Prepare a formal 5 -page paper and presentation (content, not including reference page or table of contents) on a topic of your choice related to Transportation
Prepare a formal 5 -page paper and presentation (content, not including reference page or table of contents) on a topic of your choice related to Transportation and Logistics
Your paper, which is worth 100 points and 45% of your grade, will be evaluated based on the following criteria:
Quality and depth of content (60 points)
Organization of the report (10 points)
Overall format, i.e., typed, use of page numbers, title page, table of contents, appropriate labels on figures and tables, etc. (10 points)
Correct grammar and evidence of proofing, i.e., no spelling errors (5 points)
Variety and documentation of references used. Format for citations and references must follow APA 7th ed. guidelines (15 points)
CHAPTER 9
Transportation Risk Management
1
Transportation: A Global Supply Chain Perspective (8e)
Coyle, Novack, and Gibson
© 2015 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Discussion Outline
The nature of transportation risk and disruptions
The concept of risk management
Transportation risk management process and techniques
Key transportation security regulations and initiatives
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Transportation Risk and Disruption
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3
Concept of Risk Management
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4
Transportation Risk Management Process & Techniques
Risk Management Process
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6
Step 1: Risk Identification
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7
Step 1: Risk Identification Risk Categories, Part 1
Product loss includes any type of action or negligence that leads to product not reaching the intended buyer.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Step 1: Risk Identification Risk Categories, Part 2
Product damage can result from a wide array of actions or inactions on the part of equipment operators and freight handlers.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Step 1: Risk Identification Risk Categories, Part 3
A particular risk to food, pharmaceutical goods, and other consumables that increases along with trip distance and time in transit.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Step 1: Risk Identification Risk Categories, Part 4
Companies that rely upon just-in-time delivery of inventory, or sourcing goods from low-cost manufacturers in the Far East are at high risks if delivery delay occurs.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Step 1: Risk Identification Risk Categories, Part 5
Supply chain interruptions caused by poor execution of day-to-day operations, and transport-related forces outside the control of the company.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Step 1: Risk Identification Risk Categories, Part 6
Failures to protect freight in-transit against terrorist attacks, organized crime activity, and illegal immigration lead to time-consuming freight inspections and costly countermeasures.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Step 2: Risk Assessment
Objectives
To evaluate the seriousness of each risk identified in step 1.
To focus resources on relevant risk management and mitigation strategies.
Assessment parameters
Probability—the likelihood of the risk occurring
Impact—the consequences if the risk does occur
Proximity—the anticipated timing of the risk
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Step 2: Risk Assessment Qualitative and Quantitative Analysis
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15
Step 2: Risk Assessment Qualitative Analysis – Risk Assessment Matrix
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Step 3: Risk Management Strategy Development
Mitigation Strategy Objective: To create a coherent strategy to lower the probability of risk occurrence and/or minimize the negative impact if the risk occurs.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Step 3: Risk Management Strategy Development Action Plan Techniques, Part 1
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18
Step 3: Risk Management Strategy Development Action Plan Techniques, Part 2
TABLE 9-1
Transportation Risk Reduction Strategies
| RISK CATEGORY | SPECIFIC RISKS | REDUCTION STRATEGIES | ANTICIPATED OUTCOMES |
| Product Loss | Theft and pilferage Piracy and hijacking Cargo jettison | Use generic packaging & descriptions Avoid lawless hot spots Strategic routing | Mitigate risk of financial loss, reduce customer delivery delays, and avoid replacement shipment expenses. |
| Product Damage | Operator accident Poor freight handling methods Improper equipment loading | Use protective packaging Establish training programs Monitor carrier performance | Enhance freight safety, reduce freight claims administration, and profit margin protection. |
| Product Contamination | Temperature control failure Product tampering Exposure to hazardous materials | Secure freight/lock containers Isolate dangerous freight Leverage pervasive automation | Safeguard brand equity, decrease potential for product liability lawsuits, and trim product recalls and inventory replacement costs. |
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Step 3: Risk Management Strategy Development Action Plan Techniques, Part 3
TABLE 9-1
Transportation Risk Reduction Strategies
| RISK CATEGORY | SPECIFIC RISKS | REDUCTION STRATEGIES | ANTICIPATED OUTCOMES |
| Delivery Delay | Congestion Poor weather Equipment malfunction | Use event management software Employ dynamic re-routing tools Avoid ill-equipped and congested ports | Mitigate risk of financial loss, reduce customer delivery delays, and avoid replacement shipment expenses. |
