Between “Risk” and “Resilience”

You’ve heard these words quite a bit the last 18 months.

Maybe they presented themselves to you in the context of the global health crisis. Or the stock market. Or political campaigns. Or toilet paper.

But lately, the Global Supply Chain has become the main vessel that these terms have boarded.

In August of last year, The McKinsey Global Institute published a report on Risk, Resilience, and Rebalancing in Global Value Chains. Did you miss it? If you did, that’s alright – a lot was going on at the time, to be fair.

So let us simplify the 112-page report for you:

The cost of ignoring the weaknesses within our supply chain is too great to ignore.

We think that sums it up rather succinctly.

But to refresh, here’s a shortened list of events that could throw the supply chain into further disarray:

  • Health Crisis
  • Global Military Conflict
  • Trade Dispute
  • Regulation
  • Act of Terrorism
  • Natural Disaster
  • Port Congestion
  • Labor Negotiations

We’re probably missing another dozen potentialities, but the question that arises from the report is this: at what moment do we decide to recognize that the traditional way of doing business isn’t working?

For those who insist that the bottom-line is best served by sticking with our old ways, McKinsey would likely refer you to the following graph:

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For the rest of you? Well, we’d like to say that the moment for change is now.