Risk-Adjusted Return on Capital as a Concept in Value-Based Logistics Management

Seminar paper from the year 2007 in the subject Business economics - Supply, Production, Logistics, grade: 1.7, Protestant University of Applied Sciences Hamburg (Protestant University of Applied Sciences Hamburg), course: International Logistics Management, language: English, abstract: Continued deflationary trends in many markets around the world are creating

greater pressure for risk prevention in order that margins can be maintained.

Customers and consumers are increasingly value driven. In this challenging

world, there is a growing recognition that creative pricing strategies combined

with effective supply chain management provide opportunities for significant risk

capital cost reduction and yet increased profits.

This paper presents evidence and a new model to support this viewpoint and

suggests an approach to supply chain alignment that can enable cost reduction

opportunities to be identified and higher profits to be achieved through

collaborative strategies.

For a good risk management the bank uses, among other figures, RORAC,

RAROC and RARORAC to minimize the risk that each credit-borrower brings

along. In the financing sector, therefore, they created the credit-ranking system.

Now the next question would be, why not implement that credit-ranking in

logistics to minimize risks in order to create a certain risk capital as security.

Especially in the airfreight segment, where there is a lot of environmental risk

involved, there has to be created a new way to prevent from high unexpected

losses.

The question that has to be answered