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Volume 27, Issue 4

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Lessons Learned from the Japan Earthquake

Written by  PATRICK BRENNAN Monday, 11 July 2011 18:49

On March 11, a magnitude 9.0 earthquake rocked the main island of Honshu Japan. The earthquake, tsunami and its aftermath caused devastating human, social and economic damage. People around the world were stunned by video of exploding nuclear power plant buildings, demolished cities and personal accounts of the tragedy.The earthquake also heavily disrupted global manufacturing supply chains. My discussions with electronics and aerospace companies since March as well as public sources have exposed commonalities in manufacturer experiences and revealed important lessons for reducing losses during future supply chain disruptions.Manufacturers Deployed Global Teams to Limit Potentially Massive LossesAll the electronics and aerospace manufacturers interviewed had a significant supply chain presence in Japan so it was immediately apparent that there was a high risk of widespread supplier parts outages. Their company executives met on March 11. Each company suffered little or no damage to their own facilities in Japan. Still, when supply chain staff reached out to suppliers in the earthquake region, the initial reports were grim. They informed their executives of the possible loss of many dozens to hundreds of critical parts from their suppliers. The resulting estimates of potential revenue lost were staggering.Executives immediately directed their staff to apply all available resources to assess and mitigate the damage, accepting that other priorities would suffer. In the end, cross-functional, global teams worked a month of very long, very intense days including weekends initially.The first challenge was to determine which suppliers had factories in the earthquake zone. Most manufacturers had not mapped that information before the earthquake and obtaining the information took weeks.“The shortages of components from our tier one suppliers were bad news as each component is generally used in multiple products. Still, the real nail biter was the possibility that a raw material deep in the supply chain could be