Risks–Not Good for TransportationIn 2-3 pages, list and discuss:Describe the co

Risks–Not Good for TransportationIn 2-3 pages, list and discuss:Describe the concepts of disruptions and risks as they apply to transportation. Why are they important from financial and service standpoints?
Risk analysis is a critical component of risk management. When conducting this activity, what are the two components of risk that must be analyzed? Why are they important?
The requirements below must be met for your paper to be accepted and graded:Write between 750 – 1,250 words (approximately 3 – 5 pages) using Microsoft Word in APA style, see example below.
Use font size 12 and 1” margins.
Include cover page and reference page.
At least 80% of your paper must be original content/writing.
No more than 20% of your content/information may come from references.
Use at least three references from outside the course material, one reference must be from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the three reference requirement.
Cite all reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) in the paper and list on a reference page in APA style.
References must come from sources such as, scholarly journals found in EBSCOhost, CNN, online newspapers such as, The Wall Street Journal, government websites, etc. Sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for academic writing. LECTURE:Risky Business: Transportation Risks and MitigationsOverviewIn these times of rapid change, risk management has becomes correspondingly more important for setting up efficient transportation within their supply chains, where it adds value to the both the quality and the continuity of logistics processes. Ongoing globalization and a dependence on IT has shown increasing complexity and vulnerability of the logistics supply chain. Transparency is also diminishing as logistics are outsourced and operators form partnerships. The result is an increased likelihood of breakdowns in the operations. Nevertheless, ABN-AMRO states that three quarters of the companies admit to not having sufficient safeguards in place; as a consequence they see continuity of the supply chain as one of the greatest challenges.Along with risk management comes new opportunities. Organizations with a mature risk culture explicitly describe, share, discuss and quantify their risks. However, the survey reveals that only 11 percent of the companies have a mature risk management system. Companies that control their risks effectively and structurally have fewer unexpected costs, suffer less downtime from incidents, improve their competitiveness and are better able to make carefully considered decisions. Their customers are also guaranteed a reliable supply chain (ABN-AMRO, 2015).Transportation agencies manage some of the largest and highest valued public assets and budgets in Federal, State, and local governments. These agencies are spending the public’s money. It is their corporate responsibility to set clear strategic goals and objectives to manage these assets in a manner that improves the economic growth and livability of their regions and gives the public the best value for its dollar. Risks can affect an agency’s ability to meet its goals and objectives. It is incumbent on these agencies, as network and delivery managers, to identify risks, assess the possible impacts, develop plans to manage the risks, and monitor the effectiveness of their actions (USDOT, 2012).Risk AssessmentOnce an assessment of risks has been undertaken, an integrated transportation and logistics strategy can be established. In our experience, aggressive sourcing of transportation and logistics can yield a baseline 5-15 percent in annual cost savings and potentially more in periods of excess capacity, such as we are experiencing now. These savings are typically driven by a mix of actions, including but not limited to:
Carrier consolidation
Mode mix optimization
Rate benchmarking and lane-by-lane cost reductions
Reduced expediting of freight
Network and physical flow rationalization.
OutsourcingIn addition to providing cost savings, a holistic approach increases strategic control and can lead to more integrated relationships with key carriers, thus helping to minimize the risk of supply chain disruption and ensuring that shippers continue to deliver cost-competitive, reliable service to their customers. Once the current economic downturn ends, such strengthened relationships and the associated confidence in the supply chain will be critical in supporting future growth and expansion (Dittmann, 2014).The better an organization understands their own susceptibility to carrier defaults and disruptions in their operations, enable better risk oversight and monitoring of existing carriers, support strategy formulation regarding future supply chain development.Total Risk ApproachWyman’s “total risk” approach that focuses quickly on the quantification of both the financial and operational risks for carriers and identifies implications related to the overall supply chain strategy. Specifically, financial risk should include the probabilities of default over time – based on internal company data, third-party credit ratings, and financial/credit modeling for unrated carriers. Operational risk should include the probability of major operational disruptions as well as the volatility of performance (minor disruptions) – based on carrier performance history as tracked by the shipper, self-reported carrier performance, and public reporting of fleet and labor volatility (Wyman, 2010).Risk ManagementTransportation within the supply chain arguably faces more risk than other areas of the company. However, the vast majority of companies give this topic much less attention than it deserves. Experts recommend that organizations implement the following three-step risk management process:
Identify: Their supply chain strategy team should set aside time to identify the risks facing your supply chain. This should be a free-flowing exchange, with plenty of time set aside. The group should not let themselves feel intimidated or overwhelmed. There are no bad ideas or suggestions. Get everything on the table without any constraints or criticism. A key to the success of this exercise is to identify the right stakeholders. The team should ideally get together in an off-site meeting to recognize the risks facing the firm’s global supply chain. In addition, this should be done regularly. Risk changes constantly. Once they have solved one risk, another surfaces. Depending upon their business, it may be time to advocate for a permanent risk manager who focuses solely on preemptive supply chain risk management and solutions.
Prioritize: Once the team identifies the risks facing their supply chain, they should prioritize them to avoid overwhelming the organization. They should not try to solve all the risks facing your supply chain at once.
Mitigate: In the final step of a risk management process, mitigation plans need to be developed for the highest priority risks. The line organization should be deeply involved in, and own this part of the process, as should the other stakeholders (Dittmann, 2014).
There are actions that are a key part of a risk mitigation plan. Such plans involve some art and some science. The plan should focus on significantly lowering the probability of occurrence and/or the degree of impact, and could include any of the mitigation ideas discussed in the white paper. This includes relying on experts. Most surprisingly is that most organizations do not use outside expertise in assessing risk. Solutions can and should come from many different areas, including academia, logistics providers, vendors, insurance companies and others.ReferencesABN-ABRO. (2015). Companies in Transport and Logistics need to manage risks. Retrieved from https://www.abnamro.com/en/newsroom/newsarticles/companies-in-transport-and-logistics-need-to-manage-risks.htmlCoyle, John J., Novack, Robert A., Gibson, Brian J. (2016). Transportation: A Supply Chain Perspective (8th Ed.). Boston, MA: Cengage Learning.Dittmann, J. (2014). Managing Risk in the Global Supply Chain: Supply Chain Management Faculty, University of Tennessee. Retrieved from http://globalsupplychaininstitute.utk.edu/publications/documents/Risk.pdfHicks, R. (2013). An Exploration of Healthcare Inventory and Lean Management in Minimizing Medical Supply Waste in Healthcare Organizations. Ann Arbor, MI: ProQuestRodrigue, J. (2015). Risks in Global Supply Chains. The Geography of Transport Systems. Retrieved from https://people.hofstra.edu/GEOTRANS/eng/ch9en/conc…USDOT. (2012). Transportation Risk Management: International Practices for ProgramDevelopment and Project Delivery. Federal Highway Administration Executive Summary. Retrieved from http://international.fhwa.dot.gov/scan/12030/12030.pdfWyman, O. (2009). Factoring “Risk” into Transportation and Logistics Sourcing. Surface Transportation. Retrieved from http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/files/archive/2011/OW_MTE_2009_ShipperSourcing.pdf
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