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Plan for the Everyday Events

Companies tend to have well-established plans for coping with cataclysmic events, but they may be woefully unprepared for the smaller day-to-day bumps.

Big events such as hurricanes, tornados, tsunamis, and terrorist attacks can stay top of mind because of the long-lasting impact they can have on the high-tech distribution and services supply chain. However, these types of events are not that likely to occur. They are outlier events.

“Outlier events have much more influence than they should,” Professor Ananth Raman of Harvard Business School told David Stauffer for an article for the school’s website. M. Eric Johnson, director of the Center for Digital Strategies at Dartmouth College's Tuck School of Business, told Stauffer for the same article, “Managers will often consider the giant risk but ignore the smaller risks that create friction in the supply chain.” It is critical that your company put in place strategies that focus on the everyday events. Dealing with them in a piecemeal fashion is inefficient and ineffective and can significantly hurt your company.

Deloitte recently surveyed 600 global executives about their supply chain risk management. Forty-five percent of the respondents said their programs were somewhat effective of not effective at all. Respondents — especially those in the technology, industrial products, and diversified manufacturing sectors — reported that supply chain disruptions have become more costly over the past three years. They also cited margin erosion and sudden demand change as two of the most costly problems.

Sixty-four percent of the global executives said they had a risk management program that is specific to the supply chain.

What makes an effective program? The strategies you employ to cope with everyday risks need to be robust and monitored closely. It is important that you put a leader in charge. Furthermore, it is important that the system include well-defined processes to mitigate events such as cashflow contingencies, client credit risk and default, competitor interruptions, inventory risk, data backup and recovery, key client attrition, employee satisfaction and retention, social media use and abuse, and reputation recovery.

It is also important to be nimble and flexible. Being intractable can exacerbate issues. One area that is often overlooked is human resources. Don't be afraid to move employees into new roles. Moving an employee into a new role permanently (or for a specified period to deal with an event) is a powerful and effective strategy.

Finally, be first. If there is a problem, be sure that the clients hear about the problem from you. When you contact clients, tell them what the issue is and what you are doing to address it. Be clear, concise, and honest.

A big event might happen, but everyday events will happen… every day. Don't give your company Chicken Little syndrome by focusing only on big events.

38 comments on “Plan for the Everyday Events

  1. Nemos
    July 26, 2013

    Very informative blog post, in particular the answers to “What makes an effective program?” gives a clear image. I would like to ask if an effective program against everyday events should be applied to every size company ? Although maybe my question is simple from the other hand I want to mention that I haven't seen (until now) small size companies to apply any management plan. 

  2. Frank Cavallaro
    July 26, 2013

    Good points. Every size company can benefit and it is a common misconception that these types of programs are only for larger companies.

  3. hash.era
    July 26, 2013

    @Frank : Do you think size is a deciding factor of a company's success ? I think it is in a way but not fully since there are so many small companies who dominate the business world in a very short period of time   

  4. SunitaT
    July 27, 2013

    I agree with Mr Frank Cavallaro. The major businesses are infested with problems that need simple solutions. Yes, and just because it needs simple solutions, nobody pays attention to them. They keep piling up and cause a breakdown in the system. For example: Intel ships electronics overseas through a number of supervising outlets and companies. Shutting down of any such company can be overcome, but if a number of companies around the same area shut down due to the same reason, be it a market crash, or emerging of a competitor company, such problems need to be assessed and addressed fast.

  5. SunitaT
    July 27, 2013

    Yes I agree, however if I may add a little bit, everyday problems can be solved effortlessly if the client is fed with information periodically. “Being honest with client”, i.e. Moreover I like your idea of assigning various jobs to the unsuspecting employee, which not only builds their experience, but adds more qualified heads to deal with a problem. Most of the times tackling a big problem can be costly and tedious. Most qualified personnel would charge a ton for consulting. If an employee is qualified, why not give him the responsibility? 

