Less can be more: How to make operations more flexible and robust with fewer resources

We review empirical evidence from practice and general theoretical conditions, under which simple rules of thumb can help to make operations flexible and robust. An operation is flexible when it responds adaptively to adverse events such as natural disasters; an operation is robust when it is less affected by adverse events in the first place. We illustrate the relationship between flexibility and robustness in the context of supply chain risk. In addition to increasing flexibility and robustness, simple rules simultaneously reduce the need for resources such as time, money, information, and computation. We illustrate the simple-rules approach with an easy-to-use graphical aid for diagnosing and managing supply chain risk. More generally, we recommend a four-step process for determining the amount of resources that decision makers should invest in so as to increase flexibility and robustness.