Features of building a logistic risk management system for trade enterprises

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Open International University of Human Development "Ukraine"

FEATURES OF BUILDING A LOGISTIC RISK MANAGEMENT SYSTEM FOR TRADE ENTERPRISES

Kuchmieiev O.

Introduction

logistics risk management enterprise

Today, commercial relations in the field of trade are formed in conditions of fierce competition, uncertainty and instability of the market environment. In order to succeed in trade, it is no longer enough to use only marketing approaches, you need to use modern highly effective methods and techniques of flow control. The most progressive scientific and applied direction in this field is logistics.

The growing interest of trade entrepreneurs in logistics is due to the potential opportunities to improve the efficiency of logistics systems. Practice shows that trading companies that use logistics have gained an advantage over competitors and significantly increased profits by reducing costs associated with reducing production costs in the field of resource potential. Experts estimate that a 1% reduction in logistics costs is equivalent to a 10% increase in sales. Judging by the above indicators, we can say without a doubt the importance of proper, competent, educated organization of logistics processes of a commercial enterprise.

However, it should be noted that the logistics system of commercial enterprises is under the influence of risks that accompany the functioning of any market entity. Logistic risk is understood as the risk of delays in the supply chain, supply disruption or disruption of one or more links in the chain.

The most common risks are logistics risks associated with the performance of relevant logistics functions during production, storage, labeling and packaging, consolidation and shredding, transportation by various modes of transport, documentation, calculations, distribution, etc.

In logistics, risk detection, identification and assessment activities are now underdeveloped. Decisions on specific actions to protect and reduce risk can be detailed only in the case of in-depth study and analysis of risk situations that will occur in a particular chain link.

Given the presence of risks in any activity of a commercial enterprise, today the emergence of a new area of activity - risk management, which should aim to develop a solution to reduce the risk, prevent or eliminate it.

The main purpose of the study is to clarify the role of logistics in the organization of commercial enterprises, identify possible risks in the logistics systems of commercial enterprises and justify the need for a logistics risk management system.

Presenting main material

At the present stage of trade development, risk management acquires special significance, the formation of which in domestic practice has its own specifics.

The first feature of domestic risk management in trade - low efficiency of risk management, lack of complexity in the development of risk management, its secondary in the hierarchy of corporate values, episodic and unsystematic use.

The second distinguishing feature is its frequent replacement by insurance. Such a policy is due to both abuse by the insurer and an increase in the relevant budget of the company, as well as a decrease in the overall focus on risk.

Until recently, it was more convenient for large trading companies to organize their own insurance companies. As a rule, these insurers undertake not only the protection of property interests.

The third important point to consider is that the logistics system in practice is not a dynamic organization with a single control center, but is a set of stakeholders in the form of many links in the logistics chain with certain powers and responsibilities and areas of competence. That is, stakeholders in the logistics system are a significant number of logistics units, whose interests and profits are associated with the success of the organization and the logistics system in general. The links of the logistics system are, in particular, a team of managers and specialists with a certain nature of their own activities and professional competence. This system does not allow for field differentiation of processes in the logistics chain, and probabilistic and statistical approaches alone in risk assessment are not enough.

The fourth important point that should be noted is that during the operation of the logistics system, participants in all parts of the logistics chain are interested in making a profit. Logistics managers are tasked with increasing this profit and reducing costs. Risk management issues are usually removed from the field of concentration of logistics and managers until the risk event, the cost of which may be commensurate with the profit for a significant period.

Quite often, individual and team benchmarks of risk managers do not coincide with the team benchmarks of top managers and are not integrated into the overall system of goals of the trading company. The professional competence of managers and risk managers contradicts the competence of the organization as a stakeholder.

To build an effective risk management system in the activities of commercial enterprises, it is necessary to clearly identify the subject of management - risk. There is a rather wide variety of definitions of this concept, and therefore the fact of its unambiguous understanding and documentary fixation is very important.

Therefore, risk is understood as the possibility of an unfavorable situation or a failed outcome of production, economic, financial or other activities of the organization. It should be noted that the main causes of risk are not only the statistical possibility of an unfavorable situation, but also three other factors of external and internal logistics environment: uncertainty, randomness, resistance.

