Risk Management in Supply Chains, Risk Identification - Supply Chain Management

Risk Management in Supply Chains

At the present time, risk management (risk management) is an independent field of knowledge and, in fact, a specialty [5, 8, 49].

There are supply chain risk management (SCRM) - risk management in supply chains , in which three key elements are usually identified:

• identification (identification) of risks;

• Risk analysis;

• Risk management.

SCRM process loop

Fig. 8.2. SCRM process cycle

In general, the SCRM process can be represented as a cyclic scheme (Figure 8.2).

As shown in paragraph 8.1, the risks in supply chains are diverse and affect virtually all key business processes. Naturally, the methods of identification, analysis and methods of risk management depend to a large extent on their type and possible place of occurrence in the supply chain. There are a few simple rules that should be applied when managing risks in supply chains.

1. Be specific in describing the risks.

2. Present specific risks in quantitative terms.

3. Move from studying the risks to managing them.

4. Determine what resources are needed to manage risk.

5. Make an acceptable schedule for risk management work.

We briefly review the steps of identifying and analyzing risks.

Risk Identification

This is the identification of sources of risks that can damage contractors of the supply chain, their types and list.

This question is described in sufficient detail above, and the use of classifications greatly facilitates the identification of risks and the planning of measures to manage them. For example, common logistics risks in supply chains are:

a) risks directly related to the transportation of goods on a particular vehicle, including breakage of rolling stock, road accidents, theft or loss of a vehicle, explosions, damage during loading, stacking, unloading, damage to packaging (packaging), loss or incorrect execution of documents, etc .;

b) risks of loss of quality or damage to cargo during storage, warehousing (cargo handling) and other operations in warehouses and in preparation for shipping;

c) risks associated with the delay of the shipment during the customs clearance of import-export, etc.

Identifying the threatening risks in the supply chain prior to their occurrence is possible with the involvement of experts or experts in the field of risk forecasting. When identifying, it is important to identify the factors affecting uncertainty and risk. In the logistics business processes, the supply chain includes:

• characteristics of the product and its packaging;

• transportation facilities, features of the logistics infrastructure (for example, types of warehouses, types of equipment for cargo handling, etc.);

• the order execution cycle time, the type of the route when delivering the goods, etc.

Risk identification allows subsequently to obtain a quantitative and qualitative risk assessment - an assessment of the probability of occurrence of a hazard, forecasting the probability of a level of losses in the supply chain and their value or real value. The resulting estimates allow further development of decisions on risk prevention - organizational, technological and economic measures taken to minimize the extent of damage and when regulating losses of supply chain contractors.

In absolute terms, the risk can be determined by the magnitude of the possible losses in tangible (physical) or monetary (monetary) terms, if the type of damage is measurable in this form. In relative terms, the risk is defined as the amount of possible losses attributed to any base: the property of the enterprise; total resource costs; expected income (profit).

The most difficult to assess and prevent risks in supply chains occur as force majeure.

thematic pictures

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