Towards Supply Chain Risk Analytics: Fundamentals, Simulation, Optimization

419 Pages·2016·4.1 MB·English

by  Iris Heckmann (auth.)

Iris Heckmann
Towards Supply
Chain Risk Analytics
Fundamentals, Simulation, Optimization
Towards Supply Chain Risk Analytics
Iris Heckmann
Towards Supply
Chain Risk Analytics
Fundamentals, Simulation, Optimization
Iris Heckmann
Karlsruhe, Deutschland
Von der Fakultät für Wirtschaftswissenschaften des Karlsruher Instituts für Technologie
(KIT) genehmigte Dissertation.
Tag der mündlichen Prüfung: 26.10.2015
Referent: Prof. Dr. Stefan Nickel
Korreferent: Prof. Dr. Francisco Saldanha-da-Gama
Prüfer: Prof. Dr. Wolf Fichtner
Vorsitzender: Prof. Dr. Rudi Studer
ISBN 978-3-658-14869-0 ISBN 978-3-658-14870-6 (eBook)
DOI 10.1007/978-3-658-14870-6
Library of Congress Control Number: 2016945784
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Acknowledgments
The pursuit of well-sophisticated solutions, derived from theory and
made applicable in practice, led me to FZI Research Center for In-
formation Technology. At FZI I was given the opportunity to work
on improvements for logistics systems, to learn technical content, to
gettoknowreal-worldproblemsandtoexperienceafruitfulworking
environment.
During that time I worked on the topic of Supply Chain Risk which
resulted in the underlying thesis. However, this work would have
not been possible without the support and guidance of others, who
I want to thank here.
I am indebted to Prof. Stefan Nickel for being the supervisor of
this thesis and a mentor to my research work – especially for his
farsighted guidance, his productive ideas, and his sincere interest in
discussing (rebutting or exploring).
My thanks also go to Prof. Francisco Saldanha-da-Gama for being
the co-supervisor of this work – for his calm, his profound thoughts
and his ability to explain.
Thanks are due to Prof. Wolf Fichtner for being part of the exami-
nation committee and to Prof. Rudi Studer for his sincere conduct
as the chairman of the examination committee.
Additionally, I thank my colleagues at the Logistics and Supply
Chain Optimization Group at FZI, the Institute of Operations Re-
search(IOR)aswellastheInstituteforMaterialHandlingandLogis-
VI
tics(IFL)oftheKIT–KarlsruheInstituteofTechnologyforsharing
good and bad research times.
Priceless support and patient encouragement came from my family
and friends. They all have never become tired to encourage me.
Special thanks go to my parents, who have continuously offered me
a quite and safe place for retreat.
Abstract
Unexpected deviations and disruptions, those are subsumed under
the notion of supply chain risk, increasingly aggravate the planning
and optimization of supply chains. Over the last decade there has
been a growing interest in including risk aspects for supply chain
optimization models. This development has led to the adoption of
risk concepts, terminologies and methods defined and applied in a
broad variety of related research fields and methodologies. However,
for the purpose of supply chain risk management the suitability of
risk, as it is coined in these domains, is up for discussion.
The major contribution of this thesis is given by the development
of a profound conceptual basis of supply chain risk analytics and
the transfer of newly defined concepts for the modeling and opera-
tionalizationofsupplychainriskwithinsimulationandoptimization
approaches.
The first part gives an extensive analysis of fundamental concepts
and approaches that surround research in the field of supply chain
riskmanagement. Thisincludesareviewofavailableconceptsofrisk
in general and supply chain risk in particular. As supply chain risk
is either ambiguously or incompletely defined the literature review
does not only critically revise existing approaches, but also identifies
essential aspects that drive the extent of supply chain risk. Part I
provides adjustments of commonly used concepts and offers a new
definition of supply chain risk. It is emphasized that it is the re-
sponsibility of supply chain risk analysis to evaluate the interactions
of risk defining elements. Having set the foundation for future ap-
proaches the new concept of supply chain risk analytics is coined.
VIII
Using mathematically based approaches, supply chain risk analytics
is tailored for the management of supply chain risk and associated
sub themes. A discussion of the value of mathematically approaches
in the light of risk-aware solutions and a review of existing literature
within the field of operations research complete Part I.
