The Black Swans are Gunning For You!

Maybe, after years of humming and hawwing you finally put a proper supply chain risk management program. Maybe you feel you’ve learned enough about disruptions to identify them early and react quickly and the threat of those black swans has been minimized. Maybe you just had the worst disruption in a decade and you know that there are few of them (outside of their native Australia), but many organizations, and the odds are that you won’t see them again for a decade. Maybe you’re safe. Maybe.

But what you don’t understand is these swans are angry. Very angry. And they have a right to be. How would you feel if you were, more or less, consider the ugly duckling compared to your white cousins. Ridiculed and reviled thanks to Dr. Taleb who called you out as the cause of every single unexpected event that few predict, especially when those events have devastating consequences. And to top it off, associated with your raging white cousins that are, the vast majority of the time, the perpetrators of the “swan attack”.

So what do you do when you’re angry? You get revenge. On the biggest targets. And what’s the biggest target? The modern, global supply chain.

And before you think the doctor‘s off his gourd, he knows that, 99.999% of the time your supply chain disruption is not the direct cause of a black swan attack, but that no matter how good you think you are at preventing and detecting black swan events, you’re not good enough. At least not yet.

How does he know this?

  1. The percentage of Procurement organizations that have dedicated risk management solutions is miniscule.
  2. The percentage of Procurement organizations that have dedicated risk management solutions and leading SRM solutions is smaller still.
  3. The percentage of Procurement organizations that have dedicated risk management solutions, leading SRM solutions, and modern strategic sourcing / supply chain optimization solutions is much smaller still.
  4. The percentage of Procurement organizations that have dedicated risk management solutions, leading SRM solutions, modern strategic supply sourcing / supply chain optimization, and six sigma level disaster planning capability is so much smaller still that it’s almost non-existent.

And the reality is that unless you’re at level 4, you’re not going to see enough of the potential disruptions headed your way to analyze their impact probability and potential severity, and you won’t even get a hint of coming big, “black swan” events, until the tsunami is right on top of you and there’s nothing you can do to get out of it’s way. As a recent post by the public defender  points out, events that seem unlikely, surprising, or virtually impossible do happen, more often than we expect, and our risk analysis, mitigation approaches and management actions should bear this in mind.

And most importantly, just because they are half a world away doesn’t mean that they won’t devastate your product line in two months when you’re supply can’t supply because their supplier didn’t supply because the raw material supplier couldn’t supply because the earthquake collapsed the mine — something you could have known two months ago with monitoring, which might have given you enough time to get your disaster recovery plan in place. You’ll still be affected. Costs will still go up. Workloads will still double. But you won’t be up the creek without a paddle (just in a more expensive boat with an un-preferred, less favoured one.)

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