Risk Management Process Model for Dynamic Global Production Networks

In a rapidly evolving global market, it is necessary for production networks to be flexible in response to customer demand. This flexibility, however, requires quick and well-coordinated management of risks to avoid adverse effects on the network. As part of FLEXINET project, a risk management process model is proposed specifically to facilitate dynamic reconfiguration of global production networks and it covers the process from ideation and customer request to product/service delivery. The risk management process identifies, obtains and documents relevant information about risks, facilitates evaluation and analysis of risks for alternative network and product/service configurations and also helps constitute plans for risk mitigation. The role of network partners and their characteristics, including geographical variations, are taken into account while interdependencies between partners and propagation of risks are also considered. Risk scenarios related to supply, production, logistics, demand, information and control, and external risks are included and a generic catalogue of potentially relevant risks are provided to bootstrap the process. The process model recommends documentation of historical information about incidents to be carried out continuously which can be later utilised to improve speed and accuracy of risk management. Also, by explicitly considering uncertainty level of provided information, continuous improvement in information availability within the process has been recognised, the accuracy and applicability of the analysis can be measured and appropriate action can be taken to improve the accuracy, as needed.