Risk Management Gets the Attention it Deserves
It seems in the last several years “risk management” is becoming a term you see more and more. Articles are appearing in magazines. Seminars are being offered. To me, the problems have been around a long time but now we are classifying them in to the category of risk management.
In the 1960’s and 1970’s, my husband and I worked for Kroehler Manufacturing Company, world’s largest furniture manufacturer. Wilford was the purchasing and inventory control manager. I was the assistant in the department. Thank goodness, Dallas was near a major airport. Many a night we were at the airport to pick up a package, bolts, nuts or finials, some item necessary to make furniture. Without it, the lines shut down, no production and union workers, if they came in and could not work, drew four hours pay.
Many times like this and you would be out looking for a job. Is this not what we call risk management today? Paul Teague’s editorial “My Turn” in Purchasing on July 14th discusses risk management. Paul states, “Corporate risk management begins with purchasing.” You can’t put it any other way; it is up to procurement to have the product when it is needed. All the ands, ifs, and buts don’t work. Circumstances are irrelevant. You should have thought ahead. Maybe this is a little strong putting it this way; however we have all been in this situation.
I remember one time at Kroehler, the Plant Manager was marching to the back of the office where the purchasing department was and with his very powerful voice was shouting, “Why are we out of this?” Wilford looked directly at him and said, “Because we used it all up.” I could see him getting that pink slip, out of a job and no money coming in. I think it took the boss by surprise and he started laughing. It is really not a good thing to do.
In the article Best practice in risk management Paul Teague states, “Moreover, the risks today are well riskier. Executives have learned that it’s not just continuity of supply that’s affected: it’s the company’s financial performance.”
Because of late product delivery, there are missed opportunities in the market, loss of revenue, shrunken profit and loss of market share. Many companies have beefed up their crisis-management programs. Many software companies are offering risk management programs. Risk management covers much more than possible shortages of materials, this is just the icing on the cake. This is one article you need to read.
