RECENT DISASTERS
rural areas, so the most heavily populated and industrialized regions of Japan were almost completely undamaged. Even so, cascading effects were felt throughout the ntire nation, and indeed, around the world.
The Silver Lining
in Japan’s Great
Whether based in China, Singapore, or the
United States, and whether they know it
or not, large numbers of manufacturing plants throughout the world rely
heavily on one or more Japanese
suppliers at some point in their
supply chain.
Earthquake Disaster
By SHINJI HOSOTSUBO & NATHAN LEE RHODEN
The earthquake, tsunami, and ongoing radiation threat of “3/11” have delivered a telling triple blow to the people of Japan. With more
than 15,000 confirmed dead and
nearly 9,000 still missing, the loss of
life, the physical destruction, and the
human suffering caused by the events
of March 11, 2011, have taken their toll
on both the psyche and the economy.
Nature has once again revealed its power
in a humbling way. The scale and utter
thoroughness of the devastation must be
seen to be fully appreciated. Photographs
and video simply cannot do justice to the
vast destruction that stretches as far as the
eye can see. Estimates of the overall cost
already exceed $300 billion, easily making
it the most expensive natural disaster on
record. Yet, the Japanese people have
proven themselves highly resilient in the
past, and hardship is once again fueling new determination. The conspicuous
supply chain disruptions have sparked a
“business continuity renaissance” within
the Japanese manufacturing community.
Despite the severity of the “Higashi
Nihon Daishinsai” (literally: Eastern
Japan Great Earthquake Disaster), in
truth it was only a wake-up call. Direct
damage from both the earthquake and
tsunami were largely limited to relatively
This disaster was a vivid
demonstration of how easily
disruptions at even relatively
small, seemingly insignificant sup-
pliers can shut down major factories on the
other side of the planet.
Understanding The
Japanese Supply Chain
While Toyota,
Honda, Sony, Canon,
Over several decades, Japanese car
companies have established themselves in
the world market by continuously providing high quality automobiles at the most
reasonable prices possible. Various
economic factors, tariffs, and local
content laws have led to increasing
globalization (or “localization”), and
the top companies now have assembly plants on all five continents. Much
of their success can be attributed to
their intense application of quality improvement methods (
statistical process control) and stringent
cost reduction methods (just in time), but
it should be noted that truly meaningful
application of these methods has required
years of extremely strenuous effort from
their entire supply chain, even down to the
very smallest supplier’s sub-supplier.
Given the fact that a typical Japanese
automobile contains tens of thousands
of different parts, the assembly plants
are being supplied by literally thousands
of suppliers. Yet, only a relatively small
number of those suppliers are direct “
first-tier” suppliers. Those first-tier suppliers
