Category: Operations & Systems

Most supply chain professionals I know are comfortable with risk management as a concept but deeply uncomfortable with its implications. We build risk matrices. We categorize suppliers by criticality. We run scenario plans and stress tests. And then a pandemic shuts down global shipping, and we discover that our beautifully documented risk register was largely decorative.

The problem is not that we fail to identify risks. It is that we consistently underestimate the ones that do not fit our mental models, and we systematically ignore the ones that feel too large or too unlikely to plan for. There is a useful framework for thinking about this, built around three animals that are all, for different reasons, black.

The Menagerie

Researchers Zhakata Sardar and John Sweeney proposed a taxonomy of disruptive events that I have found more useful than most formal risk frameworks, precisely because it forces you to be honest about the limits of your own foresight.

Black Swans are Nassim Taleb\u2019s famous concept: events that are genuinely unpredictable, that nobody saw coming, and that reshape the landscape after they arrive. The rise of the internet. September 11th. The specific mechanism of how these events unfold is unknowable in advance. You cannot plan for a Black Swan because by definition you cannot imagine it.

Black Elephants are more interesting, and more damning. A Black Elephant is a risk that experts have been warning about for years, that the data clearly supports, and that organizations collectively choose to ignore because addressing it would be expensive, politically difficult, or simply uncomfortable. Pandemics were a Black Elephant. Climate disruption to supply chains is a Black Elephant. Everyone who studies these topics has been raising the alarm. The information is not missing. The willingness to act on it is.

Black Jellyfish are risks we understand in principle but whose cascading effects are impossible to predict. We know that AI will transform supply chains, but we do not know how, or which specific disruptions will follow. We know that geopolitical tensions affect trade routes, but we cannot model the second and third-order effects of a specific escalation. The risk is visible but the consequence chain is opaque.

Why We Ignore What We Know

The uncomfortable truth is that most supply chain disruptions are not Black Swans at all. They are Black Elephants: known risks that were simply more convenient to ignore than to address. The supplier in a politically unstable region that everyone knew was a single point of failure. The lack of safety stock for a critical component because the carrying cost was unpopular in a quarterly review. The absence of a backup logistics route because “it has always worked.”

Organizations ignore these risks for structural reasons. The person who raises an unlikely but catastrophic risk is usually the least popular person in the meeting. The cost of mitigation is certain and immediate. The cost of the risk is uncertain and future. In any quarterly planning cycle, the certain cost loses. The risk stays unaddressed. Until it does not.

The Tenth Man

There is a concept from intelligence analysis called the Tenth Man Rule: if nine people in a room agree on a conclusion, it is the duty of the tenth person to disagree and explore the alternative, no matter how unlikely it seems. The rule exists because consensus is dangerous. Groups are naturally drawn toward agreement, and the more unanimous the agreement, the less likely anyone is to challenge it.

In supply chain management, the Tenth Man is the person who asks: what if our main supplier goes offline tomorrow? What if this trade route closes? What if demand drops 40% in a quarter? These are not paranoid questions. They are the questions that, answered in advance, turn a crisis into an inconvenience.

I think about this at a much smaller scale now. At FIKA B\u2019LORE, our supply chain is simple, but the risks are real. What if our flour supplier has a quality issue? What if the delivery vehicle breaks down on a Friday morning? What if three WhatsApp communities all order double in the same week? None of these are Black Swans. They are ordinary operational risks. But the discipline of asking the question before it happens is the same whether you are managing a global packaging supply chain or a bakery that delivers cardamom buns across Bangalore.

Flexibility Over Prediction

The real lesson from the black menagerie is not that we need better prediction. It is that we need less reliance on prediction altogether. The organizations that navigate disruptions well are not the ones that saw the disruption coming. They are the ones that built enough flexibility and robustness into their operations to absorb shocks they did not predict.

There is a Swedish expression: ju mer man planerar med tillr\u00e4ckligt mycket flexibilitet f\u00f6r det ok\u00e4nda, desto st\u00f6rre chans att ha tur. The more you build flexibility for the unknown into your plans, the luckier you tend to get. Luck, in supply chain as in life, is mostly preparation meeting circumstances you could not have specified in advance.

So listen to your devil\u2019s advocates. Understand your value chain deeply enough that you can improvise when the plan breaks. Build robustness where the cost of failure is high and flexibility where the future is uncertain. And designate someone, in every important conversation, to be the Tenth Man. The cost of that role is a few uncomfortable questions. The cost of not having it is discovering the answers too late.

There is a quote, often attributed to Einstein though probably misattributed, that goes: “Any intelligent fool can make things bigger and more complex. It takes a touch of genius, and a lot of courage, to move in the opposite direction.” I have spent fifteen years watching intelligent people make supply chains more complex, and I have done it myself. The pattern is always the same.

It starts with a reasonable desire for precision. A company grows. The product range expands. Someone decides the planning system needs another parameter, another rule, another exception. Each addition is logical in isolation. The new SKU requires its own safety stock calculation. The seasonal product needs a separate forecasting model. The key account gets a custom replenishment frequency. Each decision makes the system slightly more accurate and significantly more complex.

Then one day, three years later, nobody in the organization fully understands how the planning system works. The person who built the original logic has moved on. The exceptions have exceptions. The accuracy gains are real but marginal, and the complexity costs are enormous but invisible: slower decisions, more meetings to align, higher error rates that nobody can trace to a root cause because the system is too opaque to diagnose.

This is the complexity trap. You walk into it one reasonable decision at a time.

The Seduction of Precision

The root problem is that organizations consistently overvalue precision and undervalue clarity. A planning model that is 95% accurate and understood by everyone in the organization will outperform one that is 99% accurate and understood by two people in a back office. The 4% accuracy gap matters far less than the organizational gap in understanding, communication, and ability to respond when conditions change.

