Project delivery veterans will remember the mantra „expect the unexpected”, sometimes ironically, in reference to Murphy’s Law „what can go wrong will go wrong”, but was that statement ever valid? More importantly, how do we deal with such a situation?
In times when everything goes viral within hours, bad news even faster, software Apps available that presumably solve all our business issues and A.I. still being in the fledgling stages; how to we pro-actively “anticipate” the unexpected? Can we foresee and plan for the “unexpected”? How much time do we spend with risks vs executing/delivering? Let’s take first a step back.
Not every unexpected event will lead to the complete failure of a service delivery. However, a considerable number of events could lead to a delay followed by an unmet client expectation and overall dissatisfaction. In order to assess critical business risks, let’s start off by compiling a list of already experienced customer complaints, particularly the list of root causes that led to that specific complaint, and assign a 1 (low) to 3 (high) as to the likelihood of (re-)occurrence in your particular case.
It is important to only use complaints that are relevant and applicable to a particular service eg. a complaint for not calling back a customer to discuss a quotation is very relevant for the company but will not help us manage unexpected events for an order to assemble and ship a product within delivery lead time X. But, why do we start first by scanning customer complaints? Because everything we do and foremost the impact of a service failure needs to be assessed through the customer lens, as eventualities will ultimately hit the customer. Furthermore, we often forget that all companies have an immense, untapped business intelligence in customer feedbacks over time, even more if of constructive nature.
Next step is to look at your company’s KPIs, the ones that really matter... What additional events could negatively impact your main KPI’s, and what is the likelihood it may occur in your service delivery? Ideally you have a list of internal deviations over time which you can compile following the methodology for external complaints. Consolidating both lists, complaints and internal deviations, that are relevant to our service delivery we will haveidentified potentials risks and have an indication about the occurrence likelihood that an issue will arise.
When both lists are consolidated we might find a high overall likelihood that a service will experience a failure. If this result is concerning, resist the temptation of adapting the numbers to make the result look better. Rather, think about your overall business management processes and how robust your procedures are in relation to this particular service. Does your organization have the required maturity to perform this service? Do you have the right procedures in place? Or is it a one-off customized project that needs creation of new procedures?
Back to our list, rank the events by occurrence from highest to lowest and assign to each a how difficult to detect as well as to severity from 1= low to 3= high. For the purpose of this exercise I am not addressing the “force majeure” events as we would expect those to be extremely marginal and/or out of our control. Using our example of creating an order to assemble and ship a product within XY days a “1” could be something like “erroneous assembly order” (it can be captured and fixed before anything major happens), a “2” eg. “order not created on time” (will most likely have an impact on the ship-out and delivery date) and “3” eg. “not finding assembly parts in warehouse” (can have an impact on the entire assembly and delivery). When you rate the severityalways bear in mind the agreement with your customer: delivery on time and in full. Therefore, in those examples a 1 would be something that can be fixed without a hit on the delivery end date, a 2 could be a potential hit and will need a risk mitigation task, the same for 3. Typically, additional control steps are added to your process or plan around the events that can lead to missing a deadline. Depending on the nature of the order, the control steps will need to be part of the overall business management or just order-/customer-related.
Therefore, to mitigate a 3 that has a significant likelihood occurrence (high on your list) you’d either have to assess the parts identification, as well as storage procedures. In case an event went through your management system you will be left with mobilizing a team of warehouse operators to search the entire warehouse, goods-in/-out locations, etc and another team scrutinizing the warehousing management system looking for suspicious parts movements. There are certainly more scientific and laborious approaches to highlight risks in a service delivery. However, they all follow a similar approach of identifying, assessing the occurrence, detection and the severity of an event.
In our exercise, the multiplied values per category below show that the focus should be first on creating a plan for late orders, followed by missing assembly parts and erroneous orders. We might be surprised by the second-place event. However, if we have a material management system in place that tracks all parts from goods-in over production to goods-out via eg barcodes, you will find missing parts at the time you start creating your assembly order. That would reduce the Detection from 3 to 2 or maybe 1.
The overall goal of Risk Management is not to be stressed by all the risks and unpleasant events that can occur in our business environment but rather to plan the additional control steps and procedures in order to make sure that a service is delivered as per customer agreement. Failure to do a risk assessment in the event of an unforeseeable issue means you will always fall back to your company’s standard procedural security net.
Eventually, the ultimate goal is to continuously improve your business management system by removing as much last-minute patch-work in your service mosaic and focusing your efforts on anticipating your customer requeststo reach your desired 6* service.