Japan’s March 2011 tsunami and other recent natural disasters got me thinking about supply chain planning—specifically, how automotive companies need to proactively plan for such disasters. But how can you proactively plan for a natural disaster, when you don’t have any idea what it will be, or when or where it will take place?

You need to think seriously about multi-sourcing vs. single sourcing, a lesson learned from the Japan tsunami and the succeeding shutdown of a Hitachi plant that produced airflow sensors for automakers around the world. If you rely on a single supplier and that supplier has to shut down due to a natural disaster, you’re obviously going to have major problems producing your product and meeting customer demand.

So, how quickly can you change from single sourcing to multi-sourcing, and be prepared to reroute production? Small- and medium-sized auto manufacturers have traditionally under-invested in IT, not recognizing the role IT can play in operational excellence.

Network design

First off, you need a network design tool that lets you model your supply chain and analyze your company’s sources of risk, and quickly determine when and where to buy, make, store, and move products through your network.

“What if” scenarios

Second, you need advanced supply-chain tools so you can create different “what if” scenarios. For instance, what if one of your suppliers shut down indefinitely? Could you source products from different regions or suppliers? If so, what would the costs be, and the impact on sales? Using “what if” scenarios, you can minimize costs and delays, and maximize your margin.

Supply chain collaboration

Third, you need advanced, ERP-neutral supplier collaboration tools, whether you’re Tier 1, 2, or 3. I can’t state this strongly enough: Electronic supply chain collaboration is a necessity in today’s global business environment. With an advanced, web-based solution that incorporates traditional electronic data interchange (EDI), you’ll be able to collaborate with your suppliers no matter what language they speak, or which replenishment method they use. You’ll also be able to discover issues as early as possible, and know exactly which shipments are on the way as well as their expected time of arrival at your plant (global track and trace).

Business integration

And finally, you need tools that allow you to integrate your supply chain into your business system, so production isn’t isolated from the rest of the business. As a manager, you’ll automatically receive an alert when there’s a problem, and get all the information you need to make a decision.

How has your company coped with supply chain disruptions due to natural disasters? I welcome your feedback and comments.

Posted by Wolfram Schmid, director of industry and product marketing, Infor