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Stress Testing for the Next Supply Chain Disruption

A crisis like the 2020 pandemic often shines a spotlight on underlying systemic weaknesses, and the pandemic certainly brought the fragility of our supply chain to center stage. In recent years, we had seen prior regional calamity—such as the 2011 earthquake and tsunami in Japan—cause global ripples in the supply chain, which highlighted the existing weaknesses to our interconnected commerce networks. So when these “potential” problems of the global supply chain became very real, most industry professionals weren’t surprised by its fragility. After all, running lean supply chains with low inventory and just-in-time delivery was a feature, not a bug.

It would be easy (and incorrect) to write off today’s challenges as the result of a once-in-a-lifetime health emergency, with a variety of rare factors that swirled together to create a perfect storm of lost production and transportation, radical shifts in demand and unpredictable recovery timelines. But I think it’s also instructive to focus on a single event from the past 18 months: the Suez Canal blockage. One of the world’s busiest trade routes was completely blocked for almost a week because a single ship ran aground. That’s not a black-swan event; it could happen again. Even in a pre-pandemic economy, that single event would have created weeks of ripples across the global supply chain.