What is a supply chain crisis?


A supply chain crisis refers to significant disruptions within the interconnected network of entities, businesses, resources, and technologies involved in producing and distributing goods or services. According to Shane Parrish's discussions, such disruptions can cause systemic oscillations, where a previously smooth-running system faces out-of-sync production and inventory issues, overproductions, and stockouts.

One primary cause discussed is external disruptions such as government lockdowns, which disorient the system, creating a cascading series of inefficiencies and challenges across the supply chain. In response, companies may need to adapt by either absorbing higher costs, such as paying premiums for faster and more efficient delivery methods, or by strategically modifying their operations to insulate themselves from further disruptions. This might involve taking time out of the supply chain, which reduces exposure to these oscillations, leading to better competitiveness and profitability by mitigating the impact of these chain disruptions 1.

Supply Chain Crisis

George explains how a complex system like the supply chain can be disturbed by external factors like government lockdowns, resulting in oscillations that can affect the entire system. He suggests that the best way to minimize the impact of supply chain crises is by becoming more time-based in the supply chain. By taking time out of the supply chain, companies can insulate themselves from these oscillations and have higher in-stocks and fewer out-of-stocks, which ultimately leads to more profits.

The Knowledge Project

George Stalk Jr.: Competing Against Time | E165