Disaster recovery - dealing with the unknown.

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Each day since the disaster in Japan, I wake up to more bad news. It is heart wrenching to continually read and watch videos of this tragedy. One wonders how this society can take much more, but they are resilient.  Our Japanese employees are working every day. They set out each day to visit customers or the office and sometimes come back home due to train failure or power outages. They schedule calls that have to be cancelled due to poor phone service after another aftershock. It seems incomprehensible their determination and fortitude. They are really amazing.

Much has been written in the last few weeks about the impact on the global economy from this disaster. Clearly, it will be a very long time before we know the full impact but there are many realities that companies are dealing with today. “Japan accounts for 14 percent of the global production of computers, consumer electronics and communications gear last year, according to HIS iSuppli.” From an article titled Japanese electronics sector faces extended supply woes. The article also discusses countless factories that are not in production either due to the earthquake or following the tsunami.

Many of the companies I deal with are facing this exact problem. In fact, I will be meeting with a customer today who will delay an implementation project due to limited work in their office outside of Tokyo and a destroyed factory in Northern Japan. With tragedies like this and a long recovery ahead, how can these companies effectively plan for the future? The semiconductor industry has also been extremely hard hit by this disaster. “Japanese suppliers accounted for more than one fifth of global semiconductor production in 2010, when companies headquartered in Japan generated more than a fifth of all chip revenue, $63.3 billion, according to market research firm IHS iSuppli.” From an EETimes article titled ‘Japan quake: Tracking the status of fabs in wake of disaster.’ The article states Japan provides 60 percent of the world’s silicon used to make semiconductors.  So, we are really dealing with all levels of the supply chain in Japan disaster. This impacts electronics companies all around the world and of course the end consumer with possible product shortages or price increases.

My colleague, John Westerveld recently blogged on the topic “Coping with catastrophe. Can your supply chain recover?” In his eerily timed blogged (just two weeks before this disaster), he outlined a few things companies can do to prepare themselves for this type of catastrophe. The customers I am talking to this week who are most effectively dealing with this catastrophe have developed tools that allow them to respond to these types of unplanned events. They have many “what-if” scenarios they are running to determine how to deal with their issues to make the best business decisions.  It may not be perfect, but we all know dealing with supply chain is not perfection. So, as the weeks continue it will become clear the impact of this disaster on the economy, the human tragedy, and companies’ ability to deal with the unknown. 

How is your company dealing with this tragedy? Did you have a catastrophe plan?

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