Subscribe to our free, weekly email newsletter!


Too much slack in supply chain means softer Japanese recovery

By Patrick Burnson, Executive Editor
April 07, 2011

Analysts for IDC Manufacturing Insights and IDC Retail Insights, report that Japanese manufacturers face severe disruptions across several value chains in the coming months.

According to IDC group vice president, Bob Parker, Toyota is losing $80 million per day largely due to several strategic suppliers being located in the Northeast.

“Even if plants were not damaged, power has been unreliable,” he said in a recent blog post. “General Motors, who also relies on suppliers in northern Japan for global production, has cut overtime at its Korea plants in anticipation of parts shortages and expects the impact to reach other parts of the world.  GM reported that the complete picture wouldn’t be known for several weeks.”

In the high-tech sector, Parker sees a similar crisis playing out, with a crunch put on semiconductor supply—particularly flash memory.

“The effects are already being felt in an industry that, prior to the earthquake, was already utilizing high levels of capacity,” he said. “Apple has announced that lead times for the new iPad 2 have already been extended to seven weeks, largely due to a lack of memory components.  Having a source of reliable energy is critical to getting this industry back to running normally and there is little optimism that the nuclear issues will resolve either favorably or quickly.”

Parker noted that base materials and consumer goods were also taking a hit – due in part to failures in supply chain technology.

Simon Ellis, who currently leads the supply chain strategies practice area at IDC Manufacturing Insights, concurred:

“There has been a trend up to now, to invest in systems that would assure redundancy,” he said in an interview. “But that puts too much slack in the supply chain. Now companies have to plan for the future without getting too focused on an overwhelming rapid response to disaster.”

Ellis said that companies should not retreat from a “just-in-time” model, as inventories will become too spare.

“Preparing for normal events and mitigating risk can be done sensibly and in a cost-effective manner. We advise companies to have contingencies in place for bad weather…not 100-year storms.”

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

UPS Access Point locations serve as a replacement delivery address when consumers are not at home to receive a package or when consumers want a delivery to go somewhere other than their residence.

Non asset-based third-party logistics services provider Roadrunner Transportation Systems Inc. (RRTS) said this week it has acquired El Paso, Texas-based Stagecoach Cartage and Distribution for $35 million along with an earn-out at $5 million.

The three California port directors who faced the wrath of shippers at the annual meeting of the Agriculture Transportation Coalition (AgTC) in San Francisco late last June, surprised many with their candor and heartfelt mea culpas.

Matson, Inc., a leading U.S. carrier in the Pacific, is moving quickly to fund improvements in its new Alaska operations following its May 29 acquisition of Horizon Lines' Alaska services.

Josh Green, CEO of Panjiva, an online search engine with detailed information on global suppliers and manufacturers, said despite the recent trends coming out of China, it is important to remember is that on a big picture level, its impact on the global economy is big and growing.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA