Strong Supply Chains Through Resilient Operations

PREFACE: BUILDING STRONG SUPPLY CHAINS TO PROFIT DESPITE DISRUPTIONS

A company's products, services, strategy, and customers are all important. But the supply chain behind all of this delivers to customers the value they were promised.

Supply chains are receiving a lot of attention, because they were devastated in the early 2020s by the COVID‐19 pandemic, labor shortages, social unrest, war, and other shocks. Supply chain redesign enabled globalization, which reshaped the planet and transformed economies. Now, both executives and popular media talk about supply chains as battered and broken. The pandemic unveiled hidden vulnerabilities and showed us that many supply chains are unsustainable.

Why weren't the world's supply chains agile and resilient in the early 2020s? It's a story of too much emphasis on one element. For decades, companies focused on lowering costs. They interpreted lean manufacturing principles as primarily reducing costs of labor and other inputs. As they maximized efficiency to take full advantage of economies of scale through globalization, there was little thought for error or for redundancy. They failed to sufficiently realize how much their success depended on stability.

Today, companies operate in a VUCA world: volatile, uncertain, complex, and ambiguous.¹ It's volatile because conditions change quickly. Pandemics erupt, wildfires blaze, ports close, neighboring despots invade. It's uncertain because at least some of these trends are nearly impossible ...