November 2010 | Commentary | In Perspective

A Supply Chain PIP Squeak

Tags: Supply Chain Management, Security

At the risk of launching yet another industry acronym, efficient supply chains require PIP: people, intelligence, and good processes.

The logistics profession recognizes its own weaknesses and has moved to correct and improve practices that harden supply chains against a variety of hazards and disruptions. That was apparent from a number of presentations and discussions at the recent Council of Supply Chain Management Professionals’ annual conference. And, as proof of concept, a terror plot using air cargo was foiled just weeks after the event.

In my September column about conflict minerals, I wrote, “Supply chain management has the tools to monitor much of the inbound logistics chain— from source to consumption, through reuse or disposal. Motivated by cost, quality, and security (and even public perception in some cases), we have hardened the supply chain against many types of threats. Where technology is limited, we have supplemented with process controls.”

On matters of security, in particular, neither the private sector nor the public sector can accomplish all that is needed on their own. It takes people, intelligence, and process. Note that I didn’t say technology. Technology is one of the enablers, not a surrogate for any of these three elements.

People are a fundamental resource. Talented, intelligent people with sufficient training and motivation drive supply chain performance; people lacking in these qualities impair performance. We’re all feeling the impact of the economy and the thinning ranks. Whether for a supply chain’s economic security or its freedom from threat, we need to invest not only money but leadership and training to ensure we have the best people resources dedicated to optimizing performance all along the supply chain.

Companies derive intelligence from data and information provided by people engaged in the supply chain, as well as from the data collected and communicated by the technology we employ. The two are complementary. Where it is not feasible to have highly developed information systems, we need intellectual assets.

We especially need strong analytical and problem-solving skills at the points where all this data and information accumulate. Machines can help, but they can’t apply reason to a problem. Supplement the people network with a good technology network, and vice versa, then don’t ignore the results.

Just as you can’t rely on technology to solve or avoid every problem or hazard, you also can’t legislate challenges out of existence. Processes must be developed, defined, and flexible. That sounds like a contradiction because a process is based on rules. But even metal is flexible up to the point where it fatigues and breaks. We need to employ continuous process improvement because conditions constantly change— and in security, threats continually evolve.

We define roles for people in our supply chains every day. We continually gather and analyze business intelligence and make rational decisions. And, we establish rules for various processes, and refine and improve those processes in an ongoing effort to maintain the viability and optimize the performance of our supply chains.

In the wake of this increased security threat, I feel compelled to repeat, “We have the tools.” We need to be clear that the private sector is working in tandem with the public sector and constantly striving to improve the tools and how we use them.

In the air cargo terror plot, one or more parts may have failed or underperformed, but other efficiencies stepped up and filled the gap. This only reinforces the case for continued effort to improve in all areas.