In the past, supply chains were designed for stability, not uncertainty.
“As we pushed toward globalization and to scale and diversify operations, we built on some assumptions around a shockproof world,” says Ashley Haynes-Gaspar, general manager and COO of U.S. business applications at Microsoft.
As a result, when Covid-19 created unprecedented demand and supply disruptions, businesses were blindsided. Months-long delays and shortages of essential items signaled an urgent need to overhaul supply chain operations.
In February, President Biden issued an executive order directing federal departments and agencies to review the resilience and security of the country’s critical supply chains. “The Covid-19 pandemic and resulting economic dislocation revealed long-standing vulnerabilities in our supply chains,” the administration’s report notes. “Small failures at even one point in supply chains can impact America’s security, jobs, families and communities.”
Despite the need for supply chain resiliency, business leaders have been slow to act, having for years chosen efficiency over resilience. In Forbes’ 2021 CxO Growth Survey, C-suite respondents ranked “revising supply chain strategy” as a low priority. Delaying action, however, can expose supply chains to serious financial risks and prevent companies from seizing the benefits of resilience.