The Challenge of Variability

Even with those few examples, we can already spin off hundreds of combinations that can increase or decrease potential risk, making it extremely difficult to digest and incorporate relevant information into daily decisions. Combine that type of variability with scale, and you’ve got something that feels nearly impossible to manage in a consistent, sensible manner.

How does a supply chain professional manage a business in the face of such variability? Collaboration with clients to develop practices that tackle large-scale, complex challenges. Organizational systems framework increases visibility and accountability, while driving improvement and accounting for stakeholder needs. When combined with the internal data and external intelligence our solutions offer, it makes the infinite combination of variables much less daunting. 

One challenge is variability. We know that variability impacts organizations and systems in the following ways:

1. Increasing variability decreases velocity
2. Increasing variability increases defects/exceptions
3. Increasing variability increases costs

All of the above are the reason why Henry Ford sold the Model T in any color a customer wanted, as long as it was black. What does variability look like to a supply chain professional trying to understand risk?

• Country risk due to local legal structure and enforcement
• Large versus small worksites
• Mature versus young worksites
• Private versus state-owned (And how about transitioning from state-owned to private?)
• Labor intensive versus machine intensive work
• Local/migrant workforce
• Risk to health and/or environment due to processes and/or materials
• Value of the products and materials
• Nature of relationship between buyer/supplier
• Composition of the workforce

The right information supports informed decision-making. It seems like an obvious statement, yet most organizations are far from exemplars when it comes to making the most informed decisions related to their supply chain. If it’s so obvious, why wouldn’t companies simply fill their heads with information and base their decisions on that? What prevents or inhibits them from basing all of their day-to-day decisions squarely on valid and current data and intelligence?