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Lessons Learned in the Wake of Japan Disasters

As supply chain disruptions come in all sizes and formats—from natural disasters to economic downturns to financial crises—global businesses must prepare for their ramifications prior to its impact. As a result, business continuity planning (BCP) is one of the core topics which executives must continue to strategize on, in addition to their focus on customers’ needs; globalization; speed- to market; product lifecycle; and global warming.

One area of how such disruptions to the supply chain continue to affect businesses long after their initial act is in examining Japan’s natural disasters. In 2011, Japan was hit with the most powerful earthquake it had faced in more than a century. The resulting tsunami, power failures, nuclear disaster and destruction brought to light how critical business and supply continuity strategies are to this country and subsequently, the entire global business community.

And while a number of companies with Japanese suppliers were impacted by those incidents and decided that it would be best to avoid Japanese components and materials, businesses must first identify companies’ actual circumstances based on six aspects—not just as a result of those disasters but which they must initiate to increase supply chain continuity worldwide. Those six aspects are suppliers; alternatives; make-or-buy; logistics; inventory; and resilience.

In its new report “A Japanese Study of Strategic Supply Continuity Planning,” CAPS Research highlights elements of each aspect, shedding light on what strategies are most prevalent, which have gained traction since the 2011 disaster and which are being considered for the future. Additionally, it outlines key questions firms must address before faced with an unprecedented supply chain crisis including:

  • In what areas should Japanese companies’ supply management functions invest their energy and resources?
  • How can the management team support the effort?
  • Do all employees “buy in” to their role in support system?
  • Is the crisis limited to Japan?
  • How does the crisis impact the company mission and vision?

 

While the disasters had evident effects on Japan’s supply chain—such as the interrupted import and export of goods and services creating backlogs of companies and affecting companies globally—they serve as important lessons learned in also initiating supply continuity planning (SCP), which must focus on a stable supply of materials and components in the supply in order to formulate solid suggestions for good practices.

For more details of the report, visit www.capsresearch.org.

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