| Supply Chain Interruption | Capacity shortage Carrier bankruptcy Labor disruptions and strikes | Contract with quality carriers Monitor carrier finances Secure backup capacity Identify alternate ports and service providers | Enhance freight safety, reduce freight claims administration, and profit margin protection. |
| Security Breach | Shipment control breakdown Unprotected transfer facilities Lax security processes | Employ cargo tracking technology Screen & evaluate vulnerabilities Participate in C-TPAT and FAST | Safeguard brand equity, decrease potential for product liability lawsuits, and trim product recalls and inventory replacement costs. |
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Step 4: Risk Review and Monitoring
Risk environment is not static, requiring regular review of risks and update of action plan. The goal is to establish a repeatable, measurable, verifiable validation process.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
21
Transportation Security Regulations and Initiatives
Global Supply Chain Risks
| Inherent Physical Risks | Human-caused Security Risks |
| Global supply chain is more susceptible to loss, damage, and delay problems. Longer distances Greater product handling Multiple border crossings More intermediaries | Human-caused risks are motivated by political, ideological, or criminal intent. Theft Nuclear, chemical, biological, radiological & high explosive weapons Illicit trade of drugs Currency laundering Illegal entry of stowaways |
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
23
Enhanced Security Measures Post-9/11 Challenge of balancing trade efficiency and security
More complex US Customs clearance process
Increased cargo inspection
Greater paperwork requirements
Close scrutiny of shipment country of origin
Potential cause of delays and decreased efficiency
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
24
Transportation Security Regulations and Initiatives, Part 1
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25
Transportation Security Regulations and Initiatives, Part 2
Aviation and Transportation Security Act of 2001
ATSA established the Transportation Security Administration (TSA).
TSA roles
Screening of all passengers and property to be carried aboard an aircraft.
Screening of cargo carried aboard passenger aircraft
Certified cargo screening program
Explosive Trace Detection (ETD)
X-ray
Physical search
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
26
Transportation Security Regulations and Initiatives, Part 3
Maritime Security Act of 2002 (MTSA)
To protect US ports and waterways from terrorists attack.
Key MTSA provisions
Conducting vulnerability assessments for port facilities and vessels
Developing security plans to mitigate identified risks
Developing the Transportation Worker Identification Credential (TWIC)
Establishing of a process to assess foreign ports of US bound vessels
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
27
Transportation Security Regulations and Initiatives, Part 4
Security and Accountability for Every Port (SAFE Port) Act
To keep nuclear, chemical, and biological weapons out of freight containers traveling to US ports.
Key provisions
Codified the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT)
Required interagency operational centers to fit the security needs
Set an implementation schedule and fee restrictions for TWIC
Required all containers entering high-volume US ports be scanned for radiation sources
Required additional data be made available to administered by US Customs and Border Protection (CBP) for targeting cargo containers for inspection
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
28
Transportation Security Regulations and Initiatives, Part 5
Container Security Initiative (CSI)
To identify and inspect all containers that pose a potential risk for terrorism at foreign ports before they are placed on U.S. bound vessels.
Operational at 58 ports in North America, Europe, Asia, Africa, the Middle East, and Latin and Central America
Three core elements
Identify high-risk containers.
Prescreen and evaluate containers before they are shipped.
Use nonintrusive inspection technology to prescreen high-risk containers so as not to slow down the movement of trade.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
29
Transportation Security Regulations and Initiatives, Part 6
Customs-Trade Partnership Against Terrorism (C-TPAT)
Improve international supply chain and U.S. border security through voluntary government-business cooperative relationships.
Participating businesses
Must ensure integrity their security practices
Must verify security guidelines of SC partners
Enjoy a more secure and faster supply chain
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
30
Transportation Security Regulations and Initiatives, Part 7
Free and Secure Trade (FAST)
A commercial clearance program for known low-risk shipments entering the United States from Canada and Mexico.
Combines common risk-management principles, security practices, industry partnerships and IT
Allows expedited processing for land-based commercial carriers who have completed background checks and fulfill certain eligibility requirements
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
31
Summary
Transportation risks are potentially disruptive events that produce supply chain disorder.
Risk management is the process of identifying risk, its causes and effects, and its ownership.
Risk mitigation options include risk avoidance, reduction, transfer, or retention.
Risk is a never-ending challenge, requiring a repetitive, measurable, verifiable risk monitoring process.
Security is not the responsibility or domain of a single group. Government and industry must collaborate to secure global supply chains.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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