Two major disasters in 2011 revealed just how vulnerable many organisations' supply chains can be. The Tohoku earthquake and tsunami, followed later in the year by the flooding in Thailand, revealed some of the pitfalls of lean manufacturing processes such as just-in-time where components are made to order with little surplus or stockpiling.
The combined property and business interruption losses reached a record-breaking $240bn, with just $47bn of the losses covered by insurance, according to Swiss Re Sigma.
The most highly impacted industries were electronics (with Japan the sole source for certain batteries and flash memory), semiconductors and key parts in automotive production.
"What people forget is the supply chain now is a global network and that's why there really is a need to get into quite a lot of analytics to understand what the pinch points are," says Tom Teixeira, a partner in the global solutions consulting group at Willis.
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Keywords: supply chain risk management, supply chain planning, supply chain resilience, supply chain interruption insurance, business continuity plans, supply chain management
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