(624h) Using Layer of Protection Analysis to Mitigate Supply Chain Risk

Over the last 25 years the chemical process industry has invested a great deal of effort to promote process safety and security in their production facilities. In that same time frame, the chemical supply chain has become increasingly more vulnerable to disruptions. Business factors such as reduced inventories (“lean manufacturing”), sole-source contracting, globalization, and aging transportation infrastructure have conspired to make supply chains extremely vulnerable to delays or interruptions in the flow of materials.  The challenge of managing supply chain disruptions is complex since they can be caused by a broad array of events including accidents, natural hazards, and sabotage. Thus, while the threats to production capacity from hazards have been brought under a higher level of control, the potential frequency and severity of external hazards has actually increased. In this paper we illustrate how some of the tools developed for chemical process hazard analysis can be adapted for SCRM. Specifically, we demonstrate how Layer of Protection Analysis (LOPA) can be used to select safeguards for controlling supply chain risk.

SCRM consists of three stages: risk identification, risk assessment, and risk control. In our case study we demonstrate the use of checklists for risk identification. Risk assessment is facilitated with risk matrix that defines different levels of frequency and severity of consequence. Then LOPA is used to develop a system of safeguards commensurate with the desired level of risk reduction. The case study is based on a petrochemical facility that receives raw materials by truck, rail, barge, and pipeline. Products are shipped out by truck and rail. We consider representative supply chain disruptions due to accidents, natural hazards, and terrorist attack.