For the past fourteen months, multi-industry supply chain management teams have had to manage either the cascading product demand and supply network impacts, or business opportunities presented by the ongoing COVID-19 coronavirus pandemic. Teams have been measured by their collective abilities in pivoting such networks to respond to disruption.
Beyond this effort, teams cannot overlook the inherent supply chain risks that come with natural disasters or extreme weather. Over these past few days, there has been new reminders of such realities.
Earthquake in Japan
On Saturday, a 7.3 magnitude earthquake struck off the coast of Japan’s Fukushima and Miyagi prefectures. The incident brought forward reminders of the 2011 earthquake and destructive tsunami that struck this same region, resulting in significant supply chain disruption.
Nikkei Asia reported today that Toyota Motor will halt production among 14 Japan based automobile assembly lines for up to four days after the quake apparently disrupted operations among its suppliers in this region. The suspension began today and is expected to extend to Saturday when a reassessment would be made. These production suspensions reportedly represent upwards of half of the automaker’s production lines in the country and involve multiple models and brands. While Toyota would not disclose how many vehicles would be affected, the report estimates a number of roughly 5,000 to 6,000 vehicles based on 2019 output levels.
The report does indicate that Nissan’s engine factory in Fukushima, as well as production operations of Mazda Motor, Mitsubishi Motors, Subaru, and Suzuki Motor were apparently not impacted by the quake.
Readers may also recall that in 2011, semiconductor provider Renesas Electronics suffered severe damage to its Naka facilities resulting in a three-month supply disruption. According to today’s Nikkei report, Renesas has indicated that after confirming condition of its clean rooms, production was expected to resume today with inventory shipments expected to resume on Monday of next week. Further noted was that Renesas has recently shifted auto semiconductor production to the Naka factory after previously being sources at TSMC foundry’s Taiwan based facilities.
Severe Winter Weather in the United States
Cascading severe winter storms and severe cold weather have struck major portions of the United States over these past several days. Weather forecaster Accuweather describes the conditions as: “The most unrelenting winter weather pattern in decades unleashing brutally unseasonable cold and record snowfall deep into Texas…”
Upwards of 75 percent of the lower 48 U.S. states are now under snow cover including states such as Texas and Oklahoma which have experienced unprecedented snowfall and bone chilling cold. The Dallas- Fort Worth region itself experienced a low temperature of minus 2 degrees Fahrenheit which broke a record. Electrical grids in these states have undergone extreme demand with the result being rolling blackouts of electrical power supply. Some people have been without heat in freezing weather for several days which has been compounded by bursting water pipes and large-scale breakdowns of power generating equipment. Residents are seeking warmth as well as food, given that major retail outlets have also been impacted including Walmart stores.
These cascading winter storms have spread across the U.S. spreading snow, ice and severe cold to multiple states. Forecasters indicate that warmer conditions are not expected until this weekend.
News videos show multiple multi-vehicle pileups on interstate highways covered with ice and snow, and result has been cascading disruptions in surface truck, rail, barge, and other transportation services. Major carriers have collectively alerted customers and shippers of continued disruptions in shipments. These same disruptions are reportedly impacting planned delivery of COVID-19 vaccines from Texas to Florida. There are further fears of vaccine spoilage due to power outages.
Obviously, it will be several more days before logistics and transportation networks can restore forms of normal service levels, let alone account for delayed shipments awaiting delivery or damaged in-transit. Specific industry focused supply networks such as energy, food and agricultural will likely experience disruptions in the coming days. Similarly, vast inventories of available portable electrical generators, appliances and home improvement products will likely stockout.
In a matter of a few days, multi-industry supply chain management as well as business focused sales and operations teams have a stark reminder that continuous risk of disruptions are indeed part of the “new normal” of supply chain management decision-making and response.
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