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INDUS UNIVERSITY

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 Course Name

• Teacher • Sir. Bilal

• Semester • Fall 2023
• Credit Hours • 03

Faculty of Management Sciences, Indus University 3

 Assessment

• Assignment • 05
• Quiz • 05
• Report • 15

Faculty of Management Sciences, Indus University 4

Designing Distribution and
Risk Management
In an ongoing business environment , strategic risk management
decisions are critical to ensure supply chain optimization. This
presentation will explore the different factors to consider when making
these decisions.

by Bilal
 Contents
Part I Building A Strategic Framework To Analyze Supply Chains
Chapter 1 Understanding The Supply Chain 1
Chapter 2 Supply Chain Performance: Achieving Strategic
Chapter 3 Supply Chain Drivers And Metrics 38
Part II Designing The Supply Chain Network
Chapter 4 Designing Distribution Networks And Applications To Online Sales 68
Chapter 5 Network Design In The Supply Chain 108
Chapter 6 Designing Global Supply Chain Networks 143
Part III Planning And Coordinating Demand And Supply In A Supply Chain
Chapter 7 Demand Forecasting In A Supply Chain 178
Chapter 8 Aggregate Planning In A Supply Chain 211
Chapter 9 Sales And Operations Planning: Planning Supply And Demand In A Supply Chain 234
Chapter 10 Coordination In A Supply Chain 250
Part IV Planning And Managing Inventories In A Supply Chain
Chapter 11 Managing Economies Of Scale In A Supply Chain: Cycle Inventory 271
Chapter 12 Managing Uncertainty In A Supply Chain: Safety Inventory 314
Chapter 13 Determining The Optimal Level Of Product Availability 358
Part V Designing And Planning Transportation Networks
Chapter 14 Transportation In A Supply Chain 397
Part VI Managing Cross-Functional Drivers In A Supply Chain
Chapter 15 Sourcing Decisions In A Supply Chain 428
Chapter 16 Pricing And Revenue Management In A Supply Chain 466
Chapter 17 Information Technology In A Supply Chain 488
Chapter 18 Sustainability And The Supply Chain 500
Risk
- Risk is an Unfavorable
situation
- Found internally in
weaknesses of every
department in every area
- Found externally in
threats
The conversion of
unfavorable situation to
favorable situation is Risk
Management
Introduction of Risk Management
Definition of Risk Management Objectives of Risk Management:
Risk management is the process of identifying, The risk Management objectives may include
assessing, and mitigating potential risks that could safeguarding assets, minimizing financial losses,
impact an organization's objectives or the success of a ensuring business continuity, and enhancing
project. opportunities for success..

Importance of Risk Management: Outline of the Presentation:

This part emphasizes why risk management is vital for • Key Steps in Risk Management
businesses and organizations. It helps us to • Types of Risks
understand that managing risks allows for better • Risk Management Techniques
decision-making, increased preparedness for • Risk Management Tools
unexpected events, and overall improved • The Comparative Analysis Process
performance • Case Studies

• The role of Information Technology (IT) in Risk Management

Key Steps in Risk Management

1 1.Risk Identification
1. Identifying potential risks that could
impact the project or organization.
2.Risk Assessment 2 2. Utilizing various techniques such as
brainstorming, SWOT analysis, and
1. Evaluating the likelihood and potential historical data review..
impact of identified risks.
2. Using risk matrices or
qualitative/quantitative methods to
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prioritize risks. 3. Risk Mitigation

1. Developing strategies to reduce the

4.Risk Monitoring and Control likelihood or impact of risks.
4 2. Implementing risk response plans and
1. Regularly monitoring identified risks to assess
their status. contingency measures.
2. Assessing the effectiveness of risk mitigation .
strategies.
3. Adapting risk management plans as new risks
emerge.
Types of Risks

1.Financial Risks 2.Operational Risks 3.Strategic Risks

1. Currency fluctuations 1. Equipment breakdown 1. New market entry
2. Credit and liquidity risks 2. Process inefficiencies 2. Technological advancements
3. Market volatility 3. Supply chain disruptions 3. Competitive landscape
changes
Risk Management Techniques
1 Avoidance 2 1.Reduction
1. Eliminating or withdrawing from activities that Implementing measures to lessen the
pose high risks. probability or impact of risks.
2. Can be achieved by not pursuing certain 1. For example, implementing safety protocols
projects or business ventures. or redundant systems.

