Japan One Year Later: What Did Supply Chain Practitioners Learn from the Tsunami?

Beached Vessel in Japan after TsunamiThe importance of managing risk through the supply chain has become painfully evident as a result of natural disasters which have occurred in recent months and years.

Not withstanding the obvious human cost and tragedy that ensued, catastrophes caused by the earthquake and tsunami in Japan, flooding in Thailand, factory explosions in Germany, and volcanic eruptions in Iceland have all impacted enterprises who source globally, and who have embraced Lean/JIT practices at least to some degree.

Writing for the Change in the Chain segment of EBN Online today, UPS’s Carla Huang presents some surprising findings regarding how high-tech companies have responded – or plan to respond to mitigate future disruptions to their supply chains, reviews some of the key lessons learned from the disasters that hit Japan a little over a year ago, and comes to some interesting conclusions:

During the spring of last year, the global business community was shocked and saddened to learn of the devastating earthquake and violent tsunami that struck the northeast coast of Japan, crippling the operations of local manufacturers and suppliers and causing significant supply chain disruptions on an international scale.

To measure the impact of the disasters on the high-tech supply chain, as well as how the events impacted future supply chain plans, UPS asked high-tech manufacturers based in the Asia-Pacific region about the supply chain aftershocks they experienced as part of its annual high-tech industry survey, called “Change in the (Supply) Chain,” fielded by IDC Manufacturing Insights. Targeting senior-level decision makers at high-tech companies, the survey explores top industry trends and challenges that are driving change in the high-tech supply chain.

Perhaps not surprisingly, risk management was a key topic emerging from the 2011 survey, which was fielded soon after the natural disasters. Risk management was identified as a “weak link” in the supply chain by 42 percent of companies surveyed, overshadowing other issues such as inventory management, which has long been a top concern within the high-tech industry. However, only 27 percent of survey respondents said they planned to improve their supply chain resilience through risk management.

If anything, the natural disasters in Japan speak to the importance of companies being prepared to handle unexpected supply chain disruptions. And yet, the Change in the Chain survey showed that, while most companies in the Asia-Pacific region have some form of risk management plan in place, the majority do not have the resources or readiness to react fully in times of significant disruption.

(Read more…)

Are companies simply managing limited resources as best they can? Or are they willfully ignoring threats to their supply chain in favor of pursuing short-term profit?

Your comments are welcome.


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