Abstract
Risk Management Approaches in the Logistics Industry – Nowadays, with the globalization of business operations, logistics systems are threatened by all kinds of uncertainties and disruptions. Almost every month, serious accidents in transportation and natural disasters all around the world are reported in the media. As a result, an effective and efficient risk management scheme is of a top most priority in the mind of all professionals in logistics management. This research concisely explores risk management of logistics systems in several critical areas, namely disruption risk management, operational risk control, disaster and emergency management, and logistics service risk analysis. The research featured in the special issue are also introduced and examined. This research ends with a proposal of various future research directions for advancing risk management of logistics systems. Due to the complex market and business environment, undesirable disruptions in logistics can affect enterprises and weaken its business strength. Risk Management has become the key in avoiding business losses. Logistics interruption can come from an unforeseen exogenous event such as an earthquake or from an endogenous event, like the Toyota Quality recalls in 2010 that interrupted enterprise logistic operations and degraded its performance (Trkman & McCormack, 2009). In this chapter, the risk management in logistics is studied from the process flow perspective. The topics discussed consist of logistics processes, risk management strategy, risk management process in logistic, and enterprise performance evaluation. The aim is to provide valuable insights for enterprises through understanding the essential risk management concepts in logistics. The quality of service connecting risks is one of the most discussed topics of today in everyday work and social life. The main reason for the research was the necessity to look for new ways of improving quality that would meet international standards and reflect the increasing demands of customers in transport undertakings.
What is Logistics ?
Logistics management is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory and the related information flows through the organization and its marketing channels in such as way that current and future profitability are maximized through the cost-effective fulfillment of orders.
Aspects that influence logistics
Logistics is considered as the set of methods and means necessary to organize a company or service. The logistics sector focuses on delivering products to the customer, according to the conditions previously agreed (quantity of products, stipulated time, geolocation . Within logistics, it is usually included the transport of goods, storage costs, handling, preparation and order planning (among many other aspects). In the logistics sector, there are different aspects that have a great influence. Currently, both globalization, technology, consumer evolution, legal aspects, government policies, etc., are aspects that directly influence the sector. Currently, one of the key aspects that make the difference is that we are facing a globalized market. Without a doubt, this is one of the aspects that completely changes the sector.
Advantages of the logistics sector
- A better use of the distribution network
- Costs reduction
- Transportation and express delivery
- Information technology
Disadvantages of the logistics sector
- Coordination
- Cost of transport
- Legality
Risk Management
Recent days, risk management has been widely discussed especially when many disturbance events happened such as earthquakes, Iceland’s volcano eruption, labor wage increasing in China, or BP oil leak and so on. Each disturbance may affect business operations and need to adjust their logistics system to deal with it. The impact of accidental events can be controlled if the enterprise has a plan put in place already.
In general, risk management can be classified into two approaches,
- Mitigation strategy and
- Contingency strategy.
Mitigation action is managing the risk sources and contingency action is handling the risk consequences.
Role of risk management of the logistic processes
Risk is understood as the likelihood of damage or loss of income, the likelihood of which can be calculated. The probability of risk event is definable, therefore we can 8 predict the onset of risky event and apply various methods of control to prevent it or at least to solve the problems resulted from it. Determining the risk is associated with determining several elements of logistics systems and processes: First, there are internal risks associated with intra-regional supply systems and processes related to self-sufficiency. Among the causes of these risks are:
- Reduction of the projected traffic volume (or capacity freight);
- The increase of cost of transport services (eg. to cover primary or secondary needs);
- Rising costs of fares and tax payments in the region’s transport systems;
- Reduction in demand for transport services due to lower income of households and businesses in the region.
The risk of delays may result in breaching the supply contract by violating the basic conditions: the quantity, the quality and the delivery time. In the area of commerce we can identify the risks associated with trade and transportation. Creation of an integrated system of transport and logistics in the region will reduce the level of risk, which is of great concern to all stakeholders, regardless of the method and cost of insurance.
Steps Of Risk Management
- Identify the Risk
- Analyze the Risk
- Evaluate or Rank the Risk
- Treat the Risk
- Monitor and Review the Risk
Components of a Project Report
A project report varies according to the MBA final year project course at top colleges, depending on the consequences and the requirements of the concerned project. But broadly, a project covers the following components:
- Title page
- Table of contents
- Introduction
- Background of the project
- Project objectives
- Methodology
- Results
- Discussion and Analysis
- Conclusion
- Bibliography or references
- Appendices
Project Report Pages : 80
Can be used in : Operations Management Final Year Project
Delivery Time : Within 2 hours.
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