Which strategies should be pursued to manage supply risks? Answers can be found when analyzing the Tōhoku earthquake.
- An obvious strategy is the use of multiple suppliers. But what happens, if all of them are located in Japan? It can be learnt that redundant suppliers should be geographically distributed.
- But if really no supplier is available any more? Companies must always be prepared to search for new suppliers. They must know alternatives and be able to rapidly link them to the supply chain.
- Production halts, if an important part is missing. However, in some cases production can go on and the missing part can be added afterwards. Products must be designed for this strategy.
- Companies must be able to slow down production to a certain level in order to avoid running out of stock. This strategy can be used to bridge the gap until components are available again.
- After the earthquake, some companies rushed to announce that they don’t have critical 1st-tier suppliers from Japan. But are they safe, if they don’t know their 2nd-tier suppliers? Visibility is a key!
eral Motors Co. on Thursday became the first U.S. auto maker to close a factory because of the crisis in Japan.