Uncertainty is the sum of circumstances that can be predicted in advance, but it is not possible to determine how significantly they will affect the final performance of logistics activities. This factor is often ignored in risk assessment, but its impact on performance can be quite significant.

Randomness is the sum of circumstances that arise regardless of the general situation and, as a rule, under the influence of environmental factors. For example, the situation in the winter of 2021 in the port of Odessa, when the air temperature dropped to an unexpectedly low level and ships could not enter the port. This situation has led to: unsent containers, unreceived raw materials, unforeseen costs, losses, discontinued production [4, p. 127]. Of course, managers and logisticians of organizations that receive or send cargo in the port of Odessa, know that due to the low temperature may be difficult, but did not expect such a scale of the problem. And for one Kyiv confectionery company, the uncertainty of weather conditions - the stay in the port of ships with cargo at the time of frost - was exacerbated by a factor of chance - the lack of insurance stocks of raw materials in production warehouses in Kiev [4, p. 135].

Counteraction is a deliberate resistance to the circumstances and participants in the logistics process during its implementation. The presence of opposition is not only hostile. These include the skillful actions of competitors who use the circumstances in their interests and the actions of counterparties or third parties who perform or fail to comply with the terms of the contract.

For example, the main supplier of world-class packaging left the market for three months because of the technological reequipment of production. The logistics services of this company, in order to continuously meet the needs of consumers in products, have increased the stocks of their contractors for the entire period of its own technological re-equipment. However, one of the largest Ukrainian holdings, a supplier of raw materials for similar packaging, took advantage of the company's temporary absence from the market. So far, this holding has registered a Ukrainian subsidiary with a similar profile. Using the available material and administrative resources, the holding conducted a powerful advertising campaign and offered to the market packaging - similar products at relatively low prices. Consumers of packaging during the three months of absence of the international company rebuilt their supply and production chains under a new packaging supplier. As a result, when the European manufacturer returned to the market, all its customers switched to a competitor. The holding later sold its subsidiary as a non-core company. But the European company, despite significant efforts, has not been able to return to the market [4, p. 147].

Accordingly, during the operation of the logistics system, these factors affect the whole set of logistics units, including staff of organizations with a certain nature of their own activities, professional competence and a certain response to risky events.

Every manager or manager has a certain baggage of experience and knowledge, a certain area of competence and his own view of risk, but this view is not always objective. Quite often, top managers and entrepreneurs underestimate the importance of logistics supply chain management and risk assessment in logistics, without highlighting the particular problems. As a general example of the attitude of managers to the problems of risk, we present the results of a survey conducted by experts of the Association of Managers and the magazine "Financial Director" [5]. Tried in two stages:

1) the question “How does your company assess risks?” Was published on the website of the Financial Director magazine;

2) a sample expert survey of more than one hundred leaders of leading Ukrainian companies from Kyiv and twelve regions of Ukraine was conducted.

At the first stage, 46% of respondents answered that in their companies managers assess risks based on their experience and knowledge; 22% - risks are not assessed at all; 16% - formalized risk assessment procedures are used; 11% - all these methods are used and only 3% turn to third-party experts for risk assessment. That is, only a third of respondents take into account the risk factor.

In the second stage, half of the respondents said that they use a range of methods when assessing risks: the accumulated knowledge and experience of their managers, the assessment of external experts, as well as formalized risk assessment procedures. At the same time, 17% of companies use formalized risk assessment procedures; 33% of managers say that the company's managers assess the risks only based on their experience and knowledge, which means that they lack a systematic approach and formalized procedures.

It is important to note that company managers and even risk managers could not always answer with certainty what formalized risk assessment procedures are and what the nature of their personal accountability is. This trend emphasizes the vagueness of the goals set in the companies, the lack of job skills and tasks, as well as the dispersion of professional competence of employees.

The differences in the results of the first and second stages are explained by the fact that the experts of the most modern and successful companies occupying leading positions in various rankings were interviewed within the framework of the expert study. And the respondents interviewed on the site cannot be controlled. It is obvious that among them there were more representatives of medium-sized enterprises, where risk management is carried out so far unsystematically, or even not at all. Also, the attitude to risks determines the nature of the products.

