Planning for Increased Supply-Side Risk
fter the Global Financial Crisis hit in 2007, I began to think, write, and talk about the increased uncertainties that forecasters and supply chain planners would have to face in the future—in terms of supply as well as in demand. Most managers are reconciled to the fact that customers are fickle, thus demand is uncertain and forecasts and plans are invariably inaccurate. They are adept at coping with demand uncertainty by using various buffering strategies including the deployment of inventory safety stocks. However, they are not very accepting of the uncertainty and risk in the supply-side operations that they plan for. In mid-June 2008, I was invited to be part of a panel at a manufacturing conference. I decided to talk about my ideas on the uncertainties to an audience of hard-nosed manufacturing and supply chain managers. Another member of the panel was a well-respected manager whom I considered to be one of the best practitioners in the field. After he heard what I had to say, he agreed with me about demand-side uncertainty (and the fact that it might increase significantly); however, he refused to accept that there would ever be supply-side uncertainties that ...