7.30.2015


Above: If this is an abstraction of supply chain relationships/dependencies, where might the most risk reside?

From the World Economic Forum's 2012 paper, New Models for Addressing Supply Chain and Transport Risk:

Global supply chains and transport networks form the backbone of the global economy, fueling trade, consumption and economic growth. Trends such as globalization, lean processes and the geographical concentration of production have made supply chain networks more efficient, but have also changed their risk profile. Most enterprises have risk management protocols that can address localized disruptions. However, recent high-profile events have highlighted how risks outside the control of individual organizations can have cascading and unintended consequences that cannot be mitigated by one organization alone.

It is not just concentration of production.  Concentration is a feature of almost every level of the supply chain and, originates in concentration of demand within increasingly dense urban conglomerations. Demand concentration facilitates other sorts of concentrations. Walmart, Costco, Lowes, Home Depot, Liquor Barn and similar retail strategies concentrate a wide array of products in very close proximity to serve demand.  These demand "attractors" are served by large distribution or fulfillment centers that are increasingly clustered around the same transportation networks.  Economies of scale support product diversity, considerable convenience, and competitive pricing.

Soon: Will the supply concentration strategy be superseded by a capacity for"mass-customization"?

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