Accenture: How Robust is your Supply Chain?
Risk mitigation is imperative at all times in the business world, but 2020, in particular, has called it to the fore and emphasised its importance through COVID-19. The pandemic caused mass disruption to the global supply chain networks, causing some to ultimately falter, while others managed to maintain partial functionality. Fortunately, that partial stalwart allowed organisations, medical systems, and retail outlets to stay afloat throughout the year, bring much-needed supplies, food, and other daily necessities to households and institutions worldwide.
The resilience in vital sectors shows us that supply chains can undergo unprecedented stressors for the most part, but it also highlights almost fatal flaws in our supply chain capabilities in others. This is something that supply chain leaders are now looking to address and rectify, putting heads together to further test their ingenuity, resilience, and flexibility, to ensure that essential operations can be maintained better the next time the network finds itself assaulted.
It’s worth noting that COVID-19 is still a very present threat. The pandemic, though lesser in cases, is still a threat to economic hubs and industrial regions of countries the world over. Many are in lockdown or looking to return to that state, and for those that are emerging from the experience, the world is a very different place. And, with the fluctuation of cases and flippancy of government decisions, global supply chains continue to feel the effect, like a ripple across the water─an aggressive one, at that.
According to Accenture:
- “94% of Fortune 1000 companies are seeing supply chain disruptions from COVID-19.
- 75% of companies have had negative or strongly negative impacts on their businesses.
- 55% of companies plan to downgrade their growth outlooks (or have already done so).”
Challenges Inspiring Change
As we move into a new world, business and industry leaders will have to make hasty decisions, and take immediate action to sustain previous levels of productivity and service provision, whilst attempting to maintain the happiness of their clientele, the communities that they work within, and their employees.
The supply chain will be at the forefront of growth, and it will be critical that it can supply the goods and services that we need quickly, safely, and securely, on a daily basis, to allow leaders to maintain their performance.
With the guidance of experts and specialists in the field, a new and improved supply chain system will rise like the phoenix from the ashes of COVID-19, repurposed with an emphasis on resilience and responsibility. The new systems will be flexible and easily adaptable in times of strife, and they’ll be moulded to suit the new norms and values of consumers worldwide, with the ambition of never again faltering in the eyes of adversity.
Japan Seeks to Revive Stalled Semiconductor Industry
Post-pandemic, Japan has seen the consequences of relying solely on foreign imports for its semiconductors. Over 64.2% of its chips are usually imported from South