Monday, February 07, 2011
Interconnectedness and Supply Chain Risk
The Wall Street Journal has an excellent article today on how global interconnectedness increases supply chain risk. For those who want to read more about the academic underpinnings of this idea, I recommend reading Charles Perrow's famous work on the Three Mile Island accident. In that work, Perrow explained that tight coupling, or rigid interconnections, increase the risk of catastrophic failure in a system. In many supply chains today, the efforts to become more lean have actually increased tight coupling. This article in today's WSJ does a nice job of looking at the issue.