UK: Warning that lean business models present huge national risk
Date: 6 Jan 2012
'Just-in-time' business models that lead companies to expect supplies to arrive just when needed, eliminating all reserves, have grown to the point where they represent a major national risk, according to a report by Chatham House.
According to the group, a major disaster or disruption to supply would plunge the country into chaos after only a single week as supplies of many essentials would disappear.
The widespread use of business models that rely on the reliable and timely import of goods or materials is a key feature of this, along with the nation's "complacent reliance" on the globalised economy.
Examples of disruptions that could create a national emergency include incidences such as the Iceland ash cloud, and the tsunami and nuclear crisis in Japan. Many companies found their product pipelines to be thrown into turmoil by the recent floods in Thailand.
The warning raises concerns for businesses worldwide that have standardised around what has become a consensus of lean production - particularly those whose products or services are vitally important to society.
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In a recent article, the BBC's economics editor Robert Peston highlighted the fact that in 2012 the chances are that the economy - punch drunk as it is from the various flavours of debt crisis it has been pummelled with over the course of the year - will be hit by the collapse of a major bank and / or government.
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