The fragility of supply chains has been evident as companies have faced a series of shocks in recent years. Many companies have taken actions to improve their resilience, including building inventory buffers, dual-sourcing, and re-shoring. Even so, fewer than a third of leaders surveyed in 2023 said their companies were fully prepared for a disruption; a quarter admitted to being underprepared. One practical approach to building resilience is to design an early-warning system. Companies can start by creating an integrated and centralized data storage system with both quantitative and qualitative data. Then, they can use AI to identify anomalies in the data that serve as alarms. Lastly, companies will need to rewrite risk-management playbooks to make clear how to identify where the alarm is coming from, what is to be done, by whom, and in what order.

Not many executives need to be told that supply chains are fragile. For those who could use reminding, when the Suez Canal was unsettled last year, the number of ships passing through dropped by two-thirds. The ripple effects, such as higher prices and shortages for products ranging from toys to aircraft, were felt all over the globe.