Procure IQ

As if you didn’t have enough risks to worry about, now, as per this recent article in Industry Week on Climate Change Risk Management, you now have a new risk to worry about. If you don’t anticipate extreme weather events that can cause sudden and material damage to business assets, interrupt business operations directly, or disrupt key elements in transportation or support activities, then you might be sued by your investors for losses from your failure to disclose and anticipate those risks, just like American Electric Power Company was sued by the state of Connecticut. Right …

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A recent article in the Harvard Business Review on leadership in the age of transparency noted that whereas, in ages past, companies could ignore “externalities” and still prosper, today’s leaders are finding that, in order to truly prosper, they have to internalize the “externalities” and successfully manage them long before they creep into realm of regulation or law. (In economics, an exernality [or transaction spillover] is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit. As a result, in a competitive market, prices …

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A cooperation between the Cranfield University School of Management and Solving Efeso that resulted in the publication of Supply Chain Strategy in the Board Room (based on a survey of 181 senior logistics and supply chain executives) between July 2009 and January 2010) had a couple of surprises in the top ten findings, at least to me. While the following findings made sense: The most important supply chain performance drivers are cost focus, customer lead-time and customer quality but these vary by …

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The black swan has been on a rampage in recent times, taking down supply chains, companies, states, and even countries in his wrath, which seems to have no end. It’s foolish to assume that he’s not coming for you, because, even if you’re not on his list, it’s only a matter of time before you are. He’s as determined as robot santa claus, and just as indestructible. But if you’re ready for him, even if you can’t stop him, you can survive the encounter, and with the right blast shield, even minimize the damage. So how …

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As recent events have shown us again and again, he’s coming. You better be ready. This means you have to stop worrying about death by a thousand white swan-bites, because, having dealt with the flock day-in and day-out, you know how to deal with them. Their bites might hurt a bit, but you know that you’ve gotten quite good at sterilizing and bandaging the wound so that it heals fast, because you wouldn’t still be around had you not. However, you aren’t (as) familiar with the black swan yet. You are unaccustomed to the poison …

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And I’m still not talking about volcanic eruptions — which could bury or clog your production facilities with ash, a terrorist attack — which could blow up a pipeline, or plain old management incompetence — which could result in a poorly maintained drilling station blowing up, but suicidal Sciurus Carolinensis, who, over the past few months, has knocked out substations in Ohio and Florida. Now it seems that these organized little critters have figured out that they can’t always do it themselves and have recruited procyon lotor to help with those “well-protected” substations …

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In addition to the fact that you will have an entire state on your side, as Dick Locke points out, and the fact that not using plain english can land you in some dire consequences, as Tim Cummins points out over on Commitment Matters, there is the fact that obscure language increases the risk of failure. If no one understands what they are meant to be doing, a dispute is more likely. Contracts need to be clear, so write them in plain English. …

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… it’s too late. As per this article on the quality and performance connection of supply risk, indicators of financial risk are usually preceded by a slow decline in quality or performance that is difficult to detect from delivery to delivery as suppliers, looking to survive, begin to cut corners that they hope will go unnoticed but which often compound the farther up the supply chain you go. As the author, Jim Lawton of D&B notes, you need to consider supplier performance metrics to be the best leading indicator of overall supplier financial viability. This means that …

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Last year, Dick Locke, who has an entire state on his side, wrote a great post on the importance of plain English in contracts. Then, last month, with the help of The Temp Life (Season 2, Episode 7), I made it very clear what might happen if you don’t follow his advice. But one aspect of contracts we haven’t tackled yet is that of “reasonableness”. As highlighted in this recent article over on SupplyManagement.com which asks you to now be reasonable, these clauses can end up causing more disputes than they ultimately resolve. While they are included …

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Our last post overviewed a recent article in the McKinsey Quarterly that discussed the five forces reshaping the global economy that every executive has to grapple with, which left the reader with as many questions as answers. This post will attempt to shed some light in the directions the answers may lie. The following are the forces that were identified: Growth and Risk Management in Emerging Markets Multinationals will have to get in on the ground, attract local management talent, and let the local management …

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