201305.pdf 43279KB May 08 2013 11:07:04 PM

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Special SectionDid lessons from the2011 tsunamis andfloods really sink in?By Tam HarbertYou know the saying: “Those whofail to learn from history aredoomed to repeat it.” The naturaldisasters that buffeted the supplychain in 2011 are now history,albeit recent history. In March ofthat year, a massive earthquake, subsequent tsunami,and consequent nuclear disaster in northernJapan severely disrupted both the electronics andautomotive supply chains. Then, in the fall, monsoonsled to severe flooding in Thailand, swampinghundreds of factories—including several thatmade critical hard-disk-drive components.The big question two years later: Has the industrylearned its lessons? Would similar disasterstoday have such dramatic impacts? The year 2012was mild, with a lower than usual number of dramaticweather events (with the notable exceptionof Superstorm Sandy in the United States), so it’seasy to become complacent. But that’s dangerous,if studies of climate change that claim increasingnumbers and magnitude of violent weather eventsare accurate.The truth is, only time will tell whether thesupply chain is any better prepared today than in2011. Some analysts say the events got industry’sattention enough to initiate some changes. But atleast one analyst thinks the electronics industry isdoomed to repeat history.After 2011, several of Technology Forecasters’clients—especially midsize OEMs and lower-tiercontract manufacturers—“came to us and said,“We’ve had disaster preparedness on our to-do listfor years; now we need to put it into place,” saysPamela Gordon, president of the consultancy.Bob Ferrari, managing director of FerrariConsulting and Research Group and founder andexecutive editor of the blog Supply Chain Matters,also thinks the supply chain has learned from the2011 disasters. “It was like our 9/11,” Ferrari says.“Although supply-chain organizations used to talkabout the implications of a major supply-chaindisruption, we had never really seen one until2011.”Consequently, companies are making somechanges, according to Gordon and Ferrari. Specifically,at least some companies are doing thefollowing:Looking beyond Tier 1 suppliers. TheJapanese tsunami, in particular, exposed realvulnerabilities in the lower tiers of the supplychain. OEMs initially were reassured when theylearned that their first-tier suppliers weren’t badlyimpacted, only to suffer later when they realizedthe disaster had wiped out some “40% of thesilicon wafer supply,” says Ferrari. Today, companiesare looking deeper into their supply chainsto identify the components and materials that aresole-sourced or where the supply is concentratedin a certain geographic region (such as disk-drivemanufacturers in Thailand).Emerging regulations and political pressuresare already pushing companies to get “full materialdisclosures [FMDs]” from their suppliers, whichidentify the countries of origin of materials andcomponents, says Gordon. Now companies areS-8 Top 25 Global Distributors May 2013
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