Find the Weak Link in Your Supply Chain
A big challenge in today’s world of far-flung, complex supply chains is the limited understanding of the impact on your operations of unexpected disruption at one supplier’s site. To address this issue, my colleagues William Schmidt of Cornell, Yehua Wei of Duke, and I developed a method to help prioritize the financial or operational impact of risk that lets companies focus their mitigation efforts on the most important suppliers and risk areas. The method was implemented successfully at Ford Motor Company — an effort we described in this HBR article. But since then, we encountered an important problem: Suppliers tend to be optimistic about the information that they provide. In response, we have developed a remedy.