Earthquake leads to changes in supply chain strategies

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More than 80 per cent of the companies affected by the Japanese earthquake last year have made changes to their supply chain, a study by the Business Continuity Institute has revealed.

The institute followed up an annual survey with interviews of companies that had reported disruption to their supply chains. Some 92 per cent of interviewees said that their supply chain strategy had been reviewed as a result of the earthquake.

It found that the length of time to recover supply chains varied considerably: While 29 per cent recovered within a week, 24 per cent required up to a month and 41 per cent stated that recovery required between a month and six months.

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Lyndon Bird of the BCI said: “The Great East Japan Earthquake exposed the acute vulnerability of a complex, interdependent system of global supply chains, which affected businesses thousands of miles away from the earthquake and tsunami itself.

Some 82 per cent of companies confirmed changes to their supply chain strategy following the earthquake.

“The perpetual quest for supply chain optimisation has taken a pause, and we are seeing signs of a more considered approach to supply chain risk with businesses leveraging techniques such as business continuity management to better understand their vulnerability and to put in place measures to improve resilience and continuity when faced with disruption.”

Companies reported a number of changes in approach including regarding buffer stocks as justifiable for critical suppliers with unique products. And suppliers could earn a premium by giving customers greater confidence in their ability to maintain continuity of supply.

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