Risk Assessment Framework for Outbound Supply-Chain Management

Abstract

We developed a framework for the risk assessment of delaying the delivery of shipments to customers in the presence of incomplete information pertaining to a significant, e.g., weather-related, event that could cause substantial disruption. The approach was anchored in existing manual practices, but equipped with a mechanism for collecting critical data and incorporating it into decision-making, paving the path to gradual automation. Two key variables that affect the risk were: the likelihood of an event and the importance of the specific shipment. User-specified event likelihood, with elliptical spatial component, allowed the model to attach different probabilistic interpretations; uniform and Gaussian probability distributions were discussed, including possible paths for extensions. The framework development included a practical implementation in the Python scientific ecosystem. Although the framework was demonstrated in a prototype environment, the results clearly showed that the framework was quickly able to show scheduled and in-process shipments that were at risk of delay, while also providing a prioritized ranking of these shipments in order for personnel within the manufacturing organization to quickly implement mitigation actions and proactive communications with customers to ensure critical shipments were delivered when needed. Since the framework pulled in data from various business information systems, the framework proved to assist personnel to quickly identify potentially impacted shipments much faster than existing methods, which resulted in improved efficiency and customer satisfaction.

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