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Boston, MA – As businesses prepare for a new normal of hyper-volatility, the limits of lean philosophy are starting to show, especially given the increase in supply chain risks. The global supply chain in 2009 is a lot more than just a factory and a loading dock—today’s system of plants, distribution centers and retail outlets works more like a worldwide telecoms network than an assembly line.

There is an exploding level of risk that supply chain people have to deal with. Surveys of supply chain professionals show just how far we’ve come from the simpler days of the lean shop floor. In 2008, the biggest risks were transportation costs (especially oil) and surging commodity prices driven by huge Chinese demand. In 2009, oil has crashed from $140/bbl to about half that price, global credit completely collapsed sending unemployment up to double digits in many big economies.

2009 data show supply failure at the top, and well up from last year. Commodity price volatility is still a top concern, but down a bit, indicating that supply chain people don’t necessarily like low commodity prices any more than high prices; they just want stability. Product quality failures, both internal and from suppliers, are well up over the year in a trend that looks to be independent of economic conditions (perhaps reflecting the challenge of ever-longer, more complex supply networks).

Read the full story at businessweek.com.

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