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The situation in Japan highlights the dangers of globally integrated supply chains. The devastating effects of the natural disaster have created product shortages for critical component parts. Disruptions to the power supply and damage to the transportation infrastructure are contributing to production challenges even for Japanese firms that were not directly damaged by the earthquake or tsunami. Uncertainty about the ability of Japanese firms to continue production is forcing firms to analyze how they need to configure their supply chains to reduce dependency on one region of the world. Firms around the world have slowed production and are searching for alternative suppliers to avoid running out of critical components. Japan is a crucial source for silicon wafers and chemicals used in making circuit boards and telephone handsets. The aftermath of the nation’s disaster has highlighted key weaknesses in the supply chains of businesses, particularly in the electronics and automotive industries. General Motors plans to suspend production at a plant in Louisiana due to a component part shortage and Honda and Volvo are developing contingency plans to locate alternative suppliers.

QUESTIONS FOR DISCUSSION:

  1. Discuss the concerns that creating a web of production facilities spread across the global creates.
  2. What are the advantages and disadvantages of developing supply chains based on a limited number of suppliers?
  3. Evaluate the tradeoffs of using just-in-time delivery systems.
  4. One of the consultants cited in the article stated that good companies look at a supply chain “as a movie, rather than as a photo.” Explain what it means for a firm to view its supply chain as a movie.

SOURCE: Hookway, J., & Poon, A. (2011, March 18). Disaster in Japan: Crisis tests supply chain’s weak links. Wall Street Journal, p. A8. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703818204576206170102048018.html)

Related video clip: Japan Disaster Raises Supply Concern. (Retrievable online at: http://online.wsj.com/video/news-hub-japan-disaster-raises-supply-concerns/550C5202-830E-46A0-B92B-7387E5F3C2A6.html?

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