The specter of a catastrophic failure in one or more links of a company’s global supply chain haunts senior executives in many industries: for example, the overnight flood or fire that disrupts a key supplier and quickly grinds production to a halt half a world away. Well founded as such worries are, given the increasingly globalized and interconnected operations of large organizations, they are hardly the only risks facing supply chains. No less significant are subtler, and more persistent, sources of disruption, such as fluctuating demand, labor rates, or commodity prices that together chip away at profits, increase costs, and force organizations to miss market opportunities.
All of these issues have become more acute in recent years as rising volatility, uncertainty, and business complexity have made reacting to—and planning for—changing market conditions more difficult than ever. The addition of some three billion consumers to the global middle class over the coming two decades, and the strains they will place on global resource supplies, all but guarantee that such pressures will continue.
Against this backdrop, some companies in industries as varied as automotive, building products, chemicals, high tech, and pharmaceuticals are refocusing global operations to make them more agile. Notably, these companies aren’t just spotting and mitigating supply chain risks. They are also seeking ways to use volatility to gain advantages over rivals.
Across many industries, a rising tide of volatility, uncertainty, and business complexity is roiling markets and changing the nature of competition. Companies that can sense, assess, and respond to these pressures faster than rivals will be better at capturing the opportunities and mitigating the downside risks.