3 Transfer
1. Shifting the risk to another party, usually through insurance or
outsourcing.
2. Commonly used for financial and legal risks
Risk Management Tools

1.Risk Register 2.Scenario Analysis 3.Risk Reporting 4. Comparative Analysis of Risk

A comprehensive list of Exploring different possible Regularly communicating It involves evaluating and
identified risks, their outcomes based on various risk-related information to comparing different risks based on
potential impacts, and risk scenarios. stakeholders and decision- various criteria to gain insights into
assigned responsibilities makers. their significance, potential impact,
and likelihood of occurrence. This
analysis helps in prioritizing risks
and allocating resources to address
them effectively..
The Comparative Analysis Process :
Here's a step-by-step guide to conducting a comparative analysis of risks:

1 Identify Risks: Identify and list all potential risks that could impact the project or organization,
including financial, operational, strategic, and environmental risks.

2 Define Evaluation Criteria: Establish criteria for assessing risks, such as potential impact,
likelihood of occurrence, and relevance to business objectives.
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Assign Scores or Ratings: Rate each risk based on the evaluation criteria to quantify their
significance and prioritize them.
4 Calculate Risk Priority: Combine the scores to calculate a risk priority score for each risk,
helping prioritize them based on their overall importance.
5 Analyze Risk Relationships: Look for relationships and dependencies between risks to
understand how addressing one risk may impact others.

Make Risk Management Decisions: Use the analysis results to make informed decisions
6 on which risks to focus on and allocate resources accordingly.

7 Develop Mitigation Strategies: For high-priority risks, develop specific strategies to reduce
their likelihood or impact and align them with the organization's risk tolerance.

8 Continuously Monitor and Review: Continuously monitor identified risks and review the
effectiveness of mitigation strategies to adapt to changing circumstances.
 Case Studies
Assuming a Real-life examples of successful risk management
strategies.
Case Study 1: Engro Fertilizers Limited Case Study 2: Habib Bank Limited (HBL)

Challenge: Engro Fertilizers faced the challenge of Challenge: Habib Bank Limited, one of Pakistan's leading
managing supply chain disruptions due to unexpected banks, faced the challenge of cyber security risks due to the
events, such as natural disasters, affecting the supply increasing frequency of cyber attacks targeting the financial
of raw materials for their fertilizer production. sector.

Risk Management Strategy: Engro Fertilizers Risk Management Strategy: HBL implemented a robust risk
implemented a comprehensive risk management management approach focused on enhancing cyber security
approach that involved diversifying their supplier base measures. They invested in advanced cyber security
to reduce dependence on a single supplier. They also technologies, conducted regular vulnerability assessments
established strategic partnerships with suppliers and and penetration testing, and provided comprehensive training
invested in building buffer stocks to mitigate the impact to employees to enhance awareness and reduce the risk of
of supply chain disruptions. cyber breaches.

Outcome: As a result of their proactive risk Outcome: HBL's proactive risk management strategy helped
management strategy, Engro Fertilizers successfully them prevent multiple cyber attacks, protecting customer data
navigated supply chain disruptions caused by and financial assets. The bank's reputation for secure banking
unforeseen events. This allowed them to maintain services further bolstered customer trust, leading to increased
consistent production and meet customer demand, customer retention and attracting new clients seeking a safe
ensuring stable revenue and market position in the banking environment.
highly competitive fertilizer industry in Pakistan.
The role of Information Technology (IT) in Risk Management is pivotal, as it provides valuable
tools, processes, and capabilities to identify, assess, monitor, and mitigate risks more effectively. IT plays a crucial role in
various aspects of risk management, Overall, IT plays a crucial role in risk management by enhancing data-driven
decision-making, automation, and efficiency. By leveraging IT capabilities, organizations can strengthen their risk
management practices and enhance their ability to identify, respond to, and mitigate risks effectively, ultimately
contributing to their long-term success and resilience.

