It’s been almost a month since the Japanese island of Kyushu earthquakes and record-breaking number of aftershocks. The high-speed train recently resumed its regular schedule, and although there are still considerable humanitarian and housing issues, industry is moving to quickly resume production and meet global demands. The long-term impact of these disruptions has yet to be measured due to ongoing repairs and questions around supply after May, however, there are important reminders from the disaster for the global electronics supply chain.
Toyota announced that it has resumed all of its automotive assembly production, according to the Nikkei Asian Review. However, the issue of parts supply lingers and may affect production over the next quarter, depending on sourcing capabilities of Toyota’s subcontractors. Similarly, Honda has announced that it will move in phases toward full resumption of production. Unlike Toyota, Honda has stated that there was severe damage to some buildings and equipment, requiring repairs that will stall full resumption until mid-August, particularly for the Honda motorcycle plant.
One critical reminder during disruptions and disasters today is that news is nearly instantaneous. Widespread access to information is not only a truism; it is a core component of risk mitigation strategies. Market opportunities are not gauged in core capabilities and strengths alone, the level to which a company is agile and is directly related to the speed and accessibility of information dissemination. It is information that allows for strategic actions to ensure continuity and delimit disruptions to business operations. Agility is typically considered from a reactionary perspective, one of an agility to dodge or work around sudden events that could have negative impacts. What would it take to instead engage proactive risk mitigation?
Visibility and agility are the antidotes to disruptions and to negative operations and process flow events. How is this Holy Grail acquired? Simply put, structured, b2b data sharing. The recent disaster in Japan underscores some of the capabilities and shortcomings in visibility and agility that affect sourcing along the global electronics supply chain for sourcing. While news of the seismic events and photo images of the aftermath were readily available, visibility into the dominos along the supply chain network of subcontractors, parts and materials suppliers, and even the major OEMs continue to be lacking. The dearth of solid information, hence visibility, into just which subcontractors, equipment, facilities and so forth that were impacted adds significant uncertainty to both immediate and longer-term procurement. If we do not know which Tier 2 or 3 suppliers are unable to deliver, we do not know what parts will experience shortages and whether there are alternatives in the global marketplace.
There are many solutions to this roadblock to information that clouds our visibility into supply chain operations and procurement (O&P) options. Among the solutions that improve visibility and agility to support proactive risk mitigation strategies include, but are not limited to, the following:
- Include online electronic marketplaces as sourcing options: Among options for regular sourcing as well as alternate sourcing are the greatly expanded online marketplaces, particularly those that are part of the authorized/franchised, hence fully warrantied and full provenance parts, such as Verical. These marketplaces offer tremendous agility for routine sourcing as well as during shortage events due to their on-hand stock, extended aisle product mix and cross-referenced parts.
- Dual/multiple supplier strategies that are enacted and cemented as part of normal business operations: Ensure deep supply chain partnerships that are fully audited and integrated as part of regular business operations, likely favoring one for efficiency purposes, but holding other(s) suppliers/distributors as regular partners. Have alternate partners active, integrated, and current with business O&P to improve agility should a supplier be affected by disruption/disaster events. Including long-standing leaders from the independent distribution channel, such as Smith & Associates, is one solution example for adopting multi-partner sourcing options
- Supply chain mapping and visualization: Gaining in awareness and popularity are supply chain mapping and visualization tools. Whether as a SaaS tool or company, supply chain mapping gives companies real visibility into their entire network and, importantly, into the labyrinth of subcontractors linked at outer network tiers. Resilinc is one example of extensive mapping capabilities. The more granular the data shared about events at all supply chain nodes, the greater the opportunity to be proactive versus reactive in the face of business continuity events.
To be sure, there are many supply chain risk mitigation strategies available; the goal however, should be focused on improved visibility to ensure agility and proactive plan engagement. Success in today’s hotly competitive global market is measured in milliseconds of data transmission, not just in fiscal balance sheets. Supply disruption is not unique to the situation in Japan, nor to the effected automotive electronics and CMOS sectors. This serves as a reminder to ensure risk mitigation strategies are proactive and that your business is ahead of the global information wave.