I saw this repeatedly during my years in supply chain management and consulting. A procurement category strategy with 47 slides and 12 decision trees will sit in a folder. One with three slides and a clear framework will actually get used. An S&OP process with 14 KPIs will generate beautiful dashboards that nobody acts on. One with four KPIs that everyone understands will change behavior.

The bias toward complexity is structural. In most organizations, the person who makes something more sophisticated gets rewarded. The person who simplifies something gets questioned. “Is that really enough?” “Are we not losing something?” The answer is usually yes, you are losing something. You are losing complexity that was costing you more than it was worth.

Six Products, Not Sixty

I think about this differently now that I run a bakery. At FIKA B\u2019LORE, we sell five to six bun varieties at any given time. Our menu fits on a phone screen. Our pricing is three numbers. Our delivery model is one sentence: we bake Friday, we deliver Friday.

This simplicity is not a limitation. It is a competitive advantage. Every customer understands our offer immediately. Every member of the team can explain it. Every new WhatsApp community we open gets the same clean proposition. There is no confusion about what we do, how we do it, or what it costs.

The temptation to add complexity is constant. Should we offer different sizes? Should we add a subscription model? Should we create tiered pricing for corporate orders? Each suggestion is reasonable in isolation. And each one would add a decision point, a communication burden, an operational branch. The compound effect of saying yes to all of them would be a business that is harder to run, harder to explain, and harder to scale.

The Swedish word for this is lagom: just enough, not too much, not too little. It is a cultural instinct that turns out to be operationally sound. A bakery with six products done perfectly is more valuable than one with thirty products done adequately. The constraint forces quality. The simplicity enables focus. And focus compounds.

Where to Be Complex

The answer is not to eliminate complexity entirely. Some problems are genuinely complex and require sophisticated solutions. The key is being deliberate about where you invest in complexity and where you insist on simplicity.

The framework I have found useful: be complex where you differentiate, be simple everywhere else. If your competitive advantage is in product formulation, invest complexity there. If it is in customer relationships, invest complexity there. But your planning system, your pricing structure, your internal communication, your reporting, all the infrastructure that supports the core but is not the core, should be as simple as you can make it without breaking.

At FIKA B\u2019LORE, the complexity lives in our recipes. Leanne\u2019s cardamom bun formulation is genuinely sophisticated, the result of professional training and hundreds of iterations. Everything around that formulation, the ordering system, the delivery model, the pricing, is deliberately simple. The complexity serves the product. The simplicity serves the business.

If you suspect your organization has fallen into the complexity trap, start with one question: can everyone in the company explain how your core process works? Not the details, not the edge cases. The main flow. If the answer is no, you have a simplicity problem. And simplicity problems compound just as reliably as the good kind of compounding, only in the wrong direction.

Taiichi Ohno, the father of the Toyota Production System, had an image I have never forgotten. He described organizations during boom times as beautiful sandcastles: impressive structures that look solid from the outside but are built on a foundation that will not survive the next wave. When the tide comes in, and it always comes in, the sandcastles that looked most impressive often collapse first.

I have seen this pattern play out across industries, from packaging to oral hygiene to food. During good times, organizations accumulate. Extra headcount for projects that seemed important. Inventory buffers that made someone feel safe. Process layers that nobody questions because revenue is growing and nobody has time to ask whether every activity is actually adding value.

Then the economy turns, and the same organizations that were celebrating growth are suddenly scrambling to cut costs. The cuts are usually indiscriminate, across-the-board reductions that damage high-performing areas as much as underperforming ones, because nobody built the visibility to distinguish between the two when things were good.

The Downturn as Opportunity

The counterintuitive truth is that a downturn is the best time to build operational strength. Not because cutting costs is inherently valuable, but because the pressure of a downturn creates the organizational will to do what should have been done during the good times: rationalize, simplify, and focus.

During boom times, nobody wants to hear that the inventory policy is too generous or that the supplier base is too fragmented. There is no urgency. Revenue covers the inefficiency. But when cash becomes scarce, suddenly everyone is interested in working capital, in supplier consolidation, in whether that third warehouse is really necessary. The conversation that was impossible six months ago becomes the most important conversation in the building.

The key is to make the rationalization differentiated, not uniform. Cut where there is genuine waste. Protect where there is genuine value. This sounds obvious, but it requires visibility that most organizations do not have, because they never invested in understanding their cost structure when it did not seem urgent.

Starting Lean

When Niklas and I started FIKA B\u2019LORE, we had an accidental advantage: we had no choice but to be lean. There was no boom-time padding to accumulate. Every decision was visible because every rupee mattered. We bake to order because waste is expensive. We deliver ourselves because a logistics partner is a cost we cannot justify at 200 orders a week. We use WhatsApp instead of a CRM because the tool we already have works.

This is not austerity. It is clarity. When you have no slack, you cannot hide waste behind revenue growth. Every process either adds value or it does not. Every person either contributes or they do not. Every cost is either justified or it is not. The feedback loop is immediate, which means the learning is fast.

The larger lesson, and one I wish I had internalized earlier in my career, is that the discipline of lean operations should not be something you discover during a crisis. It should be the default. Build the dashboards when times are good, so you have them when times are bad. Understand your cost structure before someone forces you to cut it. Know which suppliers are critical and which are interchangeable before the supply disruption that makes the question urgent.

Ohno\u2019s sandcastle metaphor haunts me because it is so precisely accurate. The organizations that survive downturns are not the ones that cut fastest. They are the ones that were already lean, already clear about where value lives, already running on a foundation of rock rather than sand. The downturn does not build that foundation. It only reveals whether one exists.

Cash is king in a recession, as the saying goes. But the real insight is earlier than that: clarity is king always. Cash is just the scoreboard.