Hurricane Ike and the Importance of Visibility September 15, 2008
Posted by Jonathan Gatrell in Supply Chain Visibility.Tags: Galveston, Hurricane Ike, Risk assessment, supply chain disruptions, supply chains
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Image Source: http://www.postchronicle.com
The events of the last few days have led me to thinking about how critical visibility, and the ability to deduce consequence and take action, is to the success of both our business and personal lives. As horrific as the damage, and ongoing difficulties, caused by hurricane Ike have been and will be, it’s important to remember what happened before we had visibility into the formation of storms thousands of miles from landfall and the ability to forecast strength, path and risk so that action could be taken. Two million people evacuated from the Galveston/Houston area in an orderly fashion and without panic. In 1900, none of these forecasting capabilities existed and a major hurricane killed more than 12,000 people in Galveston. Following the hurricane, action was taken to protect the city which, with the forecasting technology that has developed in the last 100 years, has made all the difference.
Businesses require the same level of visibility and predictability to minimize the consequence of “storms” that we now take for granted. Over the last few months, unfortunately, we’ve seen the results of not having complete visibility across all critical factors that affect the “path,” “strength” and “risk” in the collapse, or required-bailout, of some of this country’s largest financial institutions. These companies lost visibility to various elements of the information that was needed to allow them to forecast consequence and take protective action – there could be no “orderly evacuation” because there was no knowledge that it was necessary. All businesses, within their internal and external process flows and supply chains, need complete visibility so that danger can be recognized, risk assessed, and corrective action taken. As was the case in Galveston in 1900, the disaster has already happened; avoidance of future failures will depend on what protective actions, based on the technology that now exists to recognize and mitigate areas of risk throughout each organization’s business ecosystem, is taken.
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Unfortunately, part of the financial crisis wasn’t necessarily lack of visibility, but greed and short-term focus. While I am not a financial expert and this may be overly simplistic, I think that much of the mortgage crisis was caused by allowing people to borrow more money than they should, in order to maximize profits.
Bob may have a very valid point in his comment – that much of the current mortgage crisis could have been caused by greed and short term focus… But there is more to it than just that.
Fir example, so many people are programmed – in the US – that home ownership is the “key” to happiness and long-term wealth and stability. And then others view real estate as a money maker – we’ve all heard those commercials about “get rich quick with real estate” and the concepts of “flipping houses”… Because so many people with some money (and wanting more) followed those same kinds of concepts – getting rich quick – the “real” homeowners – the people looking for walls and a roof to call home – were getting priced from the market which led to some of those … risky … loans – thereby allowing people to get into the trap of the shaky loans and mortgages… And when it came time for a crash – they got hit – and hit hard – with all of the over-valued and over-priced real estate they were hooked into.
But, you know what? There were some tools and visibility into the potential consequences of what could (and, would and DID) happen to thousands of homeowners – it’s called COMMON SENSE and REALITY. For so long, we, as a culture, have been living the “keep up with the Jonses” and always “do better than the Joneses” and we buy bigger and better to impress… That’s another failing – the concept that buy having this or that … status symbol? … that we’re moving up in the world when – in fact – we’re just digging a deeper hole to fall back into when that pedestal – built on dreams and lies – crumbles and falls to dust.
As the pain deepens the politicians will swing away with fault finding. In all reality this mess started prior to Bush in the Clinton cabinet. George inherited this mess thinking that Greenspan was able to hold the cows in the stock yard. But away from the reel point is the fact of what can be done now? Washington Politicians have feasted on the backs of the working public long enough. Who ever gets in to office needs to put the cabinets on a diet. We don’t need more regulations and laws in fact we don’t need or want more taxes. We need to start the engine of capitalism again and not send company’s overseas to compete. The point is we do not need to listen to lawyers who think they are CFO or CFO’s who think they are lawyers. The congress should be ashamed of there self for not enacting roll back legislation.
Let’s look at the fact that this country is inhabited by humans of all creeds and races. Environmentalist need to rethink there objective for most of the data they get fire up on is tainted by the need for continuation of government grants. The politicians hide in the bushes saying “we don’t know what to do” but if they were running in your district they would extol the competence and cleverness of the legislator. So now they are going off on vacation. Have we heard this song before?
We need to understand that the constitution and bill of wrights specifically stated that laws and regulation are set up for “all” not for some and not others. Fanny May failed by the greed and mismanagement and incompetence. How can we ignore that the top recipients of lobbyist contribution from Fanny May was the Democratic campaign. The Republicans are not clean on this type of issue as well.
If it is the “Big J” or “Big B” who takes office they need to understand how America solves its own problems. In case they forget it is not through regulation. We are tired of hearing the rhetoric that we don’t have land to drill or they do have the land but won’t, that has stopped progress and we are just at the mercy of foreign dictators who set our base line to fuel. Our economy shows that the legislators do not know the score. In case it has slipped by you the score is one of driven on supply side economics. Oil Company’s don’t just drill a hole in the ground and out comes oil. There needs to be a consideration of economics that as we are now seeing in the loan business has to weigh and consider economic factors. The private sector does not have the life raft fall back of the government. If they have a shortfall they just raise taxes. We do not need a Harvard degree to see that today it cost more at the food store and filling up at the pump so we can go to a job that is if we have one to earn a wage that has not kept up with inflation. Wall Street is not the problem, it is the symptom. Washington is the problem putting such limited and unskilled decision makers to make policy that kills economic growth. Washington if you want to see the cause of the problem, look into the mirror.
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