Experts Discuss How to Improve Decision Making Process [Guest Commentary]

A supply chain manager must make decisions under uncertainties every day. However, how supply chain executives can streamline the decision-making process? In this article, we invite a multidisciplinary group of experts to provide some insights.

1. Mike McCormack, a Director and Head of Logistics Practice, 4C Associates 

Decision making within the supply chain environment can be significantly improved when taking a view of the total supply chain costs and process efficiency. 

- Firstly, It is important for executives to use integrated data across the business as the basis for any decision and negotiation

- Secondly, good decisions should be made by taking a “Lean” or "Six Sigma" approach to any process that requires change. Understanding latent processes and removing them avoids wasted time in exploring non-value adding activities. In other words, focus decisions on what matters

- Thirdly, it is imperative to take a future view. Making decisions that improve not only cost, but customer service and agility to drive the top line help to balance the traditional supply chain cost optimization approach and align with a company’s overall business objectives

2. David Simchi-Levi, MIT Professor, INFORMS Fellow and Former Editor-in-Chief of Operations Research (INFORMS Journal) 

The ability to understand a combination of historical behavior, market conditions and future needs drives decision making. New analytic capabilities derived from operations management research that combines machine learning and optimization can take into account historical characteristics and competitor behavior to determine future demand that will allow optimization for the best results - such as profit, market share or revenue.

Examples of the project where this approach can be used are the assortment, pricing, sourcing strategies for new products, predictive maintenance using process sensors.

3. Jill Johnson, President, Johnson Consulting Services

Executives are so busy today they often focus their decisions using the same old viewpoint and assumptions. One thing that can substantially improve executive decision making is to “pivot.” Pivoting means looking at your decisions from different points of view and changing your focus in assessing your options and outcomes. Pivoting can help you see the things that may be valued differently in the future and may shift your decision making to something you would not have considered before because you are intentionally looking at things in a different way. Looking at the outcomes of decisions from several vantage points can bring new clarity to your understanding of your situation and improve the quality of the decision you make. Pivoting also enhances your future decision making the next time you revisit this issue as you will already have a deeper insight into your options.

4. Moe Glenner, the author of "PlusChange: Genesis of Innovation"

When faced with making critical decisions, executives become temporarily incapacitated by the inundation of data and competing for information. For every problem, there are at least two directions and in many cases, there are significantly more potential routes. The net result is ‘paralysis by analysis’ and during the temporary incapacitation, no decision is made while the awaiting decision becomes even more critical. Suddenly, time is up and a hurried decision is made and many times it is less than the optimal choice.

Pilots face both the inundation of competing data and the necessity to make critical decisions on every flight and yet their decision making is almost always optimal. The difference is the confidence to recognize patterns in the incoming information and then act appropriately based on experience. An executive that has confidence in their pattern recognition and their experience will consistently make better if not optimal decisions.

5. Michael Wilson, VP of Marketing, Afflink

Oftentimes, an unbiased perspective from a separate department is exactly what’s needed to “see the light.” Throughout history, the brightest ideas and best decisions have been made in a collaborative environment. Take the ancient Greeks for example, or even our country’s Founding Fathers – the fundamental principles established by these groups were generated from the collective consciousness of like-minded individuals sharing the same goal – not by one person making decisions in a vacuum.

It’s worth noting too, however, that when decisions need to be made, a good rule of thumb is to consider Colin Powell’s “Doctrine of Decision-Making.” The former Secretary of State utilizes a continuum whereby once 60 percent of the information has been obtained, and about 60 percent of the time has elapsed before an answer is needed, then that is the best time to pull the trigger and move forward. You’ll never have all the information, and you can’t wait until the opportunity passes, so balancing information and alacrity are often the best recipe for good decision making.

6. Jerry Shanahan, Partner, Oliver Wight

The biggest challenge for senior executives is to understand how the decisions they make today will affect the future performance of the business. By improving the quality of their decision-making process, the business is more likely to thrive in the future.

The problem is that most decisions are based on current and past performance, which means that decision-making is a reaction to events that have already past and by definition is too late to recover the situation. What’s more, these decisions will have an impact on the future performance of the business, which without a forward view is unpredictable, at best.

There are two things that need to be established to improve the quality of the decision making: 1) A reliable forward view of the business 2) A sense of urgency to make decisions based on analysis of issues which are in the future.

Integrated Business and Strategic Planning give executives a forward view of the business over a 24-36 month horizon. Monthly reviews of product, inventory, demand, and purchasing and supply based on robust data and with integrated financials, make future performance gaps visible, so decisions can be made today to correct the situation in plenty of time, thus giving the international business a better opportunity of a predictable outcome.

7. Mona Riabacke, Ph.D. and Ari Riabacke, Ph.D.; authors of Freestyle Decision Making

Virtually every job involves individual decision making, so taking some time to invest in your skills is valuable for everyone.

Confusion is a common consequence, and in these situations, it’s important to remember that to make no decision is a decision in itself. When we feel insecure about what to do, we hold off on decisions. We keep collecting more information to feel more secure. But in a world suffering from information obesity, this often leads to information overload – a state that makes us more prone to decision biases and slows down the action. At the same time, it has never been more important to act at a faster pace. So, sometimes, you just have to decide to decide – and make it happen!

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Last review and update: December 11, 2021
All contents are written by Ben Benjabutr unless marked as [Guest Commentary]

About the Author and Editor:
Ben Benjabutr is the author and editor of SupplyChainOpz. He holds an M.Sc. in Logistics Management with 10+ years of experience in supply chain management. You can contact him via e-mail.