Supply Chain Dominoes Print E-mail
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Written by Peter Bigelow   
Monday, 09 May 2011 16:19

The disaster in Japan reminds us how easily it is to take supply for granted.

Once again we are reminded of how small a world it really is. The reminder, unfortunately, came courtesy of a disaster, or to be more accurate, a series of disasters – unthinkable events that have a way of impacting life in ways you never considered.

Landing in Shanghai for a series of meetings and to attend the CPCA Show, I learned that Japan had sustained a sizable earthquake. The initial news did not really faze me: Japan has a long history of earthquakes and is known for being one of the best – if not the best – prepared countries for such “acts of God.” Even the size (Richter scale of 9.0) struck me more as an interesting datum point. Later, as I reached my hotel, the news had become grimmer. The aftershocks were so severe, most would be considered major quakes. Also, a tsunami warning had been issued. Yes, Japan was having a bad day, and while being in China put me a lot closer to the unfolding horror than if I were in the US, I still viewed this as a “foreign” affair.

By morning, events had taken a marked turn for the worse. The tsunami warning had been well-founded, wreaking havoc on the northeastern Japan coast. In the coastal areas were several nuclear power generation facilities. One, the Fukushima-Daiichi facility, was having problems – as it turned out, real problems. Having lived near Three Mile Island when that facility became “the” news in 1979, I at first figured that compared to the rest of Japan’s current problems, this would be just a minor issue. It was only after one of the buildings blew up that I started thinking differently.

You had to feel for the people who were living in this terrible environment devastated by the double whammy of earthquake and tsunami. They suffered more than most of us could ever imagine. While watching the news accounts, my next thoughts were about the probability that three such devastating events could occur virtually simultaneously within one country. Two of the events were truly acts of God, while the third was a well-engineered, manmade facility that, despite the best planning, had fallen victim to events few could reasonably have planned for. Yes, the Japanese were having major problems. Yes, I felt for their situation. And yes, I was glad that I was far enough away that I was safe, and in a week or so would be again home, half way around the world.

Except, it really is a small, small world.

Conversations in China quickly shifted to the inevitable supply chain disruptions, to “where,” “what” (commodities) and “how long” (disruptions would last). Just six days after the initial earthquake, reports began streaming in from, of all places, the US that Toyota and Honda would curtail production in some plants due to component supply problems. The parts in question all came from Japan.

Within a day, customers began asking whether the events unfolding in Japan might impact delivery or materials used in product we fabricate. Of most interest was not the expressed concerns over the impact a natural disaster might have, but instead who was making the most noise.

For years, larger OEMs have diligently worked to reduce their supply base and wring out every extra piece of inventory possible. Whether to meet Lean initiatives, or to tout “world class” supply-chain management, the big boys have streamlined and consolidated. Many suppliers warned such a strategy could leave the OEMs vulnerable. Go Lean, but don’t discount the need for reliable local suppliers, and don’t spread the supply chain so far that a minor disruption could cascade into a severely disruptive break. Still, bigger likes leaner, and global logistics is viewed as being too mature, too robust to permit a supply chain breakdown. But the unthinkable has a way of not just happening, but happening again and again.

I recall just a decade ago when another series of “unthinkable” events gave us a similar jolt. Immediately after Sept. 11, 2001, with the World Trade Center relegated to history, the Pentagon charred and America stunned, the US government introduced to our vocabulary the phrase “sterilize the skies.” For almost an entire week, not one commercial or private passenger or freight aircraft was allowed to fly over the continental US. From Piper Cubs to traffic helicopters to the largest jumbo jets, commercial aviation was grounded. Not only were weary travelers stranded, but UPS, FedEx and others were prevented from moving freight, in particular, to the US from Asia. Many companies reviewed their supply chain plans in light of the unthinkable terrorist attack and the resulting safety precautions taken. I know of more than a few  companies that added domestic suppliers and beefed up inventory levels of critical components to help buffer against the unthinkable.

Here we are again. The unthinkable happened in a different place, in a different way and yet has had the same net impact on global supply chain management; it has disrupted many, a lot! If I were a just-in-time supply-chain guru, I would look long and hard at local suppliers of critical components. If I were a globally focused design engineer, I would make sure not to design in a component made in only one place. And as a solid, albeit smaller player in the global supply chain, I intend to remind my customers that as small as the world may seem, unthinkable stuff can – and does – happen.

Common sense planning for the unthinkable and a prudent dose of precaution when consolidating the supply base may be the best way to make a supply chain a little more robust for when the next unthinkable happens.

Peter Bigelow is president and CEO of IMI (; This e-mail address is being protected from spambots. You need JavaScript enabled to view it . His column appears monthly.

Last Updated on Monday, 09 May 2011 17:50


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