I interviewed Gerald Ford who discussed Supply Chain Risk Management.
Can you provide a brief background of yourself?
I'm a supply chain professional. Been doing this since 1981, and I've worked for over 90 different organizations in various capacities, both in the private and public sector, and right now, I'm concentrating more on risk and performance management as it relates to organizations dealing with their suppliers.
Regarding this aspect of supply chain risk management, can you explain why you think this is an important area to cover?
Well, I think the biggest thing that I've noticed is that, with all the changing going on with supply chain, we have a whole bunch of new people that are getting into the profession. And some of the ones that have been around have retired, and organizations aren't training. So they're trying to turn around and do much more with fewer resources. Most supply chain organizations or people are turning around and giving the responsibility of checking things to the end user departments, and they're very busy. So therefore, things fall through the cracks as far as...and two main areas that I think need to be addressed is performance management, and the other one is the risk as it relates to insurance and documentation and work references and those kinds of pieces of information.
How can it be done effectively?
Well, Dustin, this is what I did. I asked the same question myself and started to do a review on what are the tools that are being used. And I actually got involved with another organization that does management consulting. And we had conversations with the ministry of government services for the province of Ontario, and they're huge. And what we wanted to know is — and we actually did a survey, and it went out to hundreds and hundreds of organizations. And we said, "So what do you use and how do you do it, and why do you do it, and do you have any tools?"
And what we quickly discovered was that most of them don't do it. A lot of them should do it but don't get around to it, and those who have done it basically are trying to use things like Microsoft Excel and Word. And they're sending it out to people to be done after the fact. And the only time they actually do any kind of performance management is when they have a problem.
In reality, performance management is working with the supplier to make them better at what they do. The best example that I've seen is done by 3M out of London, and they've done an excellent job of creating a system that allows their end users to be able to do an assessment very quickly and to score them very quickly and then allow a comparison.
So one of the things that I've done, as far as my company is concerned, is develop a similar tool for an organization to be able to use because, after all, if you don't have a review, you cannot compare. And if you do not measure, you cannot make them better. You also have a harder time getting rid of the poor performers because you're actually not measuring it. So automation is the key.
Do you have other success examples that you could share?
I think mostly the ones that I've seen are actually out of the United States. The best one is actually the State of Florida. Florida has an absolutely wonderful tool that they've used down there and all the agencies go through. I need that most of the time, when it comes to performance management, the public sector is a little bit ahead of the private sector. The other on that I've seen was the State of Texas, and again, it's for the same purposes. In Canada, I have not — except for 3M —that's the only ones I've seen. Periodically, I do come across some in the oil and gas industry. And they are... There's a number of organizations as part of their ERP system, are supposed to be able to have performance management. But it's usually one of those modules that either is not turned on or not used or people didn't even buy it because of the expense associated with doing that. So unfortunately, there's not as many concrete examples as there should be.
My thought a while ago was, because of the things like the Broader Public Sector Act and a bunch of other initiatives, I thought people would be clamoring to turn around and have a tool that they could use to be able to manage the vendors better, but for some reason, they're more than willing to accept the risk of continuing to deal with who they've dealt with and fix the problems as they occur, which, to me, doesn't make any sense. But that's, unfortunately, the reality.
Do you have any final recommendations?
I think more organizations need to be aware of what happens if you actually do have poor performance. And there's a study that was done by one of the professors up at [00:05:50], and what he did is he started tracking when organizations have any kind of supply chain disruption and what kind of impact it would have on their stock prices. Not a lot of people actually take a look at that to see what the impact is. I think that more education is actually needed. It would be nice to be able to see a little bit more delivered when it came to the courses that are being offered at the colleges and universities as it relates to supply chain. There's just very little done on it, and I think it's one of those things that is going to come around and burn people a lot more than it should. Because it's one of those things that people are saying, "I can accept the risk," but they really don't understand the level of risk they're actually taking.
About Gerald Ford
Supply Chain Project Manager