There’s Good Risk Management Advice …

… and then there’s the risk management advice in the Logistics Management version of the Supply Chain 2010 article. According to this version, you should:

  • get in the habit of much shorter contracts
    … and throw any hope of cooperative innovation right out the window
  • adopt a logically variable cost structure
    … and watch your costs go through the roof every time an index runs wild
  • get in the habit of stress testing your supply chain
    … instead of taking the time to design it properly so that it survives the stress tests

Risk isn’t going away and you have to start managing it better, but don’t make stupid decisions based on the assumption that this transient, lengthy recovery is the way things are going to stay. We’re working our way back to the Old Normal, and as I pointed out in my last post, that requires visibility, flexibility, and education. Don’t forget that.

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