Question

In September 2018, A powerful earthquake hit the Japanese island of Hokkaido. As a result. Toyota was forced to suspend production at a key plant, disrupting the supply of components to Toyota's factories across Japan as well as other countries, including the U.S. and Canada.   The earthquake and a recent typhoon in Japan highlight how vulnerable global supply chains can be to natural disasters. Discuss:

The advantages and disadvantages of relying on a limited number of production facilities for critical component parts?

Impact on the cost of capital to rebuild in an area subject to earthquakes.

How companies can make their supply chains more stable against the whims of Mother Nature.

Answer 1

advantages and disadvantages of relying upon limited number of production facilities are as follows-

Advantage related to future supply chain players would be that there would be less sharing of confidential information and there would be flexibility in terms of pricing power and there would be concentration of of responsibilities.

Disadvantages associated with fever supply chain networks would be that there is a high risk of loss and there are few alternative and there is less diversification.

Nature cannot be predicted but adverse implications arising out of natural calamities can be minimised to a certain extent by proactive management as follows-

A.the company will need to diversify its supply chain network and they will be needing to include more reliable player.

B. This company also can merge with the supply chain networks and they can also acquire the supply chain networks in order to gain a competitive advantage.

C.these companies can also try the digital form of receipt and payment and order acceptance and delivery so majority of the components required in a supply chain would be done through digital networks in order to avoid the large implications.

D. there should be a proactive management of various adverse events and the company should be trying to discount that as earliest possible.

E. There should always be alternative plans available in order to counter the adverse implications of these natural calamities.