Page 11: of Maritime Reporter Magazine (April 2011)

A cursory glance at the economic sta- tistics of Japan reveals some incredible numbers in the world’s third largest econ- omy: Gross domestic product in 2010 was $5.4 trillion; More than eight million cars are made in the country; Imports were $636.8 billion last year, exports $765.2 billion.

The supply chain servicing this kind of economy and its manufacturing and sourcing machine is one that stretches around the globe.

It is multi-layered, highly complex and colossal, so any disruption can quickly escalate into a serious problem.

What is happening in Japan after the earthquake, tsunami and radiation threat has gone way beyond a serious problem and deep into disaster terri- tory in supply chain terms. Of course, on a human scale it became a disaster soon after the walls began shaking on

March 11.

The unresolved nuclear threat forced

Toyota to suspend production at all 12 of its domestic assembly plants, a closure that (as of this posting on March 24, 2011) will cost the Japanese carmaker an estimated 140,000 vehicles. Honda also suspended production.

Nissan and Mitsubishi recently re- sumed production at some plants but are expected to suspend or stop the assembly lines as parts run out.

The main problem facing automakers is that the supply lines delivering crucial parts to their plants are being disrupted by power outages, staffing disruptions as people have trouble getting to work and the closure of suppliers.

Electronics giant Sony said many of its plants have been hit by these problems, forcing it to consider suspending or halt- ing production at several key plants until the end of the month. Canon suspended all domestic manufacturing and Konica said power cuts were affecting its facto- ries in Tokyo.

It is a story being repeated at the tens of thousands of factories across the coun- try and is also being felt around the world. Although Japanese companies have outsourced a huge portion of busi- ness to China, auto and electronics man- ufacturers across Asia and in the US and

Europe still source components from

Japan.

Supply chain managers have been kept on their toes in the last 10 years with sev- eral wars and natural disasters disrupting global sourcing, but the Japan crisis will give all the Plan B’s their greatest test yet.

Posted by

Greg Knowler — Hong Kong

April 2011 www.marinelink.com 11

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Logistics managers will need some fancy footwork to solve the massive supply problems affecting Japan manufacturers