Consistently following the discussions and conclusions provided in
Part I, Part II introduces a new simulation-based procedure for iden-
tifying and assessing supply chain risks for a given supply chain, de-
notedbySimSCRF.Theapproachbuildsonexistingproprietarysup-
plychainplanningenginesandappliesmethodsfromdesignofexper-
iments to determine weaknesses of the underlying supply chain. To
align the data model for supply chain planning with the simulation-
based representation of a given supply chain, an object-oriented in-
formationframeworkispresented. Theintroductionofanadditional
layerbetweenplanningengineandanalysisalgorithmsoffersthepos-
sibility to easily switch between different planning engines and as a
result conduct risk analysis for different supply chain planning prob-
lems. Anexemplarysupplychainriskanalysisisconductedonareal
case supply chain originating from the chemical industry. The eval-
uation provides insights on the existence of supply chain risk and its
extent as well as on potential conclusions for mitigation options.
While the solution approach of Part II is characterized by the in-
terplay of technical entities within a consistent process flow, Part
III focuses on the development of a risk-aware optimization model
for supply chain network design problems. Based on contemporary
research gaps identified for optimization approaches in Part I, Part
IIIdeducesamixed-integertwo-stagestochasticprogrammingmodel
thatextendsthecapacitatedplantlocationproblemandadditionally
offersthepossibilitytoformalizeandoperationalizesupplychainrisk.
With the goal to evaluate risk-aware solutions the concept of value
of risk consideration is defined. The evaluation of the developed op-
timization model discloses its usefulness in terms of providing risk-
aware solutions and of approaching risk by stochastic programming
principles.
Contents
Abstract VII
List of Figures XV
List of Tables XXI
1 Introduction 1
1.1 Motivation for Beginners . . . . . . . . . . . . . . . . 1
1.2 Advanced Risk . . . . . . . . . . . . . . . . . . . . . 5
1.3 The Real Introduction: The Name of the Game . . . 8
1.4 Outline and Course of Discussion . . . . . . . . . . . 12
I Supply Chain Risk Concepts – Fundamentals 17
2 The Genesis of Supply Chain Risk 19
2.1 Logistics Innovations – A Blessing and a Curse . . . 20
2.2 Supply Chain Disruptions . . . . . . . . . . . . . . . 23
2.2.1 Environmental Disruptions . . . . . . . . . . 29
2.2.2 Economic Disruptions . . . . . . . . . . . . . 30
2.2.3 Socio-Geopolitical Disruptions . . . . . . . . 33
2.2.4 Technological Disruptions . . . . . . . . . . . 34
2.3 Coping with Risk . . . . . . . . . . . . . . . . . . . . 35
2.3.1 Enterprise Risk . . . . . . . . . . . . . . . . . 35
2.3.2 Following the footsteps of Management . . . 37
X Contents
2.3.3 Identification needs Quantification – Quantifi-
cation needs Definition . . . . . . . . . . . . . 40
3 A New Definition of Supply Chain Risk 43
3.1 The Evolution of Risk . . . . . . . . . . . . . . . . . 45
3.2 Requirements for a Definition of Supply Chain Risk 47
3.3 Existing Approaches of Supply Chain Risk Definitions 48
3.4 Core Characteristics of Supply Chain Risk . . . . . . 50
3.4.1 Risk Objective . . . . . . . . . . . . . . . . . 52
3.4.2 Risk Exposition . . . . . . . . . . . . . . . . . 56
3.4.3 Risk Attitude . . . . . . . . . . . . . . . . . . 72
3.5 Re-defining Supply Chain Risk . . . . . . . . . . . . 74
4 Supply Chain Risk Analysis 77
4.1 The Risk of Supply Chain Risk Analysis . . . . . . . 79
4.1.1 Biases of Risk Identification . . . . . . . . . . 83
4.1.2 Biases of Risk Countermeasures . . . . . . . . 88
4.1.3 Breaking of Biases . . . . . . . . . . . . . . . 95
4.2 Main Elements of Supply Chain Risk Analysis. . . . 96
4.2.1 Analysis of Potential Triggers . . . . . . . . . 96
4.2.2 Analysis of Performance Measurement . . . . 107
4.2.3 Analysis of Supply Chain Constitution . . . . 117
4.3 Tasks of Supply Chain Risk Analysis . . . . . . . . . 127
5 Supply Chain Risk Analytics 131
5.1 Supply Chain Risk Analytics – Concept Definition . 132
5.2 The Value of Supply Chain Risk Analytics . . . . . . 135
5.2.1 Risk Acceptance . . . . . . . . . . . . . . . . 137
5.2.2 Risk Reduction Measures . . . . . . . . . . . 140
5.2.3 Risk Spreading Measures . . . . . . . . . . . 149
5.3 Quantification Measures for Supply Chain Risk . . . 152
5.3.1 Deviation Measures . . . . . . . . . . . . . . 153
5.3.2 Downside Risk . . . . . . . . . . . . . . . . . 153
5.3.3 Expected Values . . . . . . . . . . . . . . . . 154
5.3.4 Probability and other measures . . . . . . . . 155