The answers to the question: "What factors pose the greatest risk to the normal and planned operation of the company?" Were unexpected. As sources of maximum risk, 60% of respondents named the human factor (mistakes of their employees), 30% noted the dishonesty of business partners and 10% - natural disasters and other factors. Virtually no one mentioned such factors of change in the external environment as changes in demand for products and price conditions, the activities of competing organizations and the overall development of this segment of products in the market. [5]

Such a reaction to the survey suggests that its participants may not be well versed in the concept of "risk management" or their management in these organizations does not correspond to the current level. It should be noted that most managers, realizing that the greatest risk to their company is the mistakes of employees, in assessing these risks relied only on the experience and knowledge of managers.

It is important to note that virtually all respondents confirmed that the effectiveness of the organization is significantly higher in the case of:

1) use of formalized risk assessment methods;

2) adoption by management or owners of a fixed risk management policy. [8]

Therefore, it is very important for the head or owner of the organization to understand the consequences of the risks and make the appropriate decision.

Given the above, we can propose the following procedure for making management decisions on the choice of methods of logistics risk management in commercial enterprises.

The significance of risk in the logistics system in a trading company in terms of the inevitability of the impact on it can be proposed to calculate using the logistics risk index, which is determined in absolute terms in the range from 1 to 100. In risk theory, such an index is calculated and probabilities of their occurrence (IP):

Ілр = Ров * Ів

The choice of risk management method in the logistics system at the trading company is proposed to be based on a comparison of the value of the logistics risk index before and after the implementation of the method (Ілд, Ілп) taking into account the cost of such implementation (Ввпр)

Ілд - (Ілп - Ввпр) > 0

Table 1

Matrix for selecting the type of management methods logistics risks of the trading company

Therefore, the level of risk in the logistics system of a trading company can be proposed to determine in the following order:

1. Determining the level of logistical risk by the amount of loss of expected operating profit on a scale: minimum (10%), low (10-40%), medium (60-40%), high (60-90%), critical (more than 9o%) ).

2. Expert assessment of the probability of operating profit costs on a scale: Losses are almost impossible - 0.1; Losses are unlikely (low probability) - 0.2; Losses are probable - 0.3 - 0.5; High probability - 0.5 - 0.7; Losses are almost inevitable (extremely high probability) - 0.7 - 0.9.

3. Choice of the type of methods of logistics risk management according to the matrix model "Level of expected costs of OP * Probability of costs of OP": Risk avoidance; Risk localization; Risk dissipation; Risk compensation; Risk acceptance.

4. Deciding on the implementation of the method of logistics risk management

Table 2

Methods of logistics risk management at commercial enterprises

5. The choice of risk management method in the logistics of a trading company based on a comparison of the value of the logistics risk index before and after the implementation of the chosen method (Ілд, Ілп) taking into account the cost of such implementation (Ввпр)

Ілд - (Ілп - Ввпр) > 0

6. Monitoring the implementation of management decisions and monitoring its effectiveness.

Conclusions

Therefore, decisions on specific actions to protect and reduce (increase) risk in the activities of commercial enterprises should be detailed during the in-depth study and analysis of the risk situation, which is possible in the future and in the present.

The significance of risk in the logistics system at a trading company in terms of the inevitability of the impact on it is proposed to calculate using the index of logistics risk. The choice of risk management method in the logistics system at a trading company is proposed to be based on a comparison of the value of the logistics risk index before and after the implementation of the method, taking into account the costs of such implementation.

One of the promising areas of research on this issue is the study of risk management system modeling in logistics systems of commercial enterprises.

References

1. Alkema VG The system of economic security of logistics entities: [monograph] / ed. VG Alkemi. Kyiv: KROK University of Economics and Law, 2011. 376 p.

2. Borovkova VA Risk management in trade. СПб.: Питер, 2014. 288 с.

3. Belous J.Yu. Analysis of approaches to the definition of "economic security of the enterprise". Economics Management Entrepreneurship, 2011. № 23 (II). Pp. 241-247.

4. Zhivko Z.B. Strategic planning in the system of economic security of the enterprise. Problems of Science, 2012. № 4. P. 32-39.

5. Official website http://www.dist-cons.ru/modules/logistic/ section1.html.

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