“Efficiently broken”: how efficiency diminishes resilience

Here is a good discussion of how efficiency diminishes resilience, in supply chains.

It describes

…global supply chains, and supply chains in the U.S. in particular, as “efficiently broken.” By this I mean that they aspire to offer low prices from economies of scale but lack sufficient resiliency to create stability. Without addressing the systemic weaknesses in supply chains, I believe major health and economic disruptions will continue to happen…

The current example is eggs in the USA:

Like many others, the egg supply chain needs to be reinvented to balance price, scale, resiliency and stability. What is driving up the prices of eggs and other consumer goods is the concentration of producers. The COVID-19 pandemic revealed just how vulnerable prices and supply chains are.

Efficiency drives out redundancy, buffer stocks, and slack – all the things we need to ensure resilience, one of the two key components of adaptability, (along with agility), which is the fundamental capability required to survive and thrive in a VUCA world. Adaptability costs more than efficiency, but it stays in business. Right now efficiency is not your top priority.