Manufacturers count the cost of supply chain disruption

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Manufacturers all around the world are facing disruption to their supply chains in the wake of the Japanese earthquake and tsunami.

Japan is a major automotive manufacturer and supplier of technology components, accounting for up to 40 per cent of flash memory chips used in smartphones, and computers.

The earthquake and tsunami have damaged or destroyed many production facilities and transport networks in the country. But even those unscathed by Friday’s events are now facing disrupted transport and a lack of power.

Sony’s Sendai technology centre, where the tsunami hit, has ceased operations along with another seven manufacturing sites in affected areas. These produce items including semiconductors and lithium ion batteries. To conserve power Sony has also suspended operations in another three facilities across the country.

Toyota Motor Corporation has halted domestic vehicle production entirely, including subsidiary vehicle manufacturers, until at least the 22nd March. It hopes to restart production of replacement parts on 17th March, and to restart production of parts for overseas production (including knockdown parts) on 21st March to keep production lines moving globally.

Mitsubishi has suspended business from its Tohoku Branch.

Hitachi has reported damage to six sites, mainly production bases.

Toshiba has not reported any damage to its facilities, but said it had closed all of its premises in areas with power outages, other than its headquarters and those business operations related to essential services.

Swedish group Ericsson said that although expects its supply of components to be affected, it does not expect a material impact on its Q1 2011 sales.

Sony facilities that have suspended operation:
* Sony Chemical & Information Device Corporation, Tagajyo Plant (Miyagi Prefecture) which produces magnetic tapes, blu-ray discs etc.
* Tome Plant, Nakada/Toyosato Sites (Miyagi Prefecture) which produce optical devices, IC cards etc.
* Sony Shiroishi Semiconductor Inc. (Miyagi Prefecture) which produces semiconductor lasers etc.
* Sony Energy Devices Corporation, Koriyama Plant (Fukushima Prefecture) Lithium which produces ion secondary batteries.
* Sony Energy Devices Corporation, Motomiya Plant (Fukushima Prefecture) which produces lithium ion secondary batteries.
* Sony Manufacturing Systems Corporation, Kuki Plant (Saitama Prefecture) which produces surface mounting equipment.
* Sony DADC Japan Inc., Ibaraki Facility (Ibaraki Prefecture) which produces CDs, DVDs etc.

Sony facilities that have suspended operation voluntarily to conserve power:
* Sony Chemical & Information Devices Corporation, Kanuma Plant (Tochigi Prefecture).
* Sony Energy Devices Corporation, Tochigi Plant (Tochigi Prefecture).
* Sony Corporation Atsugi Technology Center (Atsugi, Kanagawa).

Hitachi facilities damaged:
* Hitachi Power Systems Company, Hitachi Works (Hitachi-shi, Ibaraki Prefecture)
* Hitachi Urban Planning and Development Systems Company, Mito Works (Hitachinaka-shi, Ibaraki Prefecture)
* Hitachi Information & Control Systems Company, Omika Works (Hitachi-shi, Ibaraki Prefecture)
* Hitachi Appliances, Inc., Taga Office (Hitachi-Shi, Ibaraki Prefecture)
* Hitachi Automotive Systems, Sawa Works (Hitachinaka-shi, Ibaraki Prefecture)
* Hitachi Automotive Systems, Fukushima Works (Date-gun, Fukushima Prefecture)

Aid pours in

The Japanese Red Cross is implementing an emergency plan with more than two million volunteers who are distributing essential items and food to displaced people, and more than 600 doctors and nurses who are providing healthcare and psychological assistance to people affected by the disaster.

Walmart has commited £3 million to support emergency relief efforts throughout the country. Its Akishima DC has shipped 10 tonnes of water to Yokota Air Base.

Walmart says most of its stores in Japan are open and its trucks are beginning to make deliveries into the affected area. All of its distribution centers, with the exception of one, are operational and supply chains are nearing normal delivery levels in some categories.

Inditex will contribute 1 million euros (nearly £1 million) to the relief fund for Japan further to the emergency situation the country is experiencing, through the efforts made by the International Red Cross. The Group has also opened a bank account to channel personal contributions from its employees who wish to support such relief.

Panasonic has committed £2.3 million, and in-kind donations of 10,000 radios, 10,000 torches and 500,000 dry batteries to aid victims and support the recovery operations.

Hitachi established an emergency headquarters for response efforts at its head office in Chiyoda-Ku, Tokyo, led by President Nakanishi. This will manage activities to providing support to affected regions and customers; gathering information on losses and damages suffered by employees and their families, and by Hitachi facilities; and investigating and implementing appropriate counter measures.

Toyota is to donate £2.3 million for relief and recovery efforts in communities affected by the Tohoku Earthquake. It is also considering the provision of goods and services as needed.

Mitsubishi Corporation is donating £3 million to assist those who have been affected by this disaster and to aid in the recovery.

Sony will donate £2.3 million to help relief and recovery efforts in communities affected. Additionally, a disaster relief fund will collect donations across the Sony Group from employees worldwide, and their contributions will be matched by the company through a matching gifts program. The company will also donate 30,000 Sony radios to assist the relief of earthquake victims, while the Sony Group will prepare further product donations going forward, taking into account the local needs.

The Red Cross has set up an appeal to help victims of the disaster. If you would like to make a donation click here.

You can discuss this at the Supply Chain Standard group on Linked In.

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