A “hero culture” is not a good supply chain risk management strategy
by John WesterveldIf you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
I found this article today and thought it deserved comment (we’ve commented on this before here - “Not-so-perfect order performance management metric“). In it, Justin identifies the idea that “Hero Culture” is no way to approach supply chain risk management. What’s a hero culture? It’s relying on someone to save the company from disaster in the nick of time.
- It’s the buyer sourcing a replacement vendor when your primary supplier is on strike in time to make the quarter revenue targets
- It’s the production engineer that figures out how to leverage another piece of equipment to get the product out the door when the primary equipment has broken down
- It’s the marketing guy that figures out how to increase sales on a failed product release
There’s a number of reasons why given today’s environment this approach won’t work;
- The supply chain is global today. You can’t call the vendor across town to make parts for you, instead you’ll be dealing with some company in China
- Customers just won’t wait. People expect to get what they want when they want it. If you don’t have the product, they’ll go to the competition
- Shareholder expectations and fiduciary responsibilities dictate that you continue to grow the value of the business while not taking risks
While having smart, innovative people in your organization is always important, we can’t rely on them to save us from supply chain risks. Instead every organization needs to have a structured supply chain risk management program in place that;
- Identifies and quantifies supply chain risk
- Develops and simulates mitigation strategies
- Continuously re-evaluates risk as product, market position and supply base changes
