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IT'S BEEN SAID you can never be too rich or too thin. The "too thin" part isn't really true about people and it definitely isn't true about supply chains.
As several observers have pointed out recently, it is possible for supply chains to be too lean and if the truth be told, today many of them probably are.
"We've worshipped so much at the altar of lean that for most companies there's no Plan B anymore," says Jeff Karrenbauer, president of Insight Inc., Manassas, VA, which helps companies audit their supply chains. "It's very hard to come up with Plan B in this environment, because having a Plan B implies some level of redundancy.
But we've been so busy cutting every shred of excess that many corporations are now down to the bone."
When does the pursuit of supply chain efficiency become a kind of business anorexia?
When an enterprise loses its resilience.
Resilience is defined as the ability to recover or bounce back from any kind of negative event.
In a recent article on managing supply chain risk, Russ Beverly and Jade Rodysill, senior managers with Accenture's North American Supply Chain Group, advise companies of the need for operational resiliency. "Ongoing business resilience," they say, will become a requirement for high-performance companies, who will be judged as much on their ability to assure future earnings through proactive risk mitigation and management, as they are currently measured on earnings per share.
Why the focus on risk now? The nightly news no doubt plays a role. From the still lingering after-effects of Hurricane Katrina, to the almost daily parade of headlines announcing another huge product recall, to the tragic collapse of the I-35 bridge in Minneapolis, stories of risks not well-dealt-with have been mustering attention.
But it's not just a matter of focus. The risks that most businesses face are growing.
As Beverly, Rodysill and Karrenbauer all point out, today's extended, globalized supply chains expose companies to--more and new kinds--of risk than ever before.