  6. SunitaT
    July 27, 2013

    This article gives all the more insight to managing a business for the newbie businessman. Larger companies have a “Problem Solving Helpdesk” that manages the daily shortcomings. More complicated problems are referred to the experts. Moreover, contrary to popular belief, logistics have a minimum probability of predicting daily problems. They outline the major obstacles the company may face in order to have a desired profit margin. The market can collapse overnight, and logistics cannot predict that. There is no hard and fast method of getting over these shortcomings, but can be managed properly if handled everyday by skilled and dedicated people.

  7. ahdand
    July 27, 2013

    @tirlapur: Yes and that is something which was common a few years back in most part of the world. I think its because they lack the strategic planning and forecasting. If things were planned and forecasted properly then things would not have been this bad.         

  8. SunitaT
    July 27, 2013

    If things were planned and forecasted properly then things would not have been this bad.

    @nimantha.d, agree with you. Planning and forecasting is the key factor and I am sure companies will adopt such strategies in future.

  9. hash.era
    July 27, 2013

    @Rich: That's something which will help the community a lot for sure. A good move by EBN and the DeusM Board.             

  10. ahdand
    July 28, 2013

    @Rich: Ohh I thought when you said that DeusM Is involved. Anyway it's a good move regardless whether its been done by inside or outside.        

  11. Hailey Lynne McKeefry
    July 29, 2013

    @Frank, where should a smaller business that has less budget, fewer people, and potentially less expertise start? Any advice on where they can get the best bang for the buck?

  12. Frank Cavallaro
    July 29, 2013

    Very good question, The best place to start is with your staffers that are performing the key processes within your organization. These employees will know which are critical path and which are not. Once the critical path items are established, a focused approach to insurung continuity goes a long way in this effort.

  13. ITempire
    July 29, 2013

    I agree that giving charge to a leader of risk management function can ensure accountability and can make the risk management function effective. This way proper of monitoring of everyday events can be done that increase business and operational risks. Risk management function can however only issue directions and can define boundaries; to implement on these is the duty of business managers.

  14. ITempire
    July 29, 2013

    Frank, I like your suggestion about defining critical paths. There are so many processes that a organization gets involved in and having effective risk management of each of that process would be impossible and inefficient as well. Therefore focused risk management approach on critical path items is the way to go to secure biggest in the shortest time.

  15. Wale Bakare
    July 30, 2013

     If things were planned and forecasted properly then things would not have been this bad .         

    How best do you think it could be done?

  16. Himanshugupta
    July 30, 2013

    Risk management is easier said than done. Most of the companies do not even have risk manager in place. Risk management is not only mitigating security risks but all kind or short term and long term risks. I think the main problem in risk management is the increased overhead and not well defined path forward.

  17. Hailey Lynne McKeefry
    July 30, 2013

    @Frank, i think this idea of critical path is important and not just because it helps the employees. Having this sort of mindset, adn communicating it clearly, is bound to get the organization overall more focused on what is important. That's the interesting thing about all of these kinds of changes–they have ramifications and impacts that go well beyond the initially imagined scope of things.

  18. Hailey Lynne McKeefry
    July 30, 2013

    @himanschugupta, Risk management is complex, but some best practices can get organizations pointed in the right direction. I recently read an article on risk management in finance that might have some wisdom for the electronics supply chain. the bottom line is that true risk management takes time and attention, and that it has to be ongoing. As a wise mentor always said to me: “It's simple, but it's not easy!”

  19. Hailey Lynne McKeefry
    July 30, 2013

    IN Aon's 2013 Global Risk Management survey published recently, i read iwht interest a list of the top ten biggest risks to global organizations today. Here they are:

    1. Economic slowdown / slow recovery
    2. Regulatory / legislative changes
    3. Increasing competition
    4. Damage to reputation / brand
    5. Failure to attract or retain top talent
    6. Failure to innovate / meet customer needs
    7. Business interruption
    8. Commodity price risk
    9. Cash flow / liquidity risk
    10. Political risk / uncertainties

     

    So anything you'd drop from this list, dear readers? Anything you'd add?

