In preparation for an upcoming Executive Roundtable IPM is hosting, we reached out to leaders across our network to understand their top challenges. The number one topic was enhancing supply chain resilience and transparency.
No surprise, considering geopolitical tensions, logistical chokepoints, natural disasters, shortages of raw materials, labor strikes, cybersecurity vulnerabilities, and sudden changes in consumer demand. According to Gartner, 63 percent of supply chains are considered “fragile,” about 8 percent are “fully resilient,” and only 6 percent are deemed “antifragile.” This means most companies lose value and profits when faced with uncertainty.
Organizations’ typical response has been buffers like safety stock and secondary suppliers. But to truly build resilience and ensure waves of disruption don’t destabilize the business, it is essential to rewire the end-to-end Plan-Source-Make-Deliver model to function probabilistically.
First, define resiliency performance measures for your business:
- Service continuity
- Speed to recovery
- Cost-to-serve stability
- Strategic adaptability
Where Are You Most Exposed?
Volatile supply and demand disrupt traditional planning methods, leading to a disconnect between long-term strategies and day-to-day operations—and causing organizations to fight fires rather than execute their plan.
Many businesses still lack visibility beyond their Tier 1 suppliers, making it difficult to spot vulnerabilities such as component shortages, common sub-tier suppliers, or geographic concentration risks. These information gaps make it harder to identify and mitigate risk.
Demand hasn’t just become more volatile. It’s become more ambiguous. Demand in most systems today is often a blend of true consumption, pricing and promotion distortion, customers over-buying fearing a future shortage, and operational noise. The challenge is no longer forecasting volume; it’s interpreting intent.
Rewiring the Supply Chain Model to Function Probabilistically
The problem is that most S&OP processes, ERP systems, and planning tools treat all demand as equal, even though the intent behind the signal isn’t as clear as it once was. You’re planning against risk-influenced behavior, not real consumption. And there is distortion between what the customer wants, what they order, and what they actually consume.
The farther upstream you are, the weaker the signal-to-noise ratio. Even with better analytics, models that are trained on historical patterns no longer work. Higher precision does not mean better decisions if the underlying signal data is wrong/misinterpreted. A probabilistic supply chain doesn’t try to predict the future more precisely. It makes decisions that perform acceptably across multiple plausible futures.
- Replace single forecasts with ranges and scenarios. Single numbers create false certainty.
- Separate signal from behavior in demand inputs because most volatility is behavioral, not market driven. Respond to actions taken, not speculation.
- Shift from plans, which break easily, to decision policies, which are adaptable.
- Likewise, introduce guardrails instead of absolute targets.
- Measure and design to optimize decision-making, prioritizing speed over accuracy.
Evaluating Tradeoffs: Efficiency vs. Visibility vs. Flexibility
Achieving a robust and resilient supply chain requires a balanced approach. This is not simply a problem to solve with a new ERP system or planning tool, but rather a polarity to manage. Excessive focus on cost efficiency—such as relying on single-source suppliers, adopting lean processes, or minimizing inventory—can diminish adaptability.
On the other hand, prioritizing customization and innovation to an extreme may lead to disorder and compromise operational effectiveness.
View these tradeoffs as “both/and” dilemmas rather than “either/or” problems. Resiliency is the ability of a supply chain to anticipate, adapt, and recover from disruptions in a cost-effective manner.
Tradeoff 1: Inventory buffers vs. working capital and carrying costs
Many companies boost their inventory to become more resilient, but this typically results in higher working capital expenses, greater storage requirements, and the risk of goods becoming obsolete. Although holding extra stock “just in case” can help keep service levels steady, inventory must be managed thoughtfully. Rather than relying on a one-size-fits-all strategy, it’s best to add inventory buffers selectively, focusing on vital components and key SKUs where they deliver the most benefit.
Tradeoff 2: Visibility gained via technology vs. integration burden
Advanced supply chain software platforms and digital twins offer enhanced visibility. However, they present integration challenges and demand robust data integrity. If you have limitations such as functional silos, data inaccuracies, or manual bottlenecks, these systems can’t support comprehensive decision-making across the supply chain.
And implementation of these solutions often falters. First, inadequate data management efforts fail to address fragmented, inconsistent, and isolated data within legacy systems. Secondly, these tools are frequently regarded merely as “IT implementations,” automating suboptimal processes rather than fundamentally reimagining workflows to drive transformation.
Also, simply having visibility can lead to extra “noise” unless you pair it with effective decision-making frameworks, automation, and response strategies that enable faster actions.
Tradeoff 3: Multi-sourcing vs. maximizing economies of scale
Using multiple suppliers improves resilience by eliminating single points of failure and fostering competition. But it reduces the benefits of scale and creates quality and regulatory burdens. You need supplier redundancy to mitigate risk, but the best practice is to take a segmented and surgical approach. Build in redundancy for “must-not-fail” materials, components, and finished goods, and take a leaner approach for commoditized items.
‘Resilience ROI’ Logic
While organizations all say they value supply chain resilience, many struggle to sustain governance and investment. Initiatives start with great momentum but often fade with time. Companies that succeed focus on:
- Identifying critical points (mapping supplier tiers and segmenting by importance)
- Using probabilistic approaches (planning for scenarios and conducting stress tests)
- Embedding strong governance (clarifying decision authority, tracking KPIs, and conducting regular board reviews)
Building and keeping a resilient supply chain is an ongoing challenge. The chronic disruption will not abate anytime soon. It’s best to view supply chain resilience as polarities to manage rather than a problem that can be solved.
April 16, 2026
