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

Special Sectionseeing how useful these disclosures can be in a disaster.With FMDs, OEMs immediately know whether a givenarea is a key source of certain parts or materials, and canbuild alternative sources into their disaster planning, sheexplains.Improving communications plans. The 2011 eventsexposed shortcomings in communication; it was morecomplex and took much longer than companies anticipated,says Gordon. Companies realized they neededbetter plans for how to communicate (if lines were downor power was out) and with whom they should be communicating,says Ferrari. It was the start of a new awareness“that social media can be a good alternative in communicatingduring a crisis,” he notes. Since 2011, more companieshave started to monitor media such as Facebook andTwitter to get alerts when disasters happen, to get the wordout to employees or suppliers in harm’s way, and to receiveinformation from the affected area when other means ofcommunication are unavailable.Indeed, Ferrari monitors social media carefully himself.In late March, for example, he saw a surge of reports onTwitter that a major 6.1-magnitude earthquake had occurredin central Taiwan. “Knowing that this area is theepicenter for high tech and consumer electronics supplychains, we immediately re-tweeted this news with hopesthat our readers would be on alert to both the event andThe elecTronics supplychain lives in a DanGerousneiGhborhooDAsia comprises some of the riskiest areas in terms of thelikelihood of natural disasters and the economic damagethey can inflict, according to a recent report by Maplecroft,which analyzes risk of all kinds. The company compilesan index based on a country’s economic exposure to therisk of natural disasters. Among the highest ranked (of 197countries) are Japan (No. 2), China (No. 3), the Philippines(No. 4), Taiwan (No. 6), and Indonesia (No. 8), according toHelen Hodge, head of maps and indices at Maplecroft.That means these countries have the most globallysignificant economic assets exposed to major naturalhazards, particularly earthquakes and floods. “With the increasingglobal economic importance of these nations andtheir interconnectivity to global markets, a major event inone these financial centers increases the risk of economiccontagion,” says Hodge.the potential for disruption,” he says. Among the companiesin the area are TSMC (the world’s largest semiconductormanufacturer), United Microelectronics, Innolux,and AU Optronics. Although two TSMC facilities werereportedly evacuated, it turned out that there was minimaldamage. But it was a reminder of how vulnerable Taiwanesefacilities are. “They are all in that earthquake zone,” hesays. “We dodged a bullet.” (See sidebar on Asian highriskareas.)Padding inventory, at least in critical areas. Havingbeen caught short in 2011, purchasers are more likely to beable to convince a CFO that they need to put aside safetystock or line up alternative suppliers, says Ferrari.Monitoring unstructured information. Someforward-thinking companies are using data mining andanalysis on e-mail communications and other types ofunstructured data, which can serve as a “kind of earlywarningsystem of supply-chain risk,” says Ferrari. Suchtools can help zero in on important information duringa crisis, to monitor the situation in real time, and also topiece together data that may give a more complete andaccurate assessment of the situation than can any one supplier.After all, “the natural human tendency is to hedge.Nobody’s going tell their major customers, ‘we really tooka hit here and it may be a month before we get out of this,’”says Ferrari. “You’re not going to get that right away.”Malcolm Penn, founder and CEO of Future Horizons,is less optimistic. He maintains that most companieshave done nothing to become better prepared for naturaldisasters, despite all the damage inflicted by the calamitiesof 2011. “There was a lot of scurrying around, but I don’tthink anybody has changed structurally the way they dothings,” he says.Although OEMs say they are looking beyond their Tier1 suppliers and improving communications systems, Pennis skeptical. Have they really investigated how they wouldcope if a TSMC facility were destroyed in a Taiwaneseearthquake, for example? “I can’t think of a single customerthat would go to TSMC and say, who are your wafersuppliers, and who are the suppliers of your wafer suppliers?Who supplies the slurry to grind the wafers down?”he says.Even if they asked, he adds, “TSMC wouldn’t tellthem.”•Tam Harbert is a freelance journalist and EBN contributor.S-10 Top 25 Global Distributors May 2013