06: Risk handling II - Reactive: Managing disruptions Flashcards
What a “impediments(barriers) to disruption discovery?
Prior to actual occurence: SC disruptions send out repeated warning signals
–>would be crucial to detect this signals
Impedients hindering the detection of warning signals:
- bounded rationality
- intensity threshold
- structural impediments: one agent knows but has limited power
- human agents are effort-averse, self-tinerest seeking with guile
What is “disruption discovering capability”?
Capability to correctly detect a pending or just realized supply chain disruption and to subsequently disseminate pertinent information to relevant entities within the supply chain
What are the levers of “disruption discovering capability”?
- Training
- incentive and reward systems
Warning signals for financial supplier distreess”?
- stakeholder crisis
- Strategic crisis
- Operative crisis
- Revenue crisis
- Liquidity crisis
What are stakeholder crisis?
Stakeholder crisis:
- Changes in ownership structure
- Loss of key employees
- Conflict in family run businesses
- Threat by inancial investors
- Strong influence of unions
What are strategic crisis?
- Problems in the product portfolio
-
Dependence on few customers /
suppliers - Extraordinarily high or low capital
expenditures - Worsening of competitive position
- Risks of M&A
What are operative crisis?
- Quality issues
- High inventory level
- Capacity issues
- Technical problems
What are revenue crisis?
- Trouble with plant utilization
- Profit collapse
- Postponing investments
- Cost explosion: raw material, personal expenses, etc.
- Cost cutting programs
- Short time work
- Further financial requirements
What are liquidity crisis?
-
Postponing payment
obligations - Invitation to talks with banks and/ or sub-suppliers
-
Requests for, e.g.:
- Change in payment terms
- Financing of tools
Termination of trade credit insurances
What is the dilemma between “de minimis” and “precautionary principle?
- what are the two errors in this context?
Dilemma
- Null hypothesis: The warning signals are true. –>Type I and Type II errors:
- Type I error: Reject the null hypothesis when the null hypothesis is true –>(False positive)
– Type II error: Fail to reject the null hypothesis when the null hypothesis is false –>(False negative
What is the dilemma between the “de minimis principle and the “precautionary principle”?
- De minimis principle –> (tries to reduce Type II error)
- precautionary principle –> (tries to reduce Type I error
What is the type 1 error: which principle reduces the type 1 error?
Type 1 error: (precautionary tries to reduce type1 error)
- neglect a warning signal to save resources
- can lead to a serious disruption
What is the type 2 error?
Type 2 error:
- overrecating to a warning signal
- Incurs direct and opportunity costs
What are the characteristics of a situation of a supply chain disruption? (short—term response: seeking a direct response)
manager face:
- Ambiguity of causes and effects
- Decisions have to be made swiftly
- Might involve surprise
When are disruption recovery efforts effective? (Short-term response)
- Operations are sustained or resumed,
- Organizational and external stakeholder losses are minimized and
- Learning occurs so that lessons are transferred to future incidents
What are the two types of “Buyer-supplier relationship conflicts” that may be created? (By have a short-term response: seeking a direct response
Constructive: Degree to which conflicts lead to positive relationship outcomes.
–>Partners feel better about their working relationships after a conflict
Destructive: Degree to which conflicts lead to antagonistic conduct
–>Partners feel worse about working relationships after a conflict
What is a supply chain disrtuption?
are typically accompanied by uncertainty, e.g., regarding the impact of a disruption, its cause, or possible alternative actions to mitigate negative consequences
Uncertainty has been conceptualized as “a sense of doubt that blocks or delays action”
“after a supply chain disruption: what do managers have to do? (short-term response)
(What are strategies?)
After supply chain disruptions, managers need to take decisions in complex and uncertain environments
- Rational approach —> delay collect information
- Bias for action —> action first
What is the “Rational approach” after a supply chain disruption?
Delay action
- Minimize the uncertainty
- Collect additional information in order to take a well-elaborated decisio
What is the “bias for action” after a supply chain disruption?
“Action-first” strategy
- Take immediate action although the consequences are not precisely known
- Action generates information that can be used to adjust and improve future actions
What are the response stages after a “supply chain disrubtion”?
- Recognition
- Diagnosis
- Development
- Implementation
What is the delay action and the action first strategy? (Short—term responses)
Delay action: Preference to collect information
“Action-first strategy”: Preference to act
What is a firms “resilience”?
“The ability of a system to return to its original state or move to a new, more desirable state after being disturbed
–>the recovery provess makes an important contribution to a firm´s resillence
