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by Joshua Greenbaum, Contributing Editor   | Abstract: | Before you pay good money for the latest in performance management software, think rationally about how you might use the information you'd gain. |
The new year was just one week old and there I was, again, trying to explain to a vendor how irrational supply chain management is, despite investments of hundreds of millions of dollars and a slew of books, seminars, and conferences devoted to the topic. My listener was incredulous, especially as I argued that just a little more information — a couple of more data points on supply and demand issues — could make all the difference to a supply chain manager. "Don't they already know the best possible price for the parts they need to procure?" he asked, still trying to understand decision-making in a vacuum. "I mean, they've been doing this for years. Surely they have a better sense of the market than we can give them." Wrong, wrong, wrong. When it comes to managing complex supply chains, it turns out that intuition, a finger in the wind, and other forms of wild guessing are among the best practices deployed by the best in the business. And that doesn't happen only in supply chain planning; it's pretty much endemic to all aspects of business management. We only pretend we have processes driven by rational thought and perfect information. Reality is much less tidy: Irrationality dominates, and guesswork is all too often the basis for complex and highly consequential business decisions. [Click to continue] |