Applying Risk Pooling in Paper Wholesale

Abstract

In this chapter the Risk Pooling Decision Support Tool developed in Sect. 3.2 is effectively applied to choose suitable risk-pooling methods for a large German paper distributor. This application shows that risk pooling can be used effectively as a guiding umbrella principle in systematically restructuring a distribution system: Risk pooling allows to cope with supplier lead time, customer demand, and forecast uncertainty, as well as product variety and to reduce costs and inventory, increase customer service, and make a company more competitive. Human resource factors, transaction costs, and local suboptimization seem to be important in implementing and practicing risk pooling and especially transshipments. These factors are commonly neglected in the risk-pooling literature. Risk-pooling methods can be and are used side by side to take advantage of their benefits, while making up for disadvantages of other ones. This is also confirmed by a survey on the state of risk-pooling in Germany, whose results are presented in Chap. 5.