Where Leadership Fails
Have we given any serious consideration to the possibility (probability?) that a good number of our economic problems are more about poor supply chain management – and planning – than about a pandemic?
Assistant Dean for Outreach and Engagement, David Frayer at Michigan State University says about supply chain management, “The ultimate focus of the supply chain is to meet the consumer’s value proposition, deliver the product at the location they want it in the form they want it with the unique characteristics they want it.” Covid19 was generally unexpected and the unintended consequences have proven to be a world-wide problem. From a business-jobs- government view it is not a health issue as much as it is a forecasting and planning issue.
The pandemic justifiably caused health concerns which caused the CDC and government leaders to become concerned over further spreading of the pandemic, which caused the creation of the separation of workforce into two categories, Essential Workers and Non-essential Workers, to provide a faultless way for leaders to decide who should stay on the job and who should be placed in another category – Unemployed.
A management preparation problem, not a Covid19 problem.
This shortage of employees means that businesses must operate effectively with fewer staff. The work still must be done so efficiencies must be created to continue operations. Work-from- home choices became a popular management choice. However, not all employees are technologically prepared to work from home; they need P.C.s, laptops, and other computer related equipment. All of which need chips, the same type of chips needed in Electric Vehicles. The same can be said of manufacturers of headphones, refrigerators and many, many other products.
The wait time for the essential chips grows every week from a few days to weeks and even months. Fear is that manufacturers may begin to over-order to keep from having to close operations of the manufacturing operations while waiting for computer chips. The 2020 pandemic restrictions and consumer hesitations in purchasing are a large part of the sudden demand following the slump of last year. Coupling that with actual delays in production has created delays in satisfying production demands in 2021.
Remember the “toilet paper” scare of last year? Now it could be computer chips.
Supply Change Management has always been important in the manufacturing of products but is now recognized as critical with the experience of the halt in all stages of economic activity around the world due to Covid19. Preparing for the unexpected usually takes a backseat to known business management risks. Its logical but unwise.
Management planning recognizes again that unlikely events are still vital considerations. The “what if” factors are always present as are the decisions made in risk avoidance. Anyone involved along the value chain should be adding strategies for dealing with sudden changes in supply. There will be recovery but how long that may take is dependent on many things along the assembly line known as The Supply Chain.
It is the world we live in and management needs to keep up.
Greg Henderson is the retired founder of the Southern Oregon Business Journal. A University of Oregon graduate and a six year U.S. Air Force veteran, he spent nearly 30 years in banking and finance. His articles have appeared in dozens of publications concentrating on some 20 industry sectors. Contact him at email@example.com