I was catching up on some reading and came across this article from last month in IndustryWeek.  The article describes a study done by IBM that shows “top-performing companies were 15 times more likely to apply analytics to strategic decisions” and “were 22 times more prepared to challenge the status quo in their organizations”.  These top performing organizations were also “six times more likely to entrust a broader base of employees with greater authority to make decisions and act on insights”.

This lines up with what I’ve thought for years.  The strength of a company is in its people.  Those on the front line are willing and able to make strategic and tactical decisions every day.  However, companies are often afraid that their employees will make the wrong decisions and therefore push the decision making up the organizational hierarchy.  We’ve all seen these types of organizations – significant lag time between the event and response because people at the point of action are not allowed to make a decision. These companies often miss significant opportunities because they can’t react fast enough.   From the article, it’s clear that top performing companies are those that provide their employees with appropriate tools, empower them to make decisions, and build a culture of trust.

What tools are needed to empower decision making in the workplace?

• Visibility – You need to see events as they happen, you need to understand the impact of those events across your enterprise and you need to understand the what impact your response to these events will have
• Alerts – In order to respond quickly to an event, you need to know that the event has occurred. Events can take many shapes and sizes.  Not only is it often difficult to recognize when an event has occurred, it can be very difficult to understand whether the event is important.  Does this late supply order actual impact revenue?  Does this forecast change create a problem?  To be effective, an alert must be based on the impact the event has, not necessarily the event itself.
• Analytics – The world happens at a pace faster than your ERP system can respond.  New orders, forecast changes, supply disruptions all occur on a minute by minute basis.  ERP systems have always been batch focused and cannot give you an adequate picture of the impact of an event until the next batch run.  To respond, to make accurate decisions you need to have real-time analytics that run continuously as new information comes in
• Analysis tools – You need tools that allow you to see the impact an event will have.  You need to see the details of components, inventory, other orders that will be impacted by this change.   All this information must be made visible in an intuitive, easy to read, customizable format.
• Simulation – Once you understand the impact and wish to respond to the event, you need to be able to simulate various resolution options and more importantly, compare the various solutions to one another and against the corporate metrics to ensure that the resolution solves the problem AND meets the goals of the enterprise.

What it boils down to is this.  Give your people the tools to understand the issues and the authority to make decisions, then stand back and let them get to work.

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Tags: Human judgment, Supply chain management
Posted in Best practices, Supply chain management
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