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Procurement Perspectives: An organization’s management of a crisis

Stephen Bauld
Procurement Perspectives: An organization’s management of a crisis

When times are tough and challenging, people are naturally depressed and pessimistic.

They can see no solution, very often because they have stopped looking for one.

Being convinced that all is lost, they are difficult to stir into action.

In such circumstances, the CEO must find some way to recapture the imagination of the constituency so as to refocus them on the strategic objective.

It is also necessary to devise a successful method of dealing with the problem giving rise to the crisis and to stimulate the organization to implement that response quickly.

Some of the most important measures that a senior manager can take to deal with the eventuality of a crisis must be put into place long before any real crisis arises.

During times of crisis, events tend to unfold quickly.

Indeed, often the individual problems that must be confronted during a crisis are relatively minor when considered in isolation.

What sets crisis management apart from the management of ordinary day to day problems can often be no more than the number of problems that must be dealt with simultaneously.

The rapidity of the problems confronting the organization leaves little time for quiet reflection. Since decisions must be made quickly, there is a need for a high level of confidence that the decisions that are being made are likely to be the right ones.

Unfortunately, while the existence of a crisis calls out for firm decision-making, the time restrictions that the crisis imposes means decisions must be made under conditions of greater uncertainty.

One of the most important responsibilities of a military commander is to ensure the unit assigned to his command is combat ready.

The same applies by analogy to every other type of manager in a company or government environment.

The fact that a crisis will leave little time to react means it is essential for everyone to know what means must be done before a crisis arises. It is this reality that gives rise to the understood need for a prepared program of crisis management.

There are three basic steps to crisis management. Avoid a crisis in the first place (each ounce of prevention is worth many hundreds of pounds of cure). Have some process in place for monitoring any emerging crisis, quickly address and resolve any imminent crisis that is identified before it escalates into a more serious problem.

The sooner control efforts begin, the less serious the problem is likely to be and the less risk of panic.

Seek possible ways to turn any crisis that occurs into an opportunity.

Generally, steps one and two grow out of proper planning and logistics management.

It also requires sufficient reserves of resources to be able to deal with those problems when they do arise.

Examples of successful implementation of the third step are considerably harder to find than of the first two.

However, they do exist.

In 1986, Johnson & Johnson confronted a crisis of major proportions when it was discovered that someone was putting tablets poisoned with lethal amounts of cyanide into bottles of Tylenol on store shelves. The crime has never been solved.

Seven people died from poisoned medicine.

Johnson & Johnson responded by recalling $300 million of product. It then introduced new tamperproof medicine containers.

This step changed the drug industry.

Not only did the company come across as one concerned about the welfare of its customers, it immediately put other drug companies at a disadvantage.

People who bought Johnson & Johnson products could have a high degree of comfort that they were safe. People who bought products of their competitors (in their non-tamperproof bottles) could not be as comfortable as using the Johnson & Johnson products.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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