RISK MANAGEMENT and RELIABILITY
OK, Now anyone who knows me will tell you I have some fairly strong views on any number of things though I may not make a habit of airing them in public, which seems to be the fashion these days. Everyone gets upset at the least little thing. Of course how little or how much upset you get, depends upon the impact on you and the level of risk or disappointment to which you were exposed or suffered.
Take Brexit for instance, I voted leave! My well off and rich brother and my even better off and richer sister voted remain! They think I am barmy and didn’t know what I was doing. I know they are barmy and don’t know what they are talking about. They are very upset!
For the record, I voted leave for the same reason as the nearly 70% of people in the English and Welsh regions did, because for 40 odd years I listened to English politicians especially Labour politicians tell me the reason they couldn’t do anything to support our manufacturing industries, ship building industries, steelmaking industries and much more was because of EU rules.
At the same time, me and thousands like me in the regions were watching our jobs disappear and wondering how the other European countries were supporting their own manufacturing, ship building, steelmaking and other industries.
The leave vote gave me the opportunity to make English politicians get off their very comfortable backsides and do something constructive for their constituents for a change instead of blaming someone else. The leave vote has given them the opportunity to do the things they said they could not do because of EU rules. Come on how good can it get! Now they have no excuses. It’s time for them to join the world of risk and reward with the rest of us. It’s time for them to stand up and be counted for what they have achieved for the people who put them where they are!
Yes there are risks to Brexit but there are also Opportunities and Rewards. Let’s hear more of the later please a little less “Gloom” and a lot more “Zoom”, so stop moaning, do the risk/opportunity assessment(s) and get on with it!
As any engineer will tell you for every action there is an equal and opposite reaction likewise for every risk there is an opportunity. Risk is a perception, one man’s risk is another man’s opportunity.
What the risk assessment does is give you the information to complete the work with the most beneficial outcome. It should not stop the work! There is some work which just has got to happen. If you do the risk assessment you can make it happen in a way that has the best outcome for everyone. You mitigate the risk and promote the opportunity.
In short with Brexit, our politician who were enjoying a comfortable life doing very little thought they were safe and the vote would be to remain. There was no RISK MANAGEMENT on the possible outcome of the vote being to be leave and consequently this leaves little hope for RELIABILITY that our politicians will get it right and complete the task they have now been set to achieve a result with the most beneficial outcome.
Because there was no risk assessment there was no identification of the opportunity. It is time the remain camp grew up and accepted the reality of the situation and started looking at the opportunities.
There is an unbelievable amount of high end engineering going on in this country and there is still a remarkable high level of skill and knowledge available to take advantage of those opportunities but it needs a “can do” attitude and a proper understanding of “Value for Money”.
The difference between Risk and Opportunity is the Reward. The Reward is the most beneficial outcome you can achieve. If the risk is too high change the way you will do it to mitigate the risk and promote the opportunity. But you must achieve the most beneficial outcome.
This leads me nicely into the reason that prompted this article. The Kentucky Fried Chicken saga or “Chicken Gate” as someone called it. The number of upset people is incredible. In an attempt to save a few pence someone cost a company thousands of pounds. It’s all rather familiar really. It is a problem with Britain as a whole, we do not understand “Value for Money” we know “Cheap”, and it goes all the way to the top and starts with Government.
For far too long we have had the attitude that we don’t need to do it ourselves as we can buy it cheaper! We don’t need to do our own trade deals as the EU can do it cheaper. Really? Are you sure? What is or has been the cost of this?
For Example: When British Steel stopped making Boiler Plate because you could buy it cheaper from other EU countries or elsewhere. British Ship Builders competing against ship builders in those countries found they were at the back of the queue for delivery and consequently couldn’t compete in the market place on delivery. The end result is that we have lost almost all of our Steel and Shipbuilding capability mostly to Europe, because our politicians didn’t see the Value for Money of supporting those industries in the same way as our “Friends in the EU did”. Just one example of “Cheap” Britain.
In fact we are so “Cheap” our politicians have sat back and not only watched, but in many instances have aided and abetted the sale of many of our commercial enterprises together with the intellectual property they owned, which has also been passed to foreign owners because it was “Cheaper” than supporting them properly (like they do in other EU countries). The money those enterprises earn now, no longer stays in this country, it goes to make life better in the countries of ownership, so where is/was the value for money from a British perspective? I can go on for ages on this theme.
However to get back to “Value for Money” vs “Cheap”, I now believe that this syndrome is so deeply rooted in the English psyche it could be irreversible, though perhaps not if we act now. How bad is it? This national quest for “Cheap”? Well as an example according to one local comedian, there is a local market, where, allegedly, you can actually buy “Rip Off” Primark gear!
We do not look at the added value the right supplier can give to our product or service to make it more desirable to the end user, we look at how we can cut the cost to extend the profit without the end user noticing the reduced value. We do not do the Risk Assessment and evaluate the Opportunity.
So Kentucky Fried Chicken cut the cost of transport of raw material supply by going from a value added supplier geared up to deliver specialised goods from several specialised cold storage depots, that met the specification requirements, on time in specially adapted vehicles fit for purpose, in favour of a cheaper supplier who had a single large general depot, but a much a larger fleet of (as I understand things) un-adapted vehicles in which the specialised goods were mixed with other products.
What happened to the supplier evaluation? Did the Kentucky Fried Chicken Supply Chain Management have a day off or were they pushed down a course of action by the bean counters? Who knows?
So what happened to the Risk Assessment, what happened to the Evaluation of Risk vs Reward, was the reward great enough to justify the risk, what measures were put in place to mitigate the risk and maximise the reward, did the risk assessment consider what might happen and not just what should happen?
I have been working with firms of all sizes as a consultant for over 30 years, When I started the two single biggest threats to successful delivery were “Contract Review” and “Supplier Evaluation”. They still are!
Contract Review is where you ask yourself the questions,
Can I do this?
Can I do it to the specification required?
Can I do it in the time allowed for by the customer?
Can I do it for the Price allowed for by the customer?
Will I get Paid in time?
Supplier Evaluation is where you ask yourself the questions.
Can they do this?
Can they do it to the specification required?
Can they do it in the time allowed for by the customer?
Can they do it for the Price allowed for by the customer?
Will the Customer Pay me in time to pay them?
Before you answer “YES” to any of the question you need to make sure you have got it right, especially on the Supplier Evaluation. You should have some evidence to show that you knew exactly what you were expected to achieve and that your supplier knew exactly what you expected them to achieve. And remember if it goes wrong it’s the customer you need to justify your action to (and possibly the Judge).
You should take note that these questions are two sides of the same coin. When you have asked these questions, if you answer “NO” to a single one of them, you might want to ask yourself, “Do I want to do this, do I want this work?”. This is “RISK MANAGEMENT”
On the plus side, if you do all this each time you take on work you will find that it not only gets easier, but you will see an improvement on your bottom line.
More people will want to buy from you because you “KNOW WHAT IS EXPECTED OF YOU”, because you know what to deliver and more suppliers will want to work for you because “THEY KNOW WHAT YOU EXPECT”, because you know what you want. And that’s called “RELIABILITY”.
When you have read this go and have a look at your own Risk Management have you considered all of the risks that could threaten the achievement of what you are trying to do and possibly your livelihood?
We can help with your Contract Review and Supply Chain Management, we can help you Manage the Risk.