce number of geographic locations
How to reduce supply chain complexity (prouct complexity)?
- reduce product variability
- manage product life cycles (e.g., facelifts instead of new products)
What is risk pooling with products?
To reduce product variability –>risk pooling can be used
- develop different variants based on a common platform (i.e. standardidzation)
What is a pooled system?
consolidating (pooling) inventory and resources to create a centralized pool that serves multiple locations or products
What is risk pooling with products: what is Underage cost ajd overage cost?
- Underage cost: Profit lost as a result of not having enough inventory
- Overage cost: The loss incurred as a result of ordering too much inventory
What is risk pooling with customer demands?
pooled system (centralized) –> demands of two products in pooled into one line
What are the limitations of product pooling?
A universal design
- may not provide key functionality –>fit with all products
- may be more expensive to produce, because additional functionality ma require additional components
- may eliminate brand/price segmentation opportunities –>lexus vs toyota
What is process flexibility (production)?
Capability to build different types of products in the same manufacturing plant or on the same production line at the same time.
Why is process flexibility a powerful means to deal with uncertainty?
(How to achieve process flexibility?
- Cross training of workers and other employees
- Reconfigurable machinery
- Flexible production lines (process flexibility)
What is the problem with process flexibility?
–>full flexibility can handle most uncertainty
But: also the most costly option
What is partial flexibility? (Part of process flexibility)
a small amount of flexibility (partial) yields most of the benefits of total flexibility
When is partial flexibility most beneficial?
when following the concept of “chaining:
–>“chain” is a group of products and plants which are all connected, directly or indirectly, by product/ plant assignment decisions
- No product is build by a plant outside the chain
- No plant builds a product from outside the chain
What is the idea of “postponement?
is to delay the differentiation (or customization) of the product as long as possible
–>product is kept generic as long as possible
What were the results of the re-engineered process at Benetton?
Benetton: first dying the entire pool and ship to stores and get a sense of customer demands
Results:
- Better reaction to customer demands and suggestions
- Delayed forecasts of specific colors
- Ability to still use aggregate forecasts to start manufacturing early
What are approaches that involve the idea of redundancy?
- increase inventory
- increase capcaity
- acquire redundant supplier
What is “increase inventory” (redundancy) about?
- Decentralize inventory of predictable, lower-value products
- Centralize inventory of less predictable, higher-value products
What is “acquire redundant supplier” about? (Increase redundancy)
- Favor more redundant supply for high-volume products, less redundancy for low volume products
- Centralize redundancy for low-volume products in a few flexible suppliers
What is “increase capacity” (redundancy) about?
- Focus on low-cost, decentralized capacity for predictable demand
- Build centralized capacity for unpredictable demand.
- Increase decentralization as cost of capacity drops
