May 17, 2020

Japan, A Year Later

Japan
tsunami
disaster
Supply Chain Management
Freddie Pierce
4 min
What have we learned?
Click here to read this article in the magazine edition! Guest contributor: Linda Conrad One year ago, the earthquake and tsunami that struck north-cen...

Click here to read this article in the magazine edition!

Guest contributor: Linda Conrad

One year ago, the earthquake and tsunami that struck north-central Japan demonstrated just how fragile a multinational supply chain can be. The disaster in Japan revealed how optimizing supply chain logistics and cost should be counterbalanced with proactive risk management tactics. 

While awareness for this essential balance is shifting, businesses still have ground to cover. According to a 2011 global study sponsored by Zurich Financial Services and conducted by the Business Continuity Institute, 85 percent of companies reported at least one supply chain disruption in 2011, yet only eight percent of companies said they ask to see their suppliers’ business continuity plans.

Lessons learned

The 2011 disasters can teach businesses a few cautionary lessons.  Clearly, companies with today’s finely tuned inventories saw that the benefits of cost-cutting efforts and just-in-time strategies can be quickly eaten up, by the financial and reputational cost of supplier disruptions. Longer-term losses like delayed production and even lost innovation only exacerbate the damage.

Another learning was that despite the alarming images coming out of north-central Japan last March, a significant portion of the supply chain impact was not caused by physical damage at the epicenter of the catastrophe. Instead, it caused rolling brown outs in southern Japan, which negatively impacted manufacturers around the globe, making critical parts impossible to access and delaying production.

In fact, the Zurich-sponsored survey with Business Continuity Institute showed that value chains are more frequently disrupted by non-physical events like IT outages, transportation issues, strikes, or even supplier insolvency.  Thus, companies who are only protecting themselves against physical plant damage may miss the competitive advantage offered from building resiliency and continuity planning into their value chain. 

Tools can help analyze and map out the risk

Over the last 100 years, Zurich in America has developed tools to help customers identify and deal with new risks as business evolved. Zurich created a proprietary disruption database of approximately 2,500 supplier interruptions.  Through analyzing the causes, geographic locations, political and industry issues, we gained insight into supplier risk costs. Since many business units operate in silos, companies often don’t have an enterprise-wide view of the combined impact the loss of a single supplier could have.

The following tools are available for helping businesses tame the data and draw a clear picture of their supply chain risks:

•           Supply Chain Risk Assessment tool: Zurich’s team uses a proven methodology to analyze suppliers’ exposures, using their Supply Chain Risk Assessment tool.  This review will incorporate natural catastrophe data political risk expertise, marine/ transportation issues and historical data from prior disruptions in other companies and industries. 

•           Zurich’s Supply Chain Insurance:  This insurance is an ‘all risk’ cover for supplies not delivered or otherwise delayed that have a financial impact on your company’s operations.

•           Total Risk Profiling (TRP):  TRP uses a risk assessment methodology that can be helpful in identifying the exposures and root causes. The TRP process also looks at the impact and likely frequency of potential supply chain disruptions, and can help determine which suppliers or supplies are most critical to your ongoing business success.

•           Zurich Risk Room: Provides macro country insights for the inter-connectedness of risks directly related to supply chain exposures. The tool can display the results of complex risk modeling in a way easily understood, plotting up to 158 countries in a risk grid that allows us to see where geographies fall with respect to any of the 66 selected risk factors.

These catastrophic events highlight the need to quantify exposures from your suppliers, and even your supplier’s suppliers, which lead to 40 percent of all disruptions. It is increasingly important to visualize and map out your value chain, to identify concentrations, bottlenecks and interdependencies.  For example, the flooding in Thailand last fall demonstrated the importance of ensuring supplier geographic dispersion, as the long recovery shackled the hard disk drive industry.

The complex web of diverse suppliers from diverse geographies can be daunting but not unmanageable when using the right tools. The valuable lessons learned from the earthquake and tsunami that struck Japan is that companies are beginning to think about their supply chains more broadly. They understand it isn’t just about modeling inventory but modeling disaster preparations and recovery for itself and its suppliers to ensure long term resiliency. 

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Jun 8, 2021

DHL Claim Multi-Sector Collaboration Key to Fighting COVID

DHL
Supplychain
COVID19
Logistics
3 min
Global logistics leader DHL’s new white paper highlights what supply chain professionals have learned one year into the pandemic

Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.

 

This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go. 


 

Public-Private Partnerships

With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”. 

 

Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats. 

 

In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.

 

“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”. 


 

How Do We Sustain Immunisation? 

By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”. 

 

Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared. 


Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.

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