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Performance, Change, Book synthesis

22 November 2018

Book synthesis

Building success – not failure – into systems at Riskpulse

At Riskpulse, Stephen Bennett and his teams have built their business around
preventing system failures. He explains why he prefers to think in terms of
success, not failure, and how he and his teams ensure their success is as
risk-free as possible.

Building a business in “the golden age of meltdowns”

Riskpulse COO Stephen Bennett and his teams develop analytical benchmarks for predicting risk and preventing system failures for supply chain and logistics managers. “For example, we work with food & beverage manufacturers. One client’s quality standards for beer shipments revolve around temperature: it can’t get too hot or too cold. The obvious answer is refrigeration containers, but there are higher costs associated with that method, so we work with them to optimize shipping decisions by leveraging ambient temperature whenever possible.”

Steve confirms that he is seeing increasing pressures on supply chain systems since he founded his company 10 years ago. “Complexity in large supply chains goes back hundreds of years. I wouldn’t say they are more complex now than before, I would say they are as complex as before. What we are seeing, however, is tighter and tighter coupling leading to heightened sensitivities and greater overall risk. It’s customer-driven and technology- driven. Thanks to visibility platforms, most deliveries now have some form of tracking. Also, over the past 5 years, modeling using AI and machine learning has become increasingly democratized – it costs less and less. There is a sense that technology should be enabling more efficient, more predictable supply chains. Amazon has been a major factor in this evolution because they are delivering to precise timing expectations that didn’t exist before. Now that we’re seeing how efficient delivery can be, the sense is that everyone should be able to do it. Historically, companies have run higher inventory, so timing surprises didn’t impact the end result – delays were not a big deal. But over the last 10 years, inventory is increasingly ‘just-in-time’ and some retailers are requiring delivery windows as short as 15 minutes. The biggest example, WalMart, will now fine the carrier or shipping company if a shipment is late.”

Using objective criteria to make better group decisions

The definition of a “meltdown” for Steve and his teams at Riskpulse is a) failure of a customer expectation or b) to be the cause of a system failure for one of their clients by delivering the wrong business intelligence. Steve and his teams have several tactics for preventing meltdowns. “The first method we’ve established is to create pre-determined, objective criteria for evaluation,” Steve explains. “When we have an important choice to make, we take a weighted set of qualitive criteria and place that criteria in a decision-model to help us choose. This is our primary methodology for prioritizing projects, for example. We ask questions like: How complex is this to solve? How difficult is it to model in this space? How great is the need? How understandable will the results be? And then we model the criteria on a weighted scale to help us decide how to invest in the project.”

Excerpt from Business Digest N°291, November 2018

Tagged with: meltdown, riskpulse, decision-model, prioritizing projects

Published by Caroline Schuurman