In our previous Supply Chain Matters posting, we called attention to the announced acquisition of Precision Castparts by Berkshire Hathaway and its speculated impact on commercial aerospace industry supply chains. Already this week, there are two other developments with industry supply chain implications.
Earlier this week, the People’s Bank of China elected to suddenly de-value China’s yuan by a record 1.9 percent, precipitating the yuan’s biggest one-day loss in nearly two decades. The action came after the news that China’s exports shrank a significant 8.3 percent in July amid continuing concerns that China’s economy is slipping more than previously reported.
This sudden news has rocked global markets and has raised the Spector of more devaluation of foreign currencies particularly those related to Asian based countries.
For industry supply chain teams, strategic sourcing, procurement and S&OP teams will need to pay particular attention to quickly changing economics related to sourcing of production and/or products. China is obviously positioning to boost its export sectors and that will have implications in the coming weeks and months.
One other development that warrants monitoring is that related to natural and other disasters.
Typhoon Soudelor struck the island of Taiwan and coastal China this past weekend. Taiwan, a key production center for semiconductor, high tech and consumer electronics supply chains, experienced severe flooding and landslides across the island. More than a meter of precipitation fell in some areas, and there were reports of significant power disruptions. The severe storm move on to China impacting certain coastal cities. High tech supply chain teams have obviously initiated supply chain risk assessment efforts to ascertain if the typhoon had any significant impact to supply and production planning. We suspect that there may be some impacts,
In another development unfolding as we pen this commentary, international media is reporting that catastrophic explosions have occurred in the Chinese port city of Tianjin. Reports indicate that upwards of 50 people have died with scores injured. According to a CNN report, the initial explosion may have come from an industrial warehouse that may have stored dangerous and flammable chemicals which spread to other adjacent buildings and warehouse facilities. The force of the explosion extended to nearly 2 kilometers and registered on earthquake monitoring instruments which imply a massive force. More news will be unfolding concerning this incident.
It seems as though supply chain risk has become a weekly occurrence, regardless of the season.