Title: From Risk to Resilience: Learning to Deal With Disruption
Headings: From Risk to Resilience: Learning to Deal With Disruption
From Risk to Resilience: Learning to Deal With Disruption
What to Read Next
Coping With Supply Chain Risks
The Need to Cultivate Resilience
Supply Chain Vulnerabilities and Capabilities
About the Research
Identifying Resilience Factors and Linkages
Supply Chain Vulnerability Factors
Supply Chain Capability Factors
Putting the SCRAM Framework to Work
Finding the Zone of Balanced Resilience
Topics
About the Authors
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Rabindranath Bhattacharya

Content: Globalization has made anticipating disruptions and managing them when they do occur more challenging. The potential risks of disruptions are often hidden, and the potential impacts may not be understood. This often results in “black swan” events that can be understood only after the fact. As author Nassim N. Taleb has warned, “Our world is dominated by the extreme, the unknown, and the very improbable … while we spend our time engaged in small talk, focusing on the known and the repeated.” 1
Although companies originally moved production offshore to countries such as India and China to take advantage of lower labor costs, events like Iceland’s 2010 volcanic eruption and the Japanese tsunami in 2011 have shown that the vulnerabilities of extended supply chains are real and serious. For example, according to the U.S. Federal Reserve, 41% of Minnesota manufacturers said that Japan’s tsunami had affected them negatively. 2 As a result, many manufacturers have reevaluated their sourcing options, and some are shifting operations back to their home markets. While these companies perceive other advantages to reshoring, including improved responsiveness and domestic job creation, reducing their exposure to risk has been an important driver. The reality is that supply chain practices designed to keep costs low in a stable business environment can increase risk levels during disruptions. Just-in-time and lean production methods, whereby managers work closely with a small number of suppliers to keep inventories low, can make companies more vulnerable due to the lack of buffer capacity.