Managing Risks of Supply-Chain Disruptions: Dual ... - CiteSeerX

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transportation interruption due to inspection for a particular container. This initiative maybe difficult to implement and requires making trade-offs.Implementation may take time and will require important efforts from many different stakeholders.In brief: most measures and in particular shifting from inspection to prevention will require culturalchange, above all with regards to the customs agencies. It will be also necessary to increase thevisibility in the relations with the trading partners. It can be formalized in a contract and include“transaction compliance measurement, milestone and obligation monitoring, rebate and chargebackmanagement.” (Lee and Wolfe 2003). IT applications will be crucial, in particular in terms ofinspection: for example, efforts are required to increase the reliability and the speed of nonintrusivedetection systems. At last, public-private partnerships are necessary to coordinate thedifferent actions, share expertise and define a regulation that is adapted both to the business realityand the security requirements.As security cannot suppress totally risks, firms also need to be able to recover from disruption.2.4 Build-in ResilienceAs already mentioned in the first section of this chapter, resilience is “the ability to bounce backfrom hardship” (Coutu, 2002). A good illustration comes from Morgan Stanley that realized, afterthe 1993 World Trade Center bombing, that there was a risk in having offices in such symbolictowers. As a result, it decided to take some serious evacuation measures and to set up somerecovery sites where employees could work in case of a new terrorism attack. This allowed thecompany to save numerous lives on September 11, 2001.Resilience is a “critical capability”. As someone said “More than education, more than experience,more than training, a person’s level of resilience will determine who succeeds and who fails”(Coutu, 2002). This also applies to organizations. The MIT research group pointed out two mainactions to reach a resilient supply-chain.20
1) Firms need to build a resilient organization. As explained by Coutu (2002), these organizationsneed to have 3 main characteristics.• First resilient companies are down-to-earth and have a sober view on reality; this meansthat they accept and face the true reality of their situation and therefore can train in order tosurvive hardship.Interviews that were conducted in 2003 by the research group on “Supply-Chain Responseto Global Terrorism” at MIT have shown that best-prepared companies developcontingency plans that identify the different failure modes and define the measure toundertake to respond to them; they detail the different processes and determine theresponsibilities. As plans are not sufficient, the most committed firms train their staff andperform simulations and drills.Many people insist on the fact that supply-chain risk management should be integrated inthe strategic plans as well as cost improvement or innovation. Risks need to be a realconcern within the organization and the different departments should cooperate more inorder to figure out where the vulnerabilities are and if decisions are wised in that respect.- Second resilient organizations have a strong set of values. In hardship, such a system helpsto give a meaning to the overwhelming present and to make for a “better constructedfuture”. A shared vision in a company helps to frame an event, and employees all work inthe same way for the survival of their organization.- Third resilient firms are ingenious and can improvise a solution without any obvioustoolkit. This quality enables organizations to keep functioning even after an unexpectedand hard event. Within the organization, very often, we can also find a strict set of rulesthat imposes discipline and allows organization to focus on the situation when hardshipoccurs and thus be creative even under pressure.“Resilience is a reflex, a way of facing and understanding the world, that is deeply etched into aperson’s mind and soul.” (Coutu, 2002)2) Firms must design a resilient network. Recent articles suggest different approaches in thatrespect. First it is necessary that firms enhance visibility in the supply-chain to be able to take theappropriate response. More significantly, adding redundancies can be a part of coping with21
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Page 4 and 5: AcknowledgementsI would like to exp
Page 6 and 7: 4.2.5 Conclusions .................
Page 8 and 9: List of FiguresFigure 1.1: Strategy
Page 11 and 12: Chapter 1Introduction.Modern supply
Page 13 and 14: - Levels 2 and 3--between these two
Page 15 and 16: 5. In terms of implementation, Forr
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Page 25 and 26: 2.6 Conclusions- Increase the secur
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Page 31 and 32: Some people continue to think that
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Page 35 and 36: 4.1.3 Option ValueJust like a finan
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Page 39 and 40: Re plicating portfolio in the up st
Page 41 and 42: Let’s consider a portfolio compri
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Page 49 and 50: Chapter 5OptionModeling Dual-Sourci
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= 0.99 * ($100) + 0.01* (-$200)= $9
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Table 7.1: Assumption on Parameter
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7.2.4 Exploit at maximum real optio
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developed “ a general simulation
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(13) Lee, H.L., Wolfe, M. (2003),
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and Supply Management Course.(38) Z
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to reserve for the future, by maxim
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APPENDIX B: PARAMETER VALUES USED T
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normal or in disruption.The program
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% Probability of going from (m,k,j)
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elsevalue.DecOneNormal=3;end-------
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