Can you be too Lean?

An article in the Friday Wall Street Journal talked about how the recession had lead to many companies leaning out their supply chain to save money, but the disruption in Japan from the earthquake has caused many shortages around the world.

Every leaned out assuming there was a predictable supply chain, which is generally a good assumption.  No one predicted that nearly all of japan would be impacted by a disaster.  I am not sure everyone realized how many supply chains actually passed through Japan for some raw material or computer chips.

These companies now ran short on supplies.  They did not plan for enough buffer stock in their supply lines and have run short.  There may be many companies now questioning the “Leaning out” efforts and criticizing them for not understanding the risk.  But as I have written in earlier posts, no one truly knows how to include these Black Swan events into the risk management plans.