What and How to Mitigate the rising risks in todays Logistics Management.

1. Presentation By:
Danish Ali Syed
Presented To:
Sir Arsalan Najmi

2. RISK MANAGEMENT
IN
LOGISTICS

4. HOW DO RISK OCCURS IN LOGISTICS
Finished goods are planned in one location
Materials are obtained from a second location
Production may take place in a third location
Sales in a fourth and
Product support services in a fifth location
An efficient logistics at a minimum cost
Efficient logistics at a minimum cost becomes
complex and chances of risk enhances.

5. RISK• Risks are of 2 types that are:
 Internal Risks
– Labor strikes
– Equipment failure
– Information distortion - Bullwhip
– Unavailability of raw material
 External Risks
– Natural
– Political
– Social
– Market
RISK is:
 Hazard
 Threat
 Loss
 Harm
 Jeopardy
 Indecisive
of what to do next in
this situation.

6. TYPES OF RISKS
• Transportation
– Air
– Sea
– Road
– Rail
• Warehousing
– Damage
– Theft
– Corruption
– Counterfeit
• Information
– Poor
Communication
– Wrong
Documentation
– Lack of
Coordination

7. RISK MANAGEMENT
• A way to tackle the hazard
• A non-value added cost
• Potential is to improve the planning process
• Mitigate the potential sources of risk
“The effect on Ericson, a Swedish mobile-phone company, of a fire
in a New Mexico chip-making plant belonging to the Dutch firm
Philips, has become a legend. The fire, in March 2000, started by a
bolt of lightning, lasted less than 10 minutes but it caused havoc to
the super-clean environment that chip-making requires. Ericson,
unable to find an alternative source of supply, went on to report a
loss of over used 2 billion in its mobile-phone division that year, a
loss that left it as an also-ran in an industry where it had once been
a leader” -

8. RISK MANAGEMENT IN LOGISTICS
Hindrance in achieving the 7 R’s of logistics
– Right Product is not being delivered
– Right Quantity is not being delivered
– Right Price is not achieved
– Right Time is not reached
– Right Place is not Reached
– Right Customer is not Reached
– Right Condition is not Reached

9. CASUSES OF RISK IN LOGISTICS
• Wrong decision making
• Poor Information Flow
• Wrong Planning
• Wrong allocation of resources

10. FACTORS THAT ADD RISK TO LOGISTICS
• Uncertainty
• Misc. Cost
• Lack of Technology
• More Complexities
• Lack of Integration

11. RISKS ASSOCIATED WITH LOGISTICS
• Reputational Risk – Scandals, Propaganda
• Financial Risk – Bankruptcy
• Terrorism Risk – Blasts, Gunfire’s
• Natural Disasters Risk – Floods, Earthquake
• Governmental regulations Risk – Fuel Prices, Taxation
• Demand Side Risk – Customer Satisfaction affected
• Supply Side Risk – Longer lead times
• Process Risk – Vehicle failure, lack of drivers

12. IMPACT OF RISK ON LOGISTICS
• Relationship between the parties is effected
• Business is transferred to black markets
• Revenue is lost
• Delayed Delivery times
• Incurred Cost due to wrong Shipments

13. MITIGATION OF RISK IN LOGISTICS
• Awareness of Theft:
– Enhancing visibility
– Training Staff
– Taking cautious precautions
– Using security escorts
– Installing Surveillance
– Avoid consolidation
– Quick clearance from ports & customs
– Using alternate modes of Transportation
– Proper Packaging

14. • Awareness of Damage:
– Training Staff
– Use of Advanced equipment’s
– Safety precautions at the warehouse
– 5S & Lean Management
– Proper Packaging
MITIGATION OF RISK IN LOGISTICS

15. CONCLUSION

16. Any Questions??