The State of Risk Pooling in Germany

We present the findings of a survey on the knowledge and application of risk pooling in 102 German manufacturing and trading companies of various sizes and industries: Managers appear to associate mainly transshipments and postponement with risk pooling. The risk-pooling concepts are known fairly well (central ordering, product substitution, and selective stocking the most), but only selective stocking, transshipments, and central ordering are widely applied. Transshipments are more, postponement, product pooling, and inventory centralization less applied than suggested by some publications mostly for other regions. Contrary to expectations due to rising fuel costs, the sample companies show no major decentralization trend. Trading companies seem to apply product substitution and transshipments more than manufacturing companies. The opposite is true for component commonality and postponement. More large companies appear to use risk pooling and postponement than smaller ones, perhaps because they can better afford to invest in expensive risk-pooling methods. More small companies have centralized their warehouse or logistics system in the past than large ones in our sample.