Building supply chain resilience costs money. Spreading production across multiple locations, moving to safer but pricier suppliers, and running factories at 70% instead of 90-95% capacity all cut into profits. Supply chain teams need to tell executives and boards: you can't have maximum resilience and minimum cost at the same time.
And that's easier said than done, right? Because your economic equation, your financial equation is going to be changing. Of course, if you start producing multiple locations, you don't have the same leverage of scale. If you start producing into locations which are higher cost but less risk than your low-cost location, it has a cost impact. If you say that you don't want to utilize your assets, at more than, quote, 70%, whereas you were used to using them at 90%, 95%, it has an impact on cost. So there is a lot of work to be done by supply chain professionals with their executive committee, financial teams, and boards to convey that message that resilience comes with a cost, unfortunately, right? You cannot have it all. And the whole P&L equation of the company is changing as a result of building in your P&L, that resilience cost.
