HBR's 10 Must Reads for Executives 8-Volume Collection

From Superstorms to Factory Fires

Managing Unpredictable Supply-Chain Disruptions. by David Simchi-Levi, William Schmidt, and Yehua Wei

TRADITIONAL METHODS FOR managing supply chain risk rely on knowing the likelihood of occurrence and the magnitude of impact for every potential event that could materially disrupt a firm’s operations. For common supply-chain disruptions—poor supplier performance, forecast errors, transportation breakdowns, and so on—those methods work very well, using historical data to quantify the level of risk.

But it’s a different story for low-probability, high-impact events—megadisasters like Hurricane Katrina in 2005, viral epidemics like the 2003 SARS outbreak, or major outages due to unforeseen events such as factory ...