Consider the following scenario: In the 1990s, hard disk drive (HDD) makers were among the first industries to move production to lower-cost countries. Beginning in Singapore, these companies shifted manufacturing operations to China and Thailand, in search of ever-lower labor costs. Since then, Thailand has become the second-largest maker of hard drives and a major supplier of parts to the industry worldwide. With the catastrophic Thai floods in the fall of 2011, the industry faced shortages of over 30 million drives per quarter. Some executives at HDD companies were forced to explain a glaring oversight: Why had they had relied so heavily on a supplier in a country located in a high-flood risk area?

Also consider that: By the end of the 1990s, most supply chains had become lean by minimizing their inventories and reducing waste, and could schedule deliveries across the globe with incredible precision. Supply chain speed and flexibility were impressive. Products that should take months to procure and manufacture were promised within days of customer requests.

a. What supply chain management lessons can be learned from the experiences of HDD makers?

b. What are the risks of highly efficient and lean supply chains?

c. Could one catastrophic supply chain event wipe out years of profits or market share? Explain your answer.

d. In your opinion, when do cost savings outweigh the risks?