PLN Workgroup publishes report on cooperative risk management

Study: Cooperative Risk Management to Master Problems in the Supply Chain
Problems in the supply chain affect almost every company. Cooperative risk management can help. But only a few companies use it to gird themselves for a crisis. The extent to which cooperation can protect supply chains is being examined at Jacobs University in Bremen in a current study that was brought to life with the aid of the Funk Foundation.

Highly networked systems, a high degree of internationalism, and a large number of partners working together in a network are the hallmarks of the supply chains of many companies today. With increasing complexity, the risk of problems also rises. The Production and Logistics Networks Workgroup at Jacobs University Bremen surveyed 216 companies in Germany, Austria, and Switzerland regarding existence-threatening supply chain risks and measures for risk management.

99 per cent of the companies surveyed said they had experienced problems in their supply chain in the past five years. At 73 per cent, companies in the automotive industry rate problems in the supply chain as a distinctly greater problem than in other sectors. The most frequent causes are faulty product quality, outages of equipment and control systems, and insolvency. Only 28 per cent of the supply chain problems described have their origin in the surveyed companies themselves.

Study Director Professor Julia Bendul explains: “Most of the problems develop through external influences, for which the companies should prepare accordingly. Cooperation among the suppliers or within a specific sector helps decrease the reaction time and the negative financial effects of a problem in the supply chain. That is more efficient than when each company prepares for the crisis in isolation.” The potential of risk management, however, is not always exploited, as the study shows: Although those surveyed make comparatively little use of cooperation as a risk management instrument, they rate it as the most effective measure. Only about 22 per cent had planned cooperation in advance as a risk management instrument.

Hendrik F. Löffler, Chairman of the Managing Board of the Funk Foundation: “The Funk Foundation supports new ways of dealing with existence-threatening problems in the supply chain. Therefore, the focus is on the question of how cooperative risk management has to be structured, so that it is applied in actual practice.” Central to the success of such cooperation is a trusting relationship of the employees with one another, says the study. Insurance companies also offer great potential. In cooperation during a crisis, they can play a coordinating and neutral role, which they can offer actively.

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