Strategic planning under uncertainty: Long-term muddling-through

This is an excerpt of the original article. It was written for the July-August 2021 edition of Supply Chain Management Review. The full article is available to current subscribers.

July-August 2021

We all know the old saying: “When the going gets tough, the tough get going.” It has been repeated so often it’s cliché. I’d like to suggest a variation: “When the going gets tough, leadership matters.” To say that supply chains have had a tough time of it would be an understatement. Despite the positive vaccine news here in the United States, global supply chains are not out of the woods yet.

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In my Insights column, “Decision-making under uncertainty,” I discussed planning under uncertainty and risk.* A payoff matrix supports rationale decision-making (DM) for both. It fully delineates the implications of what might happen should each of the possible courses of action be taken when a future outcome occurs.

Once developed, it is used differently for DM under risk vis-a-vis uncertainty. The former assumes one can reasonably estimate the probabilities of random futures occurring (by using historical data). On the other hand, DM under uncertainty recognizes that the chances of futures occurring are realistically inestimable. By and large, the relevant body of knowledge deals with rationale DM under risk.

Scenario planning

In 2004, I managed the launch of MIT’s Supply Chain 2020 (SC2020) Project. My last column, “SC2020 Project Update: Uncertainties,” provided an update on major uncertainties identified during its second phase.** During the third phase, scenario planning-based approaches were developed by the team for strategically planning for long-term futures that might occur.

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