If a business is a living thing, its supply chain is the heart-it delivers value and makes it possible for all the integrated parts of the business to thrive. It's also a major expense, and as such it's tempting to look for efficiencies in it. Just-in-time manufacturing, for example, became vogue because it reduced the need for costly inventory. But when your business relies on thin inventory it greatly increases the likelihood that it will suffer the impact of a supply chain disruption, and adds to the costs of it. "It's not uncommon for businesses to look only at the costs associated with their supply chain, without balancing reliability or recovery needs," says Patrick Daley, Chief Underwriting Officer, Zurich Global Corporate in North America. "We have found that actions taken to drive short-term costs out of the supply chain and improve operational efficiencies can sometimes drive greater risk into the company, increase overall costs and damage shareholder value."
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