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In a new report on supply chain risk and resilience sponsored by DHL, the authors conclude:

Increased supply chain risks have been the major unintended consequence of two of the most significant business trends of recent decades: globalization and lean production. Driven by the quest for lower manufacturing costs or access to specialist capabilities, the increasing willingness of companies to source materials and components from around the world has greatly increased the potential points of supply chain weakness, especially as some key production sites are now located in regions more vulnerable to natural disasters.  

And supply chains have also increased their vulnerability. Short product life cycles and the desire to conserve working capital encourages companies to keep inventories and buffer stocks as low as possible. It’s an approach central to the Japanese philosophy of “just-intime.” When supply chains are running smoothly, this way of working has proved incredibly successful: cutting manufacturing costs, improving companies’ ability to respond to market shifts, and simplifying quality control. But when problems do occur, there is far less slack available, leaving companies with less time to react before the impact of problems reaches their customers.