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 creatinggreater pressure for risk prevention in order that margins can be maintained.Customers and consumers are increasingly value driven. In this challengingworld there is a growing recognition that creative pricing strategies combinedwith effective supply chain management provide opportunities for significant riskcapital cost reduction and yet increased profits.This paper presents evidence and a new model to support this viewpoint andsuggests an approach to supply chain alignment that can enable cost reductionopportunities to be identified and higher profits to be achieved throughcollaborative strategies.For a good risk management the bank uses among other figures RORACRAROC and RARORAC to minimize the risk that each credit-borrower bringsalong. In the financing sector therefore they created the credit-ranking system.Now the next question would be why not implement that credit-ranking inlogistics 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 riskinvolved there has to be created a new way to prevent from high unexpectedlosses.The question that has to be answered