  20. SunitaT
    July 31, 2013

    There should be plan for small everyday events in a company. If the company is large and has enough budget; we can hire even management team for the management of the whole event. If the company is not that big, the event can be managed internally.

  21. ahdand
    July 31, 2013

    I don't think that the budget will depend on the size of the company. It depends on how much revenue you have planned to gain over the next quarter.

  22. elctrnx_lyf
    July 31, 2013

    Regular reviews along with right resources alloted to the important day to day activities will definitely help in this regard.

  23. Daniel
    July 31, 2013

    Hailey, thanks for sharing this report.  But I don't think its in priority order.

  24. Daniel
    July 31, 2013

    “I don't think that the budget will depend on the size of the company. It depends on how much revenue you have planned to gain over the next quarter.”

    Nimantha, there is no doubt that budget and expenditure comes under the scope and size of the company.

  25. Daniel
    July 31, 2013

    Elctrnx, certain things cannot be forseen in advance. In such situation only thing is we can prioritize the requirements with out much impacting the financial  constrains

  26. Eldredge
    August 1, 2013

    Not sure if it should make the top ten, but loss of IP, either due to inadequate education and attention to IP protection or due to theft can be significant and difficult to measure.

  27. Hailey Lynne McKeefry
    August 1, 2013

    I imagine that the likelihood of a given event will also factor in. For example, here in California, many of us keep “Earthquake preparednesss” in mind–with water, food, shut off valves and the rest. When I was in NY, my company never considered it because there was almost no chance of that type of problem.

  28. Hailey Lynne McKeefry
    August 1, 2013

    @Jacob, it was in some sort of order, but i'm sure the priorities are different for everyone. What would you put at the top of your list?

  29. Hailey Lynne McKeefry
    August 1, 2013

    @Eldredge, that's a good addition, particularly in the electronics supply chain. I know that hackers are increasingly focusing on organizations with an eye toward stealing intellectual property–so it may be more of a problem now than it was a few years ago, and certainly on the rise.

  30. Eldredge
    August 4, 2013

    And I think the risk rlated to IP goes well beyond the potential for theft – companies need to have the correct emphasis and processes in place to recognize and protect IP, or risk giving it away.

  31. Daniel
    August 5, 2013

    “it was in some sort of order, but i'm sure the priorities are different for everyone. What would you put at the top of your list?”

    Hailey, according to me “Failure to attract or retain top talent” and “Damage to reputation / brand” have more priorities.

  32. ITempire
    August 10, 2013

    Himanshugupta, you are right. It often happens that the risk management function is established but the leadership is too busy in enhancing the business that it doesn't focus on effective functioning of the risk management function. Later this becomes a viewed overhead for the organization. 

  33. Hailey Lynne McKeefry
    August 22, 2013

    Thanks for weighing in Jacob. I would probably put brand damage first myself, but could understand why the talent question is at the top of your list. As systems and technologies get more complex and move faster, this can be a make or break question for organizations.

  34. Daniel
    August 22, 2013

    “I would probably put brand damage first myself, but could understand why the talent question is at the top of your list. As systems and technologies get more complex and move faster, this can be a make or break question for organizations.”

    Hailey, according to me brand building is through good and talent employees effort. If there is no talented manpower, then where is the brand Image

  35. Hailey Lynne McKeefry
    August 23, 2013

    @Jacob, you are right. I take it back… People are the most important.

  36. Daniel
    August 23, 2013

    “you are right. I take it back… People are the most important.”

    Hailey, it's not like that. That's my intervention or interpretation on my own perspective. It may be right or can be wrong too. If you have any ideas for a healthy discussion we can…

  37. Hailey Lynne McKeefry
    August 24, 2013

    @Jacob, you misunderstand… i am all for debate. You made a point that made me think differently. That, to me is what real healthy debate, when you can have your views evolve when others make good points.

  38. Daniel
    August 27, 2013

    “i am all for debate. You made a point that made me think differently. That, to me is what real healthy debate, when you can have your views evolve when others make good points.”

    Hailey, now I got misunderstand. Thanks for accepting my point.

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