Every now and again I see a headline that really grinds my gears. A recent headline over on Supply Chain Brain that asked can supply networks be too flexible is one of them. Even before I read the article, I can tell you I was quite annoyed because a supply network can never be to flexible. When you consider the almost infinite number of things that can go wrong in today’s supply networks, and that the ability to recover on a dime could be the difference between profit and bankruptcy in today’s economic climate for a company that’s operating on razor thin margins, it’s absurd to even ask this question.
Then I got more annoyed when I read the first line, which quoted MIT professor David Simchi-Levi that said “I will not tell you the obvious”. Great … not! Another ivory-towered academic leaving the question vague and open-ended and further strengthening the stereotype that all of us PhDs are arrogant and don’t understand business and the need to get to the point — quickly. (While the former may be true, the latter is not where those of us that left the ivory tower is concerned.)
The saving grace is that before the paragraph ended, the author noted that “companies can spend too much time and money on achieving total flexibility in their sourcing and fulfillment strategies”, which is true. There is always a trade-off, and after a point, returns will diminish quickly. But the question isn’t whether a supply chain can be too flexible — because it can’t, but whether the cost of adding additional flexibility is justified with respect to the risks you are trying to mitigate, or whether the savings that can be achieved by reducing flexibility is worth the risks you are going to add. After all, any flexibility you can get for free is always worth it. You do need to do a(n optimization supported) total value analysis to figure out whether or not you have enough flexibility, or whether you could sacrifice some for worthwhile cost savings, but you never need to ask yourself whether flexibility is good. It’s always good. It’s just a question of whether or not you can afford it if it has significant operational impacts.