The recent earthquakes in Japan coupled with a record of over 1,000 aftershocks remind us that Mother Nature is unpredictable and that disruptions to our lives and to our daily ebbs and flows can be altered in the blink of an eye. Thankfully, the 2016 disasters, while unfortunately taking a toll on human life and livelihood, were not as catastrophic as the 2011 earthquake that spurred the devastating tsunami and Fukushima meltdown. The record-breaking aftershocks, however, have scientists warning that there will be more seismic events to come and that the area is experiencing an increase in activity.
On the business side, the island of Kyushu, and particularly the Kumamoto prefecture, which was the epicenter of both quakes, plays an important role in the electronics industry, particularly for the automotive electronics and industrial-automotive sectors, in addition to Sony's major CMOS facility where image sensors are manufactured. Unfortunately, some of the many manufacturing facilities were affected and suffered damage to equipment and to the structures, including clean rooms. Additionally, we know from statements from Renesas that some of their facilities were affected but they are also contending with disruptions due to losses down into their subcontracting tiers, affecting material and subassembly sourcing.
Visibility into the layers of sourcing is a critical issue, yet one that is not as readily available as a strong risk mitigation plan would dictate. In today's rapid information world where sourcing knows few bounds, how do you ensure the rigor of your risk management/mitigation plan? How can you ensure your plan's ability to proactively or at least immediately engage in contingency processes in order to alleviate disruptions during unforeseen events, possibly happening on the other side of the globe? To learn what is happening at the leading edge of supply chain risk management, EBNOnline spoke with Bindiya Vakil, CEO of Resilinc, and Wayne Caccamo, Chief Marketing Officer of Resilinc.
When questioned about the most pressing risk mitigation issues facing the global supply chain, in the wake of the current situation in Japan, Vakil offered a few critical points for companies to bear in mind:
- Visibility into the deeper tiers of the supply chain through mapping clears the fog and enables companies to execute timely and proactive mitigation strategies;
- The mind-set that the supply chain is an enabler (cost center) needs to change. Supply chain resiliency should be thought of as an investment in growth, because agility and immediate action during disruption events can be opportunities to gain market share and improve positioning; and
- There are vastly different timelines when dealing with logistics impairment versus manufacturing recovery scenarios – as logistics disruptions can often be shorter term in nature. Fundamentally, losing a factory or damaging a line or equipment can disrupt supply chain for months on end, due to the serial nature of recovery activities. For example, recovery time is serially determined by lead-time to secure new tooling, time to qualify and supply samples for customer qualification, followed by full manufacturing lead-time and full logistics lead-time.
Resilient supply chain planning and strategies are derived from thorough and deep mapping of the various tiers and layers of suppliers, subcontractors and facilities on a global basis. In order to respond to a situation, it is imperative that you know there is a situation that has arisen. Resilinc's mapping capability combined with these alerts is particularly critical when a key subcontractor or sub-tier supplier, who may be a sole or limited-source partner, is affected.