Lec. 12: Risk Management Flashcards
What is a formal definition of SCRM?
“SCRM is to [collaborate] with partners in a supply chain apply risk management process tools to deal with risks and uncertainties caused by, or impacting on, logistics related activities or resources.”
What is a functional description of SCRM?
The risk management process is focused on understanding the risks, and minimizing their impact by addressing, e.g. probability and direct impact.
What is risk?
“Risk is the chance, in quantitative terms, of a defined hazard occurring. It therefore combines a probabilistic measure of the occurrence of the primary event(s) with a measure of the consequences of that/those event(s)”
Whis is vulnerability?
Exposure to risk
What is resilience:
The capacity to survive, adapt and grow in the face of turbulent change.
What is robustness?
A proactive strategy that can be defined as the ability of a supply chain to resists change without adapting its initial stabel configuration. (Proactive)
What is agility?
The ability of a supply chain to rapidly respond to change by adapting its initial stable configuration. (Reactive)
Give examples of how to implement robustness:
- Multiple sources of supply
- Inventory buffers
- Flexible transportation
Give examples of how to implement agility:
- Contingency planning
- Lead-time reduction
- Trained personel
What is the problem with “lean” in SCRM?
“Lean management” might be cost efficient in the short term. However, in the case of high disruption risks, investing in a robust and/or agile supply chain can be more appropriate in the long term.
Explain the Albuquerque incident:
Fire in a sub-supplier of Ericsson. Ericsson is hit hard. Line stop for 3 weeks. Even after 6 months, yield is still only 50%.
What are the steps of SCRM:
- Risk identification
- Risk assessment
- Risk controlling
- Risk monitoring
How to categorize risks in the risk identification phase?
- Disruption
- Delay
- Distortion
- Supplier related
- Internal
- Demand related
What is a disruption?
When the supply chain is radically and unexpectedly transformation through nonavailability of certain production, warehousing, distribution, or transportation options, such equipment failure.
What is a delay?
A delay in the material flow that can be viewed as a recurrent risk and can occur because of many reasons, such as variations in transportation or production lead times
What is a distortion
AKA forecast risk, occurs when one or more parameters within the supply chain system, such as order sizes, stray from their forecasted and expected values.
What is the main framework of assessing risks?
Categorizing by the dimensions of probability and impact.
What is TTR?
Time to recover, the time it takes for a particular node to recover to full functionality after a disruption.
What is TTS?
Time to survive, the maximum duration that the supply chain can match supply with demand after the disruption of a node.
What happens if TTS > TTR?
The firm is not exposed to risk
What happens if TTS
There is exposure to risk
What are the main strategies to control risk?
- Risk avoidance
- Risk reduction
- Risk transfer (insurance)
- Risk sharing (contracts)
- Risk taking
What is risk monitoring?
Monitor to see if an important parameter or metric is reaching an unacceptable level.
What are some problems with risk management?
- Managers are not rational decission makers; SCRM is built on rational measures as probability, impact.
- Focusing on the range of plausible outcomes rather than the range of possible outcomes
- Attention factors change scope
- Risk appetite, Sometimes notes as existent across an organisation, which is not always true
- Focusing only on internal risks
- You cannot predict the future
