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Business

Japan quake taught companies to forge stronger supply chains

Toyota has created a database covering all parts and sites in order to cope with a disaster.

TOKYO -- Industrial Japan learned some sobering lessons from the earthquake and tsunami that struck northeastern Japan three years ago. It affected industrial bases nationwide, and not just in the devastated regions, causing the industrial production index in March 2011 to decline roughly 16% on the month.

     Since then, companies have taken steps to fortify their supply chains to help minimize any future hits to their customers and end users.

     In what must be good news for the auto industry, Renesas Electronics is now better equipped to keep producing the "brains" of cars. The company supplies 40% of the world's automotive microcontrollers, including chips that maintain engine control. Back in 2011, when Renesas manufactured these chips only at its Naka factory in Ibaraki Prefecture, car output in Japan suffered drawn out consequences when the earthquake knocked out the plant. Since then, the firm has established a system whereby production of these devices can be shifted to any of its six main factories in Japan should another disaster strike.

     Wheel manufacturer Central Motor Wheel also no longer has all its eggs in one basket. The company had been making 10 million wheels annually in Aichi Prefecture, but at the end of last year, it transferred production of 2 million units a year to a base run by Toyota Motor in Miyagi Prefecture.

     Toyota, for its part, has constructed a database of parts suppliers, including secondary and tertiary suppliers. For the 30,000 to 40,000 components found in a car, the automaker has information on items at more than 1,000 manufacturing sites nationwide and their supply flows.

     "We are now able to ascertain risks for every part at every site," an executive said. The automaker is working with parts suppliers on contingency plans if disaster severs its supply chain.

     Companies in other sectors also are strengthening their supply chains to prepare for future disruptions.

     To keep goods flowing to its supermarkets, retail giant Aeon plans to install power generators at all 40 of its main distribution centers by fiscal 2020.

     And in the pharmaceutical sector, Otsuka Pharmaceutical and drug wholesaler Medipal Holdings have an arrangement to dispatch packaged sets of essential medications if the normal ordering system goes down during a disaster.

(Nikkei)

 

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