There are many facets for how manufacturers identify and mitigate significant supply chain risks. These often include operational or event-driven risks, but what happens when your prime distribution center for all of Europe can no longer receive product because of an ongoing product patent dispute?
Last week , customs officials in the Netherlands seized tens of thousands of Sony’s PlayStation 3 game consoles because of trading ban handed down by a Dutch court. LG Electronics secured this legal 10 day injunction against Sony because of an alleged patent infringement concerning the PlayStation’s Blu-ray video technology. According to published news reports, Sony and LG are also engaged in patent disputes in the U.S. as well, which involve flat screen televisions and smartphones.
What makes this situation a bit extraordinary is the high tech companies tend to resolve these patent disputes through adjustments to technology cross-licensing and value-chain agreements and not outright injunctions. An injunction targeted in the Netherlands is obviously with some knowledge of Sony’s European supply chain distribution network for PS3. The Netherlands is Sony’s primary distribution center for all of Europe, accounting for upwards of 100,000 monthly PlayStation units shipped throughout all of Europe. Since the injunction is only enforceable in the Netherlands, Sony is now scrambling to find a temporary alternate distribution point in Europe, and is assuring European retailers that there will be no interruption in shipments.
Supply chain risk does take on different dimensions, especially when others know of your value-chain footprint. Having a supply chain crisis, business continuity and response team in place is always a prudent investment. High tech companies like Cisco already understand this important tenet of supply chain risk mitigation.