Ways to develop a robust supply chain. Jens Schumacher FHV

Transcription

1 Ways to develop a robust supply chain Jens Schumacher FHV

2 Content } Statement of problem & motivation } Definitions } Risk management for supply chains } Stabilization on the different management levels } Conclusion

3 Statement of problem & motivation

4 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 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

5 } 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?

6 Motivation } 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 Methods on management levels SC controlling SC risk management Stabilized SC

7 Definitions The supply chain Stabilization Robust, reliable, resilient

8 The Supply Chain } Linkages } Supplier } Manufacturer } Consumer } Transport in-between } Environment } International } Information exchange } Dynamic & changing } Complex Supplier Transport Manufacturer Transport Consumer

9 } Stabilization } Stability = The absence of strong fluctuations (as opposed to foreign influences) 1 à 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, from

10 Aim is to have a supply chain that is Robust SC performs well with respect to uncertain future conditions 1 For example, costs or travel times Reliable SC performs well when parts of the system fail 2 For example, when a distribution center becomes unavailable because of poor weather Resilient 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 1 Investopedia. (n.s.). robust. Retrieved 03 22, 2012, from Investopedia: 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

11 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

12 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, from 087_Vortrag_Kemmlering.pdf 3 ISCM. (n.s.). Institute for Supply Chain Management. Retrieved 05 18, 2012, from

13 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, from

14 Occurrence of risk in a supply chain Government Culture Supplier risk Manufacturer risk Consumer risk Macro Micro Internal Control risk Control risk Supplier Transport Manufacturer Transport Consumer Foreign competition Interest rates

15 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 monitoring and evalutation Risk identification and modeling Risk mangement Risk analysis, assesment and impact measurement 1 ISCM. (n.s.). Institute for Supply Chain Management. Retrieved 05 18, 2012, from 2 Zsidsin, B. R. (2009). Supply Chain Risk A Handbook of Assessment, Management, and Performance. New York: Springer Science + Business Media

16 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

17 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,

18 Risks in logistics on management levels Strategic risks Tactical 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 Operational risks Technical-related risks Smooth functioning of material, product and information flows and troublefree 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

19 Problems and importance of robustness on the management levels Strategical, tactical & operational

20 Strategic Important tasks 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 Risks 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 Problems Finding good partners Holding relationship Profit of a partnership Internal up- and downwards as well as external horizontal and vertical information exchange

21 Tactical Important tasks Creation and execution of robust supply chain Risk mitigation strategies Increase flexibility in transportation and supply Risks 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 Problems 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

22 Operational Important tasks Coordination and control of the movements in the supply chain in real-time Focus on smoothly running processes Risks 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 Problems 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

23 Stabilization on the different management levels Strategical, tactical & operational

24 Management levels Strategic risks à Multisourcing Tactical risks à Simulations à Synchroshipping/ Multimodal Bottom Up Approach Operational risks à Intelligent cargo

25 EURIDICE: Service Combination on the Fly Track cargo conditions Qualify content Certify origin and transit rights } Combine required services : } Cargo observation } Customs handling } Transport controlling }... Identify shipment Verify customs authorisation

26 EURIDICE: Virtual representation of cargo Virtual world truck container item Position Speed Latency Cargo Temp. Erruptions item item ID Condition Humidity Real world = Sensors / Devices / RFID

27 EURIDICE: Intelligent Cargo Network - Benefits } 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 (+)

28 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

29 icargo: Approach (1) Logistics Companies Logistics users New low-co2 services offer, Better utilization of resources Less GHG emissions, Less traffic Community Common Framework Optimized solutions for environmental efficiency Higher penetration of ICTbased services in the logistics market ICT for Transport Research & Industry

30 icargo: The idea visualised Logistic Services Shipper Authority Cooperative freight business ecosystem Dynamic multi-actor plans Interoperable cargo, vehicle and infrastructure Cargo Infrastructure Real-time automated event management Field user Vehicle Distrib. Distributor Planner Local Distr. Traffic Terminal Carrier Carrier Terminal Carrier Center Mgmt Pallet Shipment Container Container Truck Package Truck Package Field InfraTruck Ship operator structure Planner Origin Forwarder Customs Shipment from factory Long haul transport Road transport Logica All rights reserved Destination In-city delivery No. 30

31 Conclusion

32 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

33 Thank you for your attention