Supply chains worry business leaders now. A banner printing company owner frets about vinyl being delivered from China. A manufacturing executive isn’t sure when electronic components for his products will be delivered from Taiwan. A plastics extruder sees disruption of his raw materials from the Texas storms. And a home remodeling contractor warns clients of longer lead times for carpet, tile and plumbing fixtures.

The news shows pictures of ships at anchor outside ports in Los Angeles/Long Beach, Oakland and Savannah waiting for dock space to open up. Transportation rates have soared for all modes.

SAN PEDRO, CALIFORNIA - FEBRUARY 01: Container ships and tankers are anchored close to the ports of Los Angeles and Long Beach (Photo by Mario Tama/Getty Images) GETTY IMAGES

The Biden administration has not yet removed tariffs imposed by the Trump administration, though that’s likely. In short, global supply chains are chaotic.

Some current supply problems are temporary—but others will pop up in the future. The pandemic and its likely aftermath call for a re-thinking of supply chains. More emphasis on flexibility and less on cost reduction will be vital for company profits going forward. Placing less emphasis on costs may seem an unlikely way to raise profits, but if a $2,000 product cannot be shipped because a $10 component was delayed in transit, then profits suffer.

In competitive activities—such as business as well as sports—we often think of peak performance: How good is a player or a company when it’s at its best. But a more important question is how often performance is at peak capability? We’ve all seen a football kicker who previously scored a field goal from 50 yards out miss one from 40 yards. The golfer who shot par last week may be six over on the same course this week. And a company whose supply hums along perfectly for a year may suddenly not be able to fulfill this week’s commitments.

An old sailor once recommended the “three accidents” rule, which asks how many accidents must happen before you die. His goal was to have enough protection that three separate accidents would have to happen before he died. Using an afternoon sail on San Francisco Bay as an example, he said suppose a wire stay fails and your mast comes down. Nobody dies. Now imagine that the engine won’t start. Still nobody dies. Now imagine that these two accidents happen while the boat is crossing in front of a freighter. Yep, people would die. The old salt taught us to leave plenty of room between us and large ships but more broadly to imagine what could go wrong.

Three might not be the right number of accidents to worry about in every situation, so long as business leaders consider what problems could cause a company to lose money. Suppose those $10 electronic components are delayed six weeks. Is there a way to prevent that possibility from killing profits for the quarter? For any possible problem, key personnel should brainstorm solutions.

Inventory management can protect a company from supply chain failures. That could mean extra raw materials, work in progress or finished products. Of the raw materials, supply of some components may be very reliable. Commodities such as polyethylene or steel plate will be readily available, though sometimes at a high price. Usually, though, the cost of commodities is a low enough fraction of total manufacturing costs that a short period of high prices won’t sink a business’s finances.

At the other extreme, custom-made components are the most fragile part of a supply chain. Whether plastic, metal or wood, they are often made with custom tooling. Loss of the tooling in a fire or other way could delay production for months. Closure of the company making the component might also delay deliveries. Brainstorming this challenge might push the problem to engineering and design to see if a standard part could be used instead of the custom part. Standard parts are usually less expensive, but even if not their supply reliability could argue in their favor.

The supply chain vulnerability discussion can be broadened to include a company’s own production. Could a vital machine go down, or a couple of critical workers give each other a virus, or the entire plant flood?

Carrying high levels of inventory to limit supply chain problems flies in the face of decades of advice for businesses to keep inventory lean. That advice was developed when interest rates were high, so holding inventory was expensive. It still make sense for bananas and fashion items that may be out of style next month. For many products, however, obsolescence is slow. If theft is also a low risk, as it is for many industrial products, then inventory is pretty cheap. And its value is higher the more fragile the supply chain.

Using multiple vendors, across different regions, is another approach to consider. Concentrating orders among a small number of suppliers typically lowers cost, but minimizing cost is not as important as ensuring availability of supplies.

Another consideration should be proximity of the supplier. More things can go wrong with materials coming from across the ocean than from down the street. However, the location of the vendor may not be the crucial issue. The wholesaler down the street may be importing products from a factory across the ocean. Conversations with vendors should clarify all of the steps necessary for the vendor to deliver on time. Having the conversation adds emphasis that the topic as critical to earning repeat business.

Protecting a company from supply chain failures will be a frustrating exercise. There are seldom perfect, cheap solutions. Yet executives who want their company to remain in business in the years to come must think through their supply chain risk, develop continency plans and incorporate this thinking into their entire operations system.