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When safeguarding their supply chains against disruptions, companies commonly assign the highest priority to events that happen relatively often and hit hard. Focusing on those with the highest likelihood and the greatest potential impact certainly seems like a logical approach to risk management. Except that these are not the worst perils that companies face. In fact, events that rarely happen but wreak havoc pose the most dangerous threat to corporate health.

Companies often group inventory items into classes in order to manage them more efficiently. Managers routinely use these clusters or segmentations in their inventory replenishment planning decisions. However, as companies grow and their operations expand, these classifications can become outdated. If this problem is not addressed, products can become misclassified. Inaccurate SKU classifications add cost to supply chains and hurt service levels as inventory managers misallocate resources to meet demand.

Yossi Sheffi, professor and director of the MIT Center for Transportation & Logistics, discusses his newest book, "The Power of Resilience: How the Best Companies Manage the Unexpected." [Run Time (Min.): 6:44]

Watch the video.

In new book, MIT professor explains how companies can lessen the shocks of a volatile world. Companies large and small globalize their enterprises in search of advantages, such as lower costs, flexibility, and closer proximity to key markets. But globalizing comes with an Achilles’ heel: The vaster a company’s operations, the more vulnerable it becomes to jarring events around the world, including natural disasters, political upheaval, industrial actions, mistreatment of workers in suppliers’ factories, and damaging effects of climate change.

Yossi Sheffi has been writing about transportation, logistics, and supply chain management since as far back as 1985, when he published Urban Transportation Networks. Since then, he has tackled a variety of topics important to supply chain managers, including logistics clusters and supply chain resiliency. A professor at the Massachusetts Institute of Technology, where he serves as Director of the MIT Center for Transportation & Logistics (MIT CTL), he is an expert in systems optimization, risk analysis, and supply chain management.

By Laura Krantz GLOBE STAFF OCTOBER 07, 2015. A pilot program at the Massachusetts Institute of Technology allows learners to earn a master’s degree by completing the first semester online and the second on the Cambridge campus, president L. Rafael Reif revealed Wednesday. The new arrangement is initially limited to MIT’s one-year program in supply chain management, which is designed for midcareer professionals. Reif said the rising cost of higher education plus the capabilities of Internet learning motivated the school to try the idea.

MIT announced today a pilot program allowing learners worldwide to take a semester’s worth of courses in its top-ranked, one-year Supply Chain Management (SCM) master’s program completely online, then complete an MIT master’s degree by spending a single semester on campus.

The United Nations now estimates that 90 percent of the world’s population has access to improved drinking water. But the story of access to safe drinking water is more complex, especially when it comes to the 2.7 billion people who live on less than $2 a day: In developing countries around the world, tens of millions of people rely on water filtration and purification products each year to improve their drinking water in the absence of proper infrastructure providing clean water.

Logistics are the core of any business, large or small.

By Bruce Arntzen. Many companies have made great strides in recent years to prepare for supply-chain disruptions from a range of events, from natural disasters to man-made crises. Yet they don't prepare for recessions. A look at the calendar says they should.  Major financial quakes have occurred once every seven years, on average, over the last 50 years. The last one struck in October 2008, and caused the worst economic downturn in several generations.

By Yossi Sheffi. Unexpected events — ranging from extreme weather to product contamination — can easily disrupt businesses in today’s complex, interconnected global economy. The good news? A company can substantially increase its resilience by improving its ability to detect — and respond to — disruptions quickly. In 2008, the Black Thunder mine in Wyoming’s Powder River Basin — the largest coal mining complex in the United States, owned by St. Louis, Missouri-based Arch Coal Inc. — planned to install a massive new conveyer tube to move coal to a silo for loading trains.

September 21, 2015 (Cambridge, MA). The second installment of the MIT Center for Transportation & Logistics’ (MIT CTL) ground-breaking online supply chain course, Supply Chain and Logistics Fundamentals, will start on September 30th, 2015. Called Supply Chain Design, the SC2x course is part of the three-part SCx series and will run for 12 consecutive weeks. A year ago MIT CTL opened a new chapter in supply chain education with the launch of its SCx online program.

By Zyad El Jebbari. The handicraft industry in Morocco represents more than 9% of the country’s GDP and employs over 2 million people. Yet artisans struggle to expand the global market for their products, with total exports accounting for a mere 8% of the industry’s revenue. The primary overseas market for these products is the United States, which generated about $10 million of revenue in 2013.

How can companies prepare for disruptions? What are the best ways to analyze risks and increase an organization's overall resilience? “We start by thinking about what can go wrong,” says Yossi Sheffi. In an August 2015 webinar, Sheffi, director of the MIT Center for Transportation and Logistics and a renowned expert on supply chains, risk management, and resilience, shared insights and examples from his latest research. His new book, The Power of Resilience: How the Best Companies Manage the Unexpected, is out this month from MIT Press.

By Yossi Sheffi

By James B. Rice, Jr.

Market and industry dynamics are constantly changing. The emergence of omni-channel retailing, wide fluctuations in energy prices that require supply chain designs to be revisited, and the impact of mega-size container ships on global operations are just a few examples of these changes.

"Arcturus" sustains 60mph using the same energy as a hairdryer. Photo: Chris Penticoff.

Contact:
Sarah J. Smith, Communications Specialist
MIT Center for Transportation & Logistics
sajsmith@mit.edu /  +1.617.253.4592

By Alexis H. Bateman

The U.S. House of Representatives recently passed legislation that would remove state-level authority to require companies to show when a food product contains genetically-modified organisms, or GMOs.

Officially called the Safe and Accurate Food Labeling Act, the bill is the result of a growing push by consumers for more information about the contents of the products they buy. Some companies have objected to the potential new requirements, arguing that it is not possible to capture the complexity and volatility of their supply chains on labels.

By Dr. Yossi Sheffi, LinkedIn Influencer

A shortage of truck drivers has bedeviled the logistics industry for so long, that it’s difficult to imagine a time when filling driver vacancies was not a problem. What is also difficult to fathom is why simply paying these workers more is not a solution.

The lessons learned at this stage can help to avoid missteps before the network has to handle higher product volumes.

Read the article.

The Internet of Things, a network of physical objects that are embedded with electronics, software, sensors and connectivity that enable objects to “talk” to each other, is also closer than most people think, said Joseph Coughlin, director of the AgeLab at the Massachusetts Institute of Technology.

By Jarrod Goentzel and James B. Rice, Jr.

Many companies have become adept at using supply-chain management to increase their competitiveness, yet the function remains under-utilized in one vital area: working capital management.

As interest rates rise and markets become less tolerant of performers who are careless with working capital, companies may pay a high price for failing to make full use of the financial management capabilities in their supply chains

It was once thought so called "combinatorial bidding" - in which carriers bid on combinations of lanes as packages to drive network efficiencies and thus presumably lower rates - would dominate truckload freight sourcing.

It all looks good on paper, says MIT's Dr. Chris Caplice, and he ought to know - he wrote his PhD dissertation on the concept. But when the rubber hits the road - literally in this case - the theory is just not practical to implement, Caplice now says, even though some shippers still try to use the tactic.

By Jarrod Goentzel and Ian Heigh

As the deadly Ebola outbreak threatened West Africa, a team of medical, humanitarian and logistics experts teamed up to respond to the deadly virus. The lessons learned by the team could provide a logistics blueprint for handling future crises.

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By Dr. Yossi Sheffi, LinkedIn Influencer

No one knows for sure how Greece’s financial crisis will impact the global economy over the long-haul. However, what companies can expect is instability in some form or other, such as volatile prices and fluctuating currency values within the Eurozone and beyond.