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SUPPLY CHAIN RISK MANAGEMENT

SUPPLY CHAIN RISK MANAGEMENT. Claudia COLICCHIA Carlo Cattaneo University - LIUC. NESA, Helsinki 9-10 June 2008. Definitions of risk. Expected probability of an event or condition whose occurrence, if it does take place, has a harmful or negative effect. Risk:. Supply Chain Risk.

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SUPPLY CHAIN RISK MANAGEMENT

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  1. SUPPLY CHAIN RISK MANAGEMENT Claudia COLICCHIA Carlo Cattaneo University - LIUC NESA, Helsinki 9-10 June 2008

  2. Definitions of risk Expected probability of an event or condition whose occurrence, if it does take place, has a harmful or negative effect. Risk: Supply Chain Risk Supply chain vulnerability: "An exposure to serious disturbance, arising from risks within the supply chain as well as risks external to the supply chain. "– Cranfield University “Distribution of the loss resulting from the variation in possible supply chain outcomes, their likelihood, and their subjective values”

  3. Why supply chains are now so vulnerable? Globalization of supply chains Trend towards outsourcing Volatility of demand Reduction of the supplier base Lack of visibility and control procedures Focus on efficiency rather than effectiveness

  4. SC Strategy Supply chain risk management process SC Risk Assessment "The identification and management of risks within the supply chain and risks external to it through a coordinated approach amongst supply chain mambers to reduce supply chain vulnerability as a whole" – Cranfield University SC Risk Reporting Supply Chain Risk Management SC Risk Mitigation SC Risk Monitoring

  5. RISK ASSESSMENT: AHP method • A decompositional technique for multicriteria decision-making [Saaty 1980, 1990, 1994] that: • Enables people to make decisions in situations when multiple and conflicting objectives/criteria are present • Involves making a series of pair-wise comparisons • Uses: • - Simple mathematics (calculation of the principal eigenvector) • - Criteria <set by the decision maker > • - Preferences of that criteria • <also set by the decision maker> • - The standard preference table • 1 equally as important • 2 equally to moderately more important • 3 moderately more important • 4 moderately to strongly more important • 5 strongly more important • 6 strongly to very strongly more important • 7 very strongly more important • 8 very strongly to extremely more important • 9 extremely more important

  6. Our sample problem

  7. Decision Hierarchy Legal Lusoponte project Environmental Social GOAL Economic Political RISKS RISK SOURCES Technological Additional EIS requirements Expropriation difficulties Design Changes … … …

  8. How it is done Social,Legal, Economic…

  9. Results

  10. Future steps Introducing the "risk likelihood function" Considering interdependencies modifying the weight Assessing and compare the results (impact on overall risk) Applying the method in other context using real data

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