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Risk Pooling

Risk pooling is an important concept for improving supply chain management. It helps companies think about the impacts of decisions on inventory, warehouse location, transportation, push-pull strategies, and product design. The document proposes applying risk pooling to address issues in a university cafeteria's supply chain, such as food waste from variable demand and low service levels from supply problems. The proposal suggests preparing food for students and faculty together in batches to lower costs by pooling resources and demand risks compared to separate preparation processes. The results would be lower costs from reduced waste and expenses, better demand forecasting, and improved customer satisfaction.

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Nitin Sonkar
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404 views13 pages

Risk Pooling

Risk pooling is an important concept for improving supply chain management. It helps companies think about the impacts of decisions on inventory, warehouse location, transportation, push-pull strategies, and product design. The document proposes applying risk pooling to address issues in a university cafeteria's supply chain, such as food waste from variable demand and low service levels from supply problems. The proposal suggests preparing food for students and faculty together in batches to lower costs by pooling resources and demand risks compared to separate preparation processes. The results would be lower costs from reduced waste and expenses, better demand forecasting, and improved customer satisfaction.

Uploaded by

Nitin Sonkar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Risk Pooling

Introduction

Risk pooling is one of the most important theoretical concept


needed to be understood to have a better supply chain for any
company

Bullwhip effect can be ranked as second

It helps a lot in thinking about the impact on supply chain decisions


1.

Inventory Management

2.

Warehouse location and product flow

3.

Transportation

4.

Push-Pull Strategy

5.

Product Design

Existing Problems

Wastage of food:

Huge variability in demand

Frequent eat outs e.g. on weekends, birthdays etc

Variation in quality of food due to improper staff planning

Occasional ad-hoc time table changes

Low Service Level:

Untimely supply of raw materials

Unavailability of primary chef and staff

Scope for more accurate and proper information sharing

Proposed Solution

Waste Management

Separate the organic waste from the general waste and


place in a separate bin

Weigh the bin and subtract the weight of the bin to estimate
the quantity of catering food waste produced

Multiply your daily value by 7 to calculate the weight of food


waste produced per week

Proposed Solution

Costs associated with catering waste:

Disposal Cost:
Multiply the cost of collection per kg by the
actual weight calculated. This gives you the
total waste disposal charge for the year

Proposed Solution

Costs associated with catering waste:

Fresh Food Cost:


Assess the average cost of new food
ingredients from a sample of invoices

Proposed Solution

Costs associated with catering waste:

Staff Cost:

Estimate what proportion of the total food that is


bought is thrown out

Then estimate the number of hours that staff spend


preparing food and the associated cost

Then multiply this value by the proportion calculated


above

From the previous observation of food wastages, a better


information about customers demand and choice can be
determined

Then an appropriate push-pull strategy can be


implemented in this case by preparing food in two batches

Proposal 1

Preparing and serving food in two batches using postponement and


push pull

Total serving time = 2Hrs.

Lot 1 = 30 mins

Post Lot 1 : Check the food wastage by tracking bins &


serving bowls post 30 mins.

Lot 2 = Prepared and served Post 30 mins.

Lot 2: Depending upon the wastage and demand in first lot


food preparation is completed for the second lot and
served.

Note: The role of information sharing among


students is vital
The role of mess manager is now more crucial as
decision has to be taken on the go

Proposal 2

Risk Pooling

Risks associated by having two different preparation processes of


food

Increased cost

More time taking

Risk pooling helps in better inventory management by

Providing common menu

Common preparation of food

Results

Lowering of cost due to preparation of common food for both


(faculty and students)

Lowering of expenses due to low wastages

Better demand forecast

Offset of ones demand by anothers (Pooling of risk associated with


time, resource and demand)

Better customer satisfaction

Thank You !!

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