Introducing Risk Management Process to a manufacturing industry
Introducing Risk Management Process to a manufacturing
industry
Masterthesisinidentificationofriskavoidance
strategiesatCocaColaEnterprisesSweden
Autumn 2012
Gabriel ?berg Bustad, gabob@kth.se (870609-7279) Emma Bayer, emmaba@kth.se (871001-3601)
Emma Bayer Gabriel ?berg Bustad
Introducing Risk Management Process to a manufacturing industry
Acknowledgements
We would like to send special thanks to our supervisor Jerzy Mikler at the Royal Institute of Technology, for his support and advices as well as his dedication to our project at Coca-Cola Enterprises Sweden (CCES). Also, we would like to thank our supervisor at CCES, Staffan L Olsson for his support throughout the project, which has made it possible for us to conduct this study on risk management.
Finally, the project could not have been completed, and the results would not have been the same, without all the employees which participated in interviews and workshops. Thank you all for your dedication and assistance. We hope the outcome of the project will be beneficial for your future work!
Stockholm, January 2013 Gabriel ?berg Bustad
Emma Bayer
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Emma Bayer Gabriel ?berg Bustad
Introducing Risk Management Process to a manufacturing industry
A bs trac t
Risk can be viewed as a state where there is a possibility of a loss but also a hope of gain. To realise the existence of a risk, one must be aware of both the gains and losses incurred. Increased number of natural disasters and companies having global supply chains to a higher extent, are both factors which have increased the number of risks that can affect an organisation's supply chain negatively. This fact has made it even more important to focus on risk prevention. In the beverage industry market, characterized by fast-moving products, manufacturing companies like Coca-Cola Enterprises Sweden (CCES) can be highly affected if disturbances occur in their supply chain.
Risk management is, according to ISO 31000, "coordinated activities to direct and control an organization with regard to risk ". A risk management processes therefore aims at mitigating negative impact of external and internal disturbances in order to avoid interruptions in production, product quality issues and financial losses. CCES's control over internal processes and its disturbances is mostly based on reactive approaches rather than a proactive strategy and there exist no guidelines of how to identify and handle occurring disturbances. The main purpose of the project has therefore been to identify the most critical risks the company is facing within their "Source" and "Make" processes, and find both proactive and reactive mitigation actions. Another significant part of the project delivery is to present a model for how the company should organize and maintain a sustainable risk picture. The model aims to present a dynamic risk management process that can be used by CCES as well as other companies in the future.
The project consists of three major phases; Risk Identification, Risk Avoidance Mapping and Implementation of a Risk Management Process. In the first phase, the brainstorming tool Hazard and Operability (HAZOP) has been used during workshop events for risk identification and assessment. Some of the most critical risks identified are; Sabotage during transport from supplier to CCES, Lack of spare parts for maintenance, Lost production time due to long beverage change overs and Filling bottles with too much beverage. In order to find feasible preventive and reactive mitigation actions for the critical risks, both employee interviews and the Supply Chain Operations Reference (SCOR) model has been applied. Some of the actions recommended to perform are concluded to be; Let suppliers own transports, Standardize the product change process and the shift hand overs and Implement routines of having locked transports from supplier to CCES.
The structure of the project has acted as a basis for the recommended way of continuing the risk management work at CCES. The authors have identified the importance of keeping the risk management process dynamic, and therefore a Risk Register have been introduced for documentation and follow-up. Another way of following up the risk management work, is to perform Risk Audits after the event of a disturbance. This will help the organisation to realize the impact a certain disturbance brings, but it will also measure of the recovery work's effectiveness. The authors highlight the importance of having a dedicated owner of the risk management process in order to keep it dynamic. A complete risk management process has finally been created, adaptable to different kind of organisations. By making this process a part of SCOR, the authors believes that the process can be used to identify individual risks within the management processes Plan, Source, Make, Deliver and Return for all SCOR member companies. Thereafter, a general risk mapping can be created from the individual risks that can be used to share information and experiences among the member companies.
Keywords: Coca-Cola Enterprises, Risk management process, Risk identification, assessment and avoidance mapping, SCOR, HAZOP, Risk Register, Risk auditing, Resilience
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Introducing Risk Management Process to a manufacturing industry
Sammanfattning
En risk kan f?rklaras som ett tillst?nd d?r det finns en chans att vinna, men ocks? en sannolikhet f?r f?rlust. F?r att vara medveten om en risks existens m?ste man d?rf?r f?rst? b?de vad det finns att f?rlora och vinna. Under de senaste ?rtiondena har antalet naturkatastrofer och annan extern p?verkan ?kat. Detta i kombination med att f?retag idag har globala v?rdekedjor i allt st?rre utstr?ckning, har gjort att organisationer uts?tter sig f?r risker till en st?rre grad idag. D?rf?r har betydelsen av att fokusera p? riskf?rmildrande ?tg?rder ?kat. I dryckesindustrin, karakt?riserat av snabbr?rliga produkter, kan f?retag s?som CocaCola Enterprises Sweden (CCES) p?verkas h?rt om st?rningar sker i deras v?rdekedja.
Risk Management ?r, enligt ISO 31000, "koordinerade aktiviteter f?r att styra och kontrollera riskhantering i en organisation". En riskhanteringsprocess ?mnar d?rf?r f?rmildra negativ p?verkan av interna och externa st?rningar f?r att undvika till exempel avvikelser i produktion, f?rs?mrad produktkvalitet och finansiella f?rluster. CCES's kontroll ?ver interna processer och dess st?rningar baseras fr?mst p? reaktiva ?tg?rder, och f?retaget har inga riktlinjer f?r hur de ska identifiera och hantera uppkommande st?rningar. Syftet med detta projekt har d?rf?r varit att identifiera kritiska risker inom f?retagets leverant?rs- och produktionsprocesser och att hitta proaktiva och reaktiva l?sningar f?r att f?rmildra och undvika st?rningar. Ytterligare en stor del av projektets syfte har varit att presentera en dynamisk process f?r hur CCES, samt andra f?retag, ska organisera en h?llbar riskbild.
Projektet best?r av tre huvudsakliga delar; riskidentifiering, riskf?rmildrande ?tg?rder och implementering av en riskhanteringsprocess. I den f?rsta fasen har verktyget Hazard and Operability (HAZOP) anv?nds under workshops f?r att identifiera och v?rdera risker. N?gra av de mest kritiska riskerna som identifierats ?r; Sabotage under transport fr?n leverant?r till CCES, Brist p? reservdelar f?r underh?llsarbete, F?rlorad produktionstid p? grund av f?r l?nga dryckesbytartider och Fyller flaskor med f?r mycket dryck. F?r att hitta passande reaktiva och proaktiva l?sningar f?r de kritiska riskerna har b?de intervjuer med anst?llda genomf?rts och referensmodellen Supply Chain Reference Model (SCOR) anv?nts. N?gra av de ?tg?rder rekommenderade att g?ra har identifierats till att vara; L?ta leverant?rerna sj?lva sk?ta transporter, Standardisera produktbytesprocessen samt skift?verl?mningar och Implementera rutiner f?r att ha l?sta transporter fr?n leverant?r till CCES.
Strukturen av projektet har anv?nts som en bas f?r den rekommenderade strukturen p? CCE's fortskridande arbete inom riskhantering. F?rfattarna vill bestryka vikten av att h?lla den framtida riskhanteringsprocessen dynamisk och i detta syfte har d?rf?r ett riskregister tagits fram f?r dokumentation och uppf?ljning. Ett annat s?tt att f?lja upp riskprocessarbetet ?r att genomf?ra s? kallade audits efter en st?rning har intr?ffat. Detta hj?lper organisationen b?de att f?rst?r en st?rnings p?verkan p? verksamheten, men fungerar ocks? som ett verktyg f?r att m?ta hur effektivt ?terh?mtningsarbetet efter en st?rning har varit. F?rfattarna menar ocks? att en dedikerad ?gare till riskprocessen ?r av stor betydelse f?r ett dynamiskt, framg?ngsrikt och effektivt riskarbete. En fullst?ndig riskhanteringsprocess har slutligen sammanst?llts, anv?ndbar f?r m?nga olika typer av organisationer. Genom att g?ra processen till en del av SCOR-modellen, kan processen i framtiden anv?ndas till att identifiera individuella risker inom de fem managementprocesserna Planering, Ink?p, Tillverkning, Leverans och Retur f?r alla SCOR's medlemsf?retag. D?refter menar f?rfattarna att en generell kartl?ggning ?ver de mest kritiska riskerna inom varje managementprocess kan skapas f?r att dela information och utbyta erfarenheter mellan medlemsf?retagen.
Nyckelord: Coca-Cola Enterprises, Riskprocess, Riskidentifiering, Riskv?rdering, SCOR, HAZOP, Riskregister, Riskuppf?ljning, Motst?ndskraft
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Abbreviation list
Wo rd/ abbre v i ati o n/ ac ro ny m
CCE CCES CIP HAZOP KPI MTBF MTTR PFD QESH RM RMP SCC SCFD SCOR SPC VMI
Explanation
Coca-Cola Enterprises Coca-Cola Enterprises Sweden Cleaning In Place Hazard and Operability study Key Performance Indicator Mean Time Between Failure Mean Time To Repair Process Flow Diagram Quality, Environment, Safety and Health Risk Management Risk Management Process Supply Chain Council Supply Chain Flow Diagram Supply Chain Operations Reference Statistical Process Control Vendor Managed Inventory
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