Japan disaster – supply chain implications

We've been intending for a few weeks to get a guest post from Ian Bowles of Probrand, who knows more about IT supply chains and cost structures than anyone I've ever met. I'll give more background to him next time, but he has just sent me this which I wanted to post immediately for obvious reasons

I have visited this area about a dozen times to see various plants, and I feel for the people.  The manufacturers based in the area affected by the Tsunami are both suppliers of complete products and suppliers of components.  At the end of this piece I’ve included an initial list (from my personal knowledge) of affected companies - those in bold are of particular interest to the IT market. The effects are severe on both plant and people, and continuing; for instance, Sony has helicoptered in water and food to staff trapped in their buildings.

This is a quick list and does not cover the typical supply chain of small businesses supplying the major  brands.   These businesses tend to be the part of the manufacturing process the first tier do not want you to see; small companies, in many cases family businesses operating in small, old factories which will not withstand such a disaster.  They tend to be using focused manufacturing technology to build parts to supply big companies, and many will have lost not just the building but the machines needed to make the parts required.

The damage to the Nuclear Power plants and the oil refinery will have a major impact in the short term to medium term.  The Fukashima Nuclear plants are down with flood damage.  How long before any of that facility can come back on stream will take weeks to determine.   All Japan is now suffering power shortage at certain times in the day.  This has two effects; the most obvious is no production when power is off.  The problem is the contamination build up in semi-conductor plants when power is off.  The result will be reduced yields when production is running.

The other point to consider is a chip takes 90 days to build from the initial manufacturing steps to final test.  Disk read write heads take another 30 days to build.  The implications for the semi conductor plants is huge; the industry may have lost up to 3 months production from these plants  assuming you can start up in days.  What influence will that have over the assembly plants?  And the transport infrastructure in Japan is the key to the manufacturing supply chain.  The damage to rail and road networks is such that the plants that could work may not be able to get material in and finished products delivered out.

The implication of this disaster is that all the computer industry must be looking at their business continuity plans to determine what can be built where and who are the alternate suppliers?    Many suppliers will now be looking at supply contracts, briefing their legal teams to protect their businesses the best way they can from the issues.   Rarely does any major plant in Japan not have a whole raft of small local suppliers feeding all sorts of small parts; their loss in this context will be the big problem. The big plants may be OK but the small suppliers will cause the biggest issues. For sure, the result of all the damage is not just the human issue; there will be business casualties from this event, and not just in Japan.

I suspect this will, sadly, force Japan into recession again. But how will it influence China; I think their growth train maybe de-railed more than a little. And how will our economy be impacted?

Atrec Semi Conductors Memory chips
Canon Cameras,   Optical Components
DMC Touch Screen technology
Epson Semi Conductors
Fukashima Ceramics Ceramics
Fuji Electric Major plant wide product range of electrical parts
Fujitsu Semi-conductors  /  Printers / components
Fuji Film Image Systems
Furakawa Electric Major Plant
Honda Cars
M.Setieu Solar Panels
Murata                 Mobile Phone parts
Nanox LCD
Niko Ink Ink Jet Ink ?
Nikon Cameras
NSK Ball Bearings
OKI Printers
Sony 5 plants One plant building Blu-Ray is flooded to 6ft  (used for TV and high-end laptops)

A second plant building R/W head for Hard Disks is also it seems in trouble

The third is a manufacturer of batteries used in laptops

Toshiba Semi Conductors  / Mobile Phone parts
Toyota and Nissan Both have stopped  all production in Japan due to power issues
‘White label’ A Blank Wafer manufacturing Facility supplying a wide range of semiconductor suppliers

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Voices (2)

  1. scmjapantsunami:

    thanks Peter, i reporting status in http://twitter.com/#scmjapantsunami

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