1.Data Collection and Analysis: IT systems collect vast 5.Compliance and Regulatory Management: IT systems assist in
amounts of data from different sources within an organization. ensuring compliance with legal and regulatory requirements. By
This data includes financial records, operational metrics, automating compliance tracking and reporting, organizations can better
customer information, and more. Through data analytics and manage risks associated with non-compliance and potential penalties.
business intelligence tools, IT can analyze this data to identify 6.Cyber security and Data Protection: IT plays a critical role in
patterns, trends, and potential risks. managing cyber security risks. It includes implementing robust security
2.Risk Identification: IT systems can be used to automate risk measures, conducting vulnerability assessments, and using firewalls,
identification processes by continuously monitoring operational encryption, and intrusion detection systems to protect sensitive data and
activities, transactions, and system logs. By setting up alerts and networks.
triggers, IT can identify unusual behavior or deviations from 7.Business Continuity and Disaster Recovery: IT is instrumental in
standard procedures, flagging potential risks in real-time. developing and implementing business continuity and disaster recovery
3.Risk Assessment and Modeling: IT allows for sophisticated plans. Through offsite backups, redundant systems, and cloud computing,
risk assessment and modeling techniques. By using advanced organizations can minimize the impact of potential disruptions.
risk modeling tools, organizations can simulate various risk 8.Vendor and Supplier Risk Management: IT systems can help in
scenarios, understand their potential impacts, and assess the evaluating and managing risks associated with vendors and suppliers. By
likelihood of these events occurring. using performance management tools and conducting regular
4.Risk Communication and Reporting: IT facilitates the assessments, organizations can ensure the reliability and compliance of
efficient communication of risk-related information across their partners.
different levels of an organization. It enables the generation of 9.Risk Training and Awareness: IT facilitates risk management training
risk reports, dashboards, and key risk indicators (KRIs), programs for employees, raising awareness about risk management best
providing decision-makers with timely and accurate information practices, cyber security protocols, and internal control procedures.
to make informed choices.
Best Practices in Risk
Management
1 Establishing a Risk 2 Continuous
Management Culture Improvement

1. Engaging all stakeholders 1. Regularly reviewing and

in the risk management updating risk
process. management processes
2. Encouraging proactive and strategies.
risk identification and 2. Learning from past
reporting. experiences to enhance
future risk management
efforts

3 Data-driven approach
Proper data analysis and application of various analysis
techniques such as SWOT, Porter's Five Forces, and cost-
analysis ensures informed decision-making.
Supply Chain Resilience vs Risk Management Aspect Supply Chain Resilience Supply Chain Risk Management
(Troubleshooting) (Futuristic and Proactive)
Definition The ability of a supply chain to The process of identifying, assessing,
It's important to recognize that both withstand and recover from and mitigating specific risks that may
supply chain resilience and supply disruptions and disturbances. impact the supply chain.
chain risk management are
essential for effective supply chain Focus Addressing disruptions and challenges Anticipating and preventing risks before
management. as they occur. they occur.
Timing Reactive, triggered by disruptions and Proactive, ongoing process for risk
Supply chain resilience helps challenges. identification and management.
organizations address and recover
Key Activities Building redundancy, flexibility, and Risk identification, risk assessment, risk
from disruptions when they occur,
adaptability in the supply chain. mitigation, and response planning.
ensuring continuity and stability.
Scope Addresses existing issues and Looks ahead to identify potential risks
On the other hand, supply chain risk challenges. and opportunities.
management takes a proactive
approach, focusing on identifying Approach Response-oriented, aims to recover Preventive and anticipatory, seeks to
and managing risks beforehand to from disruptions. avoid or minimize risks.
prevent or minimize their impact. Examples of Establishing alternative sourcing Conducting risk assessments,
Both approaches work together to Strategies options and backup suppliers after a implementing contingency plans, and
enhance the overall resilience and disruption occurs. monitoring key risks proactively.
adaptability of the supply chain,
making it better prepared to handle Benefit Enables the supply chain to recover Reduces the likelihood and potential
challenges and seize opportunities quickly from disruptions. impact of specific risks.
in an ever-changing business
environment. Importance Vital in maintaining supply chain Crucial for avoiding or minimizing
stability and business continuity after disruptions and maintaining long-term
disruptions. efficiency and resilience.
Thank You

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