A comprehensive supply chain risk management strategy must be a central component of any successful business and needs to extend beyond the supply chain itself to encompass all major operations of the organization. Modern predictive analytics is fast becoming a critical tool in recognizing key trends, patterns, and potential disruptions within supply chains. In turn, by creating sophisticated risk mitigation models, enterprises possess a means to protect their most valuable assets.
The supply chain has frequently been thought of as a series of links interconnected along a continuum, with one origin point and one end point. That represents a very simplistic view of the actual supply chain for most modern-day businesses.
Today, supply chains often contain numerous destinations increasingly removed from multiple origins and tenuously connected through any number of intermediary points by a progressively unpredictable logistics system. In this scenario, even a minor disruption within any connecting process can cause a dramatically negative impact on company results.
A more appropriate view of the supply chain is as an interdependent, collaborative, and complex network that is similar to the way a company functions. Much the way a computer network links individual devices and employees through cable or wireless technology, in supply chains, the components are manufacturing facilities, distribution centers, and stores; the cable is the transportation system.
The traditional corporate supply chain
Though it’s admittedly reductionist, simply stated, organizations can embody either of two mindsets. One mindset is akin to the view of the supply chain as a series of links, with a single origin point and a single end point. That’s the mindset of accountability -- a direct link between action and result. The other mindset mirrors the collaborative network view of supply chain -- a company that believes results are best achieved through teamwork.
The accountable person wants to be recognized as responsible for the end result. That person says: "I accept responsibility; I would like to be rewarded if I produce the result. Now, please get out of my way and let me pursue the thing that I said I would deliver."
In contrast, the collaborative person accepts that the end result exists somewhere in the machinery of the organization; such people are pleased to partner with others. They trust that in the midst of all the teamwork, some sort of solution will emerge and the right outcome will happen. Those are people very willing to be collaborative.
In the extreme, the accountable person probably isn’t very interested in relating well to peers. At the opposite end of the spectrum, the collaborative person may not be willing to be personally responsible for specific results.
What a successful company needs are people willing and, in fact, even desiring to be both accountable and collaborative and in the right proportions. Every organization will have its own personality in terms of whether, on balance, it tends to tip a little bit more toward one or the other.
A balanced approach to accountability and collaboration is essential on the part of leadership. Typically, that approach requires a blend of both confidence and humility. Leaders who are confident will accept accountability, and leaders who are humble will admit they cannot accomplish what they need to without the help and support of their organization and others.
So what does this have to do with insurance?
Innovation in insurance has largely come from the integration of functions: innovation using increasingly precise prediction as a basis for making decisions, innovation calling upon data sets that weren’t accessed previously to include them in the decision-making process, and innovation speeding up insurance processes and shortening cycle times. That can translate to underwriters pushing decision-making to the point of sale or claims departments settling and cutting checks on the first visit to the damaged property.
Fundamentally, innovation can derive from two sources: On one hand, a company may lean toward deductive reasoning, extrapolating opportunity from its current mode of operation and capabilities. While valid, that mindset can shorten a company’s horizon. On the other hand, a more innovative company may believe that in addition to being an expert in one area, there may be more opportunity in associative thinking and a more open mindset -- which benefits from collaboration.
The ability to collaborate today is greater than ever. Last year, the National Association of Insurance Commissioners’ Center for Insurance Policy and Research wrote:
The use of social media in the business of insurance is becoming widespread. Insurance companies and producers use social media for a variety of purposes, including increasing visibility, developing relationships, and building trust. Insurance companies are not using social media to overtly sell their products and services, but to provide customer service in order to build and maintain relationships with consumers. The goal of developing these relationships is the creation of market presence and product branding, which in turn should generate new customers.
One effective form of innovation uses that intimate dialog with a customer to understand a customer’s emerging need. From the strength of that relationship, a customer may become integrally involved in the development process, offering feedback that enables producing a viable product much faster. That helps both the customer and the company.
The customer clearly is an important link in any supply chain. Just as in managing a strong supply chain, managing a successful company requires the participation and accountability of all stakeholders. And just as data and analytics are necessary to strengthen and support a supply chain, so too do data and analytics fuel the collaborative and innovative juices of a company.
As companies struggle with ever-increasing complexity and growing interdependence, the lessons of successful supply chain management — using accountability and collaboration in the proper proportions — are truly an effective prescription for corporate well-being in the current business environment.
Before becoming Verisks CEO, Scott Stephenson served as president and COO, managing the day-to-day operations of Verisk Analytics and all of the companys operating units. He joined Verisks ISO subsidiary in 2001. Before that, he was a senior partner with The Boston Consulting ... View Full Bio