"Are there major factors hindering this happening?" YES! Wall Street's and CFO/CEO greed; all in the name of "increasing shareholder value" ... little wonder that the capitalist business model has become so discredited. This is not capitalism but a cynical distortion for vested self interests. It is time for companies to start running their buisinesses properly with the business driving the balance sheet not the other way around. Time too for greed and poor management to become as socially unacceptable as racism and drunk driving.
I just read in a recent report that more than 60% of the wafer foundry business is concentrated in Earth-quake prone areas - Japan and Taiwan. That is a RED ALERT for the electronics industru worldwide as the foundries are the backbone of Electronics manufacturing. USA and Europe have a very nominal share of the current Wafer fabs. These nations have to take this fact seriously and put in capital investments now to correct this huge imbalance in the supply chain. Foundries like TSMC and UMC must make effort to distribute their fabs outside the seismic zone to avoid repetition of what has happened in Japan.
I think TaimoorZ's point holds one of the gretest lessons of this tragedy for the supply chain. Too much depends on Japan, that is why the loss is so great, just as so much is depending on China now.
the supply chain really needs to spread out, the prevent a such an occurence as this from happening again.
Are there major factors hindering this from happening?
@multiple sourcing idea. This is a good idea for contingency planning, but likely adds cost in terms of another entity to manage and a new problem in part equivalency.
From this article, the main problem is power generation. Maybe suppliers should be required to have generators.
@Tirlapur: That's exactly what I had thought while reading through the disruptions in electronic supply chain caused by the quake. Japan may be the leader in electronic component manufacturing, but it's not the sole production center. Countries like China and Hong Kong have similar facilities for production. I think OEMs will have to rethink their strategy and instead of trusting one outsourcing partner, they may consider having multiple partners to minimize the risk.
The disasters of such a magnitude, as what has happened in Japan, come once in a lifetime and generally may not be repetitive. Next time a totally unseen-before disaster may strike a totally unexpected region of the world. All businesses are run with some kind of a risk with some reasonable backup measures. But when unprecedented events occur the businesses all around are going to be thrown out of gear. The amount of overhead all the backup systems required to cover such disasters will be enormous and a normal business cannot afford it. It is like when we walk out of the house everyday for work, the possibility of metting accident on the road is enormous but we take that risk and move on. We only take adequate precautions but cannot afford to take into account all the possibilities .
So we have to stop getting unduely paranoid about the failure of some of the businesses becaue of the unprecedented event that happened in Japan. Some of lessons would be however worth taking into consideration while planning in the future - be it a supply chain strategy, distributed manufacturing or outsourcing.
But when something goes wrong, the effects are potentially catastrophic, made worse by the fact no one really has any contingency planning any more.
I do wonder about that. So many businesses seem to operate on the premise that they will be operating in the best of all possible worlds in which nothing can go wrong. Then when something goes wrong, as is almost inevitable, they have no idea what to do. Had they planned for it, they would have had to deal with a minor glitch, but as so many do not they are stymied. Then everything has to grind to a halt as they search for a solution. Business managers would do well to memorize Murphy's law, not in a fatalistic way, but to bear in mind what to plan for.
"made worse by the fact no one really has any contingency planning any more."
Malcolm,
Why can't companies rely on mutliple outsourcing partners rather than single. This will diversify the supply-chain base and will help the company to cope up catastrophe.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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