From the course: Supply Chain and Operations Management Tips

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Build flexibility into your supply chain

Build flexibility into your supply chain

From the course: Supply Chain and Operations Management Tips

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Build flexibility into your supply chain

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- If we knew what was gonna happen tomorrow, managing a supply chain would be easy. But the future is full of uncertainty, so we need to prepare by investing in flexibility. The supply chain is commonly thought of in three segments: upstream, internal operations, and downstream. Let's look at two key concepts that can help you make smart investments in flexibility no matter if you're managing one of these segments or overseeing the entire chain. When we talk about flexibility in a supply chain, we're talking about ways to mitigate risk. Risk is really just another word for surprises. Surprises come in two flavors: good surprises or opportunities. These are sometimes called upside risks. Bad surprises are threats, sometimes called downside risks. If we focus on the upstream supply chain, for example, an opportunity would be a supplier who offers a bargain deal on some of the materials we need. While a threat would be a supplier that shuts down because of a natural disaster. One way to…

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