McCombs Alumni Network News

From Jeff Linder, MBA ‘92

One great thing about going to McCombs alumni functions, especially MBA functions, is that I generally get into conversations with people that I believe are smarter than me.  That could give a person feelings of inferiority, or a lift.  I choose a lift.

A lot was going on during the “meltdown” earlier this year. A lot of people were looking for a better perspective on it all, and a few things hit my inbox that pointed the blame at business schools and actually, masters programs in finance.  I’m not passing judgment here.  Where do we go from here?

At that time I thought up a question for people that know more than me on all this, especially people directly involved in higher education in business.  What’s great is, at these alumni events, these people show up and even from Austin.  Last winter reception we had the new dean of the McCombs School of Business, Tom Gilligan, and associate dean over all the MBA programs (six in number), Eric Hirst, attend along with several other people in charge of important aspects of the program.

So the question was: “What do you tell prospective MBA students who ask about other areas of focus besides finance?”

More than once I heard the response:  supply chain management. 

Basically, the wheels of our economy were threatening to fall off, and there were paradigms actually shifting all around us (for example, 6 months later the Feds owned 60 percent of GM).

About then, I read this press release from IBM: IBM CEO Touts Smart Systems, Efficient Infrastructure.
  
The “Smart Systems” was and is a very well timed marketing push by IBM.  It looks like they are trying to leverage the principles behind the most successful IT applications in supply chain management across many industries and on a grander scale.  Hope it works.

The press release talked about healthcare, transportation, retail, and finance - and had numbers in it.  I was impressed and found myself talking about it a little at these events (smart people in a room - take advantage of it).

These ideas were added to and refined a bit, and in this blog, I’m reporting on all this loose talk for whatever it’s worth.  If you comment on this blog, we’ll keep it going and send it off to the next G7 meeting and maybe get some finder’s fees from IBM, eh?

Here goes:

The alternative to bailout funds is to find waste and eliminate it.

Transportation:  They’ve quantified the waste in traffic jams on many dimensions.  Efficient supply chain management can make a big difference here on many, many levels.  The supply “chain” covers everything up to the point of us arriving at our destinations: roads, control systems, even oil and gas exploration and production, and fuel distribution. 

Healthcare:  The supply chain includes the interrelationships of insurance providers, hospitals, physicians and premium payers – there’s a challenge, or two, for you.  A little easier focus might be to optimize paper medical records and convert to effective electronic medical records.

Public Utilities:  There is a lot of antiquated infrastructure in most of the country.  A few examples are seen with leakage, shutdowns, guys in trucks with clipboards, and sagging power lines.  A good client of mine in water/wastewater has developed software for monitoring, reporting and controlling. While helping them grow their market, I found out how critical and how utterly huge these issues will likely be and soon.

Finance:  This was the most interesting area we talked about for supply chain management (we did solve the world’s problems at these alumni events, several times over).  In finance, the “supply chain” covers the progression from risk … to … profit, and there was general agreement with the idea stated in the press release that there are other ways to get from risk to profit other than spreading the risk (ex. credit default swaps).  In general, there is improved tracking of risk and better reaction to it by tracking the risks of alternate actions.

$40 billion was the estimated savings possible in the press release in retail distribution.  So possibly $100 billion in transportation?  $100 billion in healthcare?  Can we get the numbers up there? How about education?  Communication?  Energy?  Finance?  Can all this rival the trillion-dollar mark of the bailout?

Hopefully we’ve got people thinking big in Washington along these lines.  We need it.

Bye for now, and please remember to read the event invitations from Austin and show up at the McCombs Alumni Network Events.

Jeff Linder
Co-President
Houston MBA Chapter of the McCombs Alumni Network