Now Thai floods and Japanese auto supply chain impact

A Wall Street Journal article (Oct 29, 2011) describes the impact of flooding in Thailand, which has resulted in two Sony plants deluged, Toyota suppliers impacted, a Honda plant impacted for six months etc. Given the disruption caused by the Japanese earthquake earlier, the floods are expected to further disrupt auto supplies to Japanese OEMs that have increasingly moved to Thailand.  A World Bank study is quoted as claiming increased risk of flooding in Bangkok, Manila and Ho Chi Minh city – all potential low cost locations for auto suppliers.  Should supply chains consider the weather related disruptions in these locations and thus shift production ? Or should they hold inventory to hedge against these disruptions ? Or should the global supply chain maintain some excess capacity to provide a hedge ?  Or will the lower demand in these location mitigate the cost of disruption ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

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