I recently interviewed Maja Puljic who shared her views on the role of people in the management of supply chain risk. Maja Puljic is a doctoral researcher and PhD candidate at Manchester Business School in England. She is currently working on research on behavioral issues in Supply Chain Risk Management. Her thesis is on the role of personality on supply chain risk.
Why are psychological aspects interesting and why should the psychology of individuals be considered in supply chain risk management?
Maja believes we need this approach so that we can learn how to appropriately consider the so called ‘people’ dimension in the management of supply chain risk. That way you get a more complete picture of what is going on behind decisions that determine supply chain risk strategies.
In addition to the structural and technical aspects of managing supply chain risk, there is another set of crucial variables – the human variables that need to be considered if we are to fully understand how supply chain risks are perceived, how they are assessed and how supply chain risk management decisions are made.
The decisions are not made by the supply chain, they are made by supply chain managers. That is why we need the behavioral approach to supply chain risk management just as much as we need other approaches to help us shed light on that particular factor in the equation.
Which specific issues are being investigated?
The starting point or underlying assumption is that the initial assessment of supply chain risk, especially when it comes to probability and estimated frequency of supply chain disruptions is still very much down to the individual perception of the supply chain managers. The impact of supply chain disruptions is usually easier to estimate because companies can work with financial records. The probability that a supply chain disruption will occur is much more difficult to estimate. This is usually where the individual perception of the supply chain manager takes the lead.
We know from previous research in other areas that managers perceive risk objectively and that it is a highly individual matter. Managers perceive risk in a way that deviates from what is so called unbounded rationality. It means that managers, due to time constraints, unlimited transparency of information, etc., as a rule will not be analyze the whole situation or environment. To a certain extent or perhaps a large extent they will have to rely on their own perception of risk.
This is where Maja works with the individual’s risk perception. Other factors which come in are individual differences. Other issues investigated are personality traits, individual cognitive biases, judgment and decision making biases, and differences such as past experiences, individual working style, problem solving style, coping with uncertainty, ambiguous situations etc.
What is the contribution or benefit of this new research approach for supply chain management practice?
With this research Maja and her team will learn about the degree of subjectivity in the perception and management of supply chain risk. This means that they will be able to isolate that human element from the whole situation. They will be able to attribute certain variances in decisions to the individual or behavioral elements, as opposed to structural and technical factors and financial objectives.
They will be able to see the main causes for variations in supply chain risk perception. They will also be able to determine if these variations are due to the leadership and personality traits, individual styles, cognitive patterns, the way the person copes with uncertainty, etc.
When they know these things they will be able to provide strategies, tools and methods that will help supply chain professionals improve their decisions associated with managing supply chain risk. De-biasing and improving the quality of your decisions to become more objective and accurate is actually something that can be learned and trained.
A particular contribution of this research will be that they will be able to develop and provide methods and tools for de-biasing and improvement in decision making in supply chain risk management.
Where to learn more…
Maja would also be most grateful if supply chain professionals interested in her survey could share their thoughts. The survey only takes 15 min to fill in, the answers are completely confidential, and all respondents who provide an email address will receive an Executive Summary of the findings when the analysis is complete. The survey link is: http://tinyurl.com/buwjonl
Maja Puljic, Mag.
PMO Division (People, Management and Organisations)|Psychometrics at Work Research Group