Managing Supply Chain Risk - What if the unexpected happens?

Transcription

1 Managing Supply Chain Risk - What if the unexpected happens? The Logistics Institute Asia Pacific Dr. Robert de Souza Executive Director & CEO

2 TLI ASIA PACIFIC : OVERVIEW Established in November 1998 under The Global School House Program as a collaboration between The premier institute in Asia Pacific nurturing logistics excellence through world-class research, education and industry outreach

3 Supply Chain Disruption Main Challenges Supply chain disruptions affect firms top and bottom lines and are becoming increasingly expensive Steps to Overcome Challenges Companies take various steps to protect their supply chains, including: Gaining a deep understanding of their supply chain to identify risk Implementing business continuity plans Taking a more active role across their supply chains to ensure their suppliers have enough capacity to deliver Not relying too much on a single supplier or region within the supply chain Managing supply-chain risk is difficult Risks are often interconnected in complex ways Actions taken by one company impacts others

4 Severe Disruptions are Hard to Predict Disasters (Weather, Earthquake, Terrorists) Supply Chain Disruption Environmental

5 Introduction - Disruption Profiles 1. Postpone the disruption effecting time 2. Reduce disruption duration 3. Improve the recovered performance level Without robustness and resiliency 4. Reduce disruption severity With robustness and resiliency

6 Risk Index of A Supply Chain Suppliers Manufacturer Retailer Produces 4 types of products RSC The suppliers with different risk indexes may bring different levels of risk to the supply chain network Revenue Risk Index

7 Supply Chain Risk Framework Risk Monitoring Risk Identification Risk visualization Real-time natural disasters for warning Supply chain risk category Master facilitative control tower Risk Monitoring Risk Identification Risk exposure index Risk Mitigation Mid/Long Term Mitigation Risk Assessment Risk Assessment Time-adjusted inventory policy Demand uncertainty analysis Mitigation policy examination platform Risk propagation Risk measurement via Value-at-Risk Risk matrix approach Time-based risk propagation analysis

8 Challenge 1: Selection of (alternative) partners before a disruption It is important for a firm to understand its risk exposure in the supply chain network before any risk actually occurs. We develop a methodology to describe the risk exposure of a firm by estimating indices for the self-risk index and the connectedness risk for a partner.

9 Challenge 2: How (fast) does a risk event propagate up/down a supply chain? A new time-based Inoperability Input-Output Model Model method and model were developed to quantify the propagation of disruptions in a supply chain occurring at any node(s). SCR Propagation Model and the Impact Over Time

10 Challenge 3: Can supply chain vulnerabilities be mitigated? No. of Live Players Click individual supplier/customer/comp to view individual CSL/Profit Valueadded (Revenue, Cost, Profit) Aggregate Customer Service Level Disruption Information Order/Information

11 Challenge 4: Can vulnerabilities be visualized for responsive decision-making? These modules collect, monitor and analyze critical items such as: Inbound and outbound logistics Inventory level Order fulfillment and manufacturing operations. Risks like natural disasters

12 Challenge 5: Risk Interconnectedness Mapping Supplier #1 & #2 Largest market share lies in USA and SE Asia Supplier #2 is closely linked (main-subsidiary relationship) to Supplier #11 Keeps only one month buffer stock 99.5% DIFOT >5 years relationship Slow response of a few weeks 3-4 times a year 12

13 Putting it Together: Risk Modelling

14 SCRM Visualize supply chain relations, cover n-tier relationships, identify hidden n-tier single sources Predefined risk inventory and content provisioning integrated Validate impact within seconds, collaborate with supplier Receive relevant alerts only no noise Automated, geo-coded impact detection 14

15 Case Study Indonesia Disaster Risk Context Population (growth +1.49% yearly) Urban 49.79% Rural 50.21% Islands people killed by natural disasters ( ) Poor domestic and international connectivity Poor infrastructure (intermodal Transportation) Heavy reliance on land transportation Underutilization of maritime corridors Empty backhauls (e.g. east to west/rural to urban) High exposure to natural hazard (part of ring of fire) Lack of facilities to store, consolidate, and forward humanitarian cargos Figure 1. Hazard risks map Indonesia (earthquake and tsunami) Source: From Indonesia Natural Hazard Risks, by UN OCHA ROAP 26% of national GDP in logistics Need for enhanced disaster response capabilities 1. What is the most optimum network configuration for prepositioning stocks of life-saving goods in Indonesia? 2. How would the selected network perform in terms of service level, in view of actual and potential disaster events?

16 Case: Risk Modelling The selection of 6 locations out of 9 candidate locations deemed suitable was undertaken Figure 1.a) Optimum Configuration by AnyLogistix (2017) Figure 1.b) Second-best configuration by AnyLogistix (2017) Figure 1.c) Configuration by Operational Research No. Configuration of Nodes Difference in Total Trasnsportation Cost [%] Weighted Average Lead Time [Days] Standard deviation on lead time <=1 day [% on total demand] 1 Pekanmbaru, Surabaya, Banjarmasin, Ambon, Timika, Manado 0% % 2 Pekanmbaru, Surabaya, Banjarmasin, Ambon, Jayapura, Manado 0% % 3 Medan, Surabaya, Banjarmasin, Ambon, Jayapura, Makassar +14.9% % The solutions identified via network optimization experiment in AnyLogistix (2017) will allow a potential cost saving of 15% as compared to the solution prospected by OR, with no impact on lead time.

17 Mitigation Strategies vs. Risk Risk Monitoring Risk Identification Mid/Long Term Mitigation Risk Assessment 17

18 RESEARCH Supply Chain Risk Management at Leads a Research Consortium