05: Risk handling I Proactive

Question 1

What are the two areas of risk management in the 3. step risk handling

Answer 1

• Proactive: cause-oriented or proactive approaches
• Reactive: Effect-oriented or reactive approaches

–>Both require prior prepartion!

Question 2

What are the 4 areas of proactive supply risk. mgmt approaches?

Answer 2

• Supply chain security
• operational strategies
• Relationship management
• risk transfer

Question 3

What is supply chain security?

Answer 3

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

Question 4

What is the goal of supply chain security?

Answer 4

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)

Question 5

What are domains of technology enabled supply chain security?

Answer 5

–>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.

Question 6

What is the “dilemma of security inspections”?

Answer 6

security inspections are costly and decrease the flow of materials –>which reduces the supply chain productivity

Question 7

How can solve the “dilemma of security inspections”?

Answer 7

similar to quality management methods:

focus on prevention (instead of inspections) through:
- Education of human agents
- Safety cultur
- Maybe interfirm collaboration

Question 8

What is important about safety measures?

Answer 8

Safety measures need to be layered and balanced

Question 9

What is an example of a layered safety?

Answer 9

Layered safety: automobile´s safety design to ensure drivers survivability in a head on collision is based on multi-layered defensive measures

Question 10

What is an example for balanced safety?

Answer 10

Balanced safety: investing in a highly secure front door to deter house burglas is not effective if the back door is vulnerable

Question 11

What are “defense in depth” in the Pattagon model (cheese)?

Answer 11

Defense in dept::

• cascading safety layers
  (Hard: technical, soft: administratvie procedures)

Question 12

What are the two issues where operational strategies can focus on?

Answer 12

• Reduce supply chain complexity
• Reduce tight-coupling

Question 13

What is meant with reduce tight-coupling?

Answer 13

–>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

Question 14

How to reduce supply chain complexity? (Structural complexitiy)

Answer 14

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

Question 15

How to reduce supply chain complexity (prouct complexity)?

Answer 15

• reduce product variability
• manage product life cycles (e.g., facelifts instead of new products)

Question 16

What is risk pooling with products?

Answer 16

To reduce product variability –>risk pooling can be used

• develop different variants based on a common platform (i.e. standardidzation)

Question 17

What is a pooled system?

Answer 17

consolidating (pooling) inventory and resources to create a centralized pool that serves multiple locations or products

Question 18

What is risk pooling with products: what is Underage cost ajd overage cost?

Answer 18

• 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

Question 19

What is risk pooling with customer demands?

Answer 19

pooled system (centralized) –> demands of two products in pooled into one line

Question 20

What are the limitations of product pooling?

Answer 20

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

Question 21

What is process flexibility (production)?

Answer 21

Capability to build different types of products in the same manufacturing plant or on the same production line at the same time.

Question 22

Why is process flexibility a powerful means to deal with uncertainty?
(How to achieve process flexibility?

Answer 22

• Cross training of workers and other employees
• Reconfigurable machinery
• Flexible production lines (process flexibility)

Question 23

What is the problem with process flexibility?

Answer 23

–>full flexibility can handle most uncertainty

But: also the most costly option

Question 24

What is partial flexibility? (Part of process flexibility)

Answer 24

a small amount of flexibility (partial) yields most of the benefits of total flexibility

Question 25

When is **partial flexibility** most beneficial?

Answer 25

**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

Question 26

What is the idea of "postponement?

Answer 26

is to **delay the differentiation** (or customization) of the product **as long as possible** -->product is **kept generic as long as possible**

Question 27

What were the results of the re-engineered process at Benetton?

Answer 27

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

Question 28

What are approaches that involve the idea of redundancy?

Answer 28

- increase inventory - increase capcaity - acquire redundant supplier

Question 29

What is "increase inventory" (redundancy) about?

Answer 29

- **Decentralize inventory** of predictable, lower-value products - **Centralize inventory** of less predictable, higher-value products

Question 30

What is "acquire redundant supplier" about? (Increase redundancy)

Answer 30

- **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

Question 31

What is "increase capacity" (redundancy) about?

Answer 31

- **Focus on low-cost, decentralized capacity** for **predictable** demand - **Build centralized capacity** for **unpredictable** demand. - **Increase decentralization** as cost of capacity drops