UPDATED:: Quake in Japan illustrated fragility of “Global Supply Chain” & flaws in conventional “wisdom”

Business continuity planning life cycle

Business continuity planning life cycle (Photo credit: Wikipedia)

The case for a Company to maintain a current and comprehensive Business Continuity Plan does not come much better than this example from HP!

Modern global supply chains, experts say, mirror complex biological systems like the human body in many ways. They can be remarkably resilient and self-healing, yet at times quite vulnerable to some specific, seemingly small weakness — as if a tiny tear in a crucial artery were to cause someone to suffer heart failure.

via Quake in Japan Broke a Link in Global Supply Chain – NYTimes.com

Of course EVERYONE hopes that they never have to contend with what the Japanese nation have had to live through. But, at a time in the history of our planet, when the impact of events on the other side of the planet have truly global repercussions, “HOPE” isn’t much of a strategy! 

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Zurich Risk Report:: pointing at, NOT “pushing the boundary”!

imageIt is reassuring to know that, when “responsible” insurers, such as Zurich Financial Services, publish reports they don’t gloss-over “uncertainty”! But I am still concerned that, whilst they have the considerable insight and wisdom of Doug Hubbard in their corner, they do little more than (re)define the “problem statement” and point in the general direction of theoretical solutions…

It’s like presenting a High School student with a problem from Quantum Physics, giving them a calculator and telling them to get on with it!!! 

Surely, in the current climate, it is too big an assumption that a business has the in-house resource (time, finance and intellectual) to de-code, interpret and address such problems? These are the same problems that have already laid waste to the major institutions and the reputations of banking and finance organisations, whose “investment” in the finest mathematical minds (outwith Academia) has proven what we already know: attempts to model the future in a complex and inter-connected world are, ultimately, futile exercises.

This does not mean that I am totally against building models but let’s get the facts straight first!

We can’t forecast the future based upon the past

Assumptions are just that! They are, by definition, subjective, even if quantitatively based, and

…in complex [non linear] systems, even minor deviations, can have a MAJOR impact.

As a result, and with all due respect to Mr Hubbard (as well as those whose work he cites), I am not convinced that an unreliable model is vastly better than no model. At least, as far as reliable forecasts on a meaningful timeline are concerned.

The pressing need is for, cost effective, “real world” SOLUTIONS to everyday problems, not answers to questions that are topics of research and debate amongst industry experts and Academics. 

Why systems-thinking and Complexity management are vital for survival

Collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole. Competitors who evolve as peers collapse in like manner.


The Collapse of Complex Civilisations (1988, p214)

Complexity is a characteristic of dynamic systems. It is the multiple inter-connections, sometimes referred to as the “problem-solving capability”, without which the system cannot perform its intended purpose(s). Every system has a sustainable level of complexity [critical complexity].

Butterfly Effect: Due to the inter-connectedness of systems the impact of a single (even relatively minor) event can be manifest in more than one outcome.

Catastrophic changes in the overall state of a system can ultimately derive from how it is organised — from feedback mechanisms within it, and from linkages that are latent and often unrecognised.

From a report for Federal Reserve Bank of New York Read more of this post

The supply chain disappointment – Insurance Insight

As supply chain risks rise up the agenda for businesses, there is clearly an opportunity for insurers to step in with up-to-the-minute solutions that respond to new challenges. Dequae believes while the risks have changed, “the insurance solutions have not really adapted to the changes in the supply chains”. She points, in particular, to the need for innovation when it comes to “more coverage and capacity”, as well as broader conditions and “coverage at acceptable prices”.

via The supply chain disappointment – Insurance Insight.

I have become used to some of my more “critical” comments not making it past moderators who are overly-sensitive to the potential for political repercussions.  So here it is:

supply_chain_diagramAnyone who has given the subject matter some thought knows, broadly, what the problems are. Some even know of available solutions. But NONE have acted to seize the competitive advantage that “embedding” solutions as part of their proposition! Read more of this post

Survey confirms concerns with supply chain insurance | FERMA

Future supply chainThis is a topic that has occupied much of my thinking (and writing) in recent years and I am still not convinced that the scale and nature of the risks are fully understood. NOW must be the time for another smart insurer (FM Global have already acted) to respond to their customers’ stated needs!

Global logistics (and reverse logistics) have changed dramatically in the last decade and further changes with considerable insurance implications are predicted for the next 5 years. THE opportunity exists NOW, to address a major and growing problem for fragile global business networks in these uncertain times and in the, hopefully, less volatile times ahead.


By embedding Ontonix "Complexity & Resilience risk technology" within Supply Chain solutions, that:

– extends the risk horizon into the Corporate ecosystem by analysing the structure in information within system (network) data

– enables rapid and regular measurement of the "health" of the system

– identifies areas of risk at source

enables the business owners to become “Risk Leaders”: measure; map; mitigate; manage; monitor, system complexity and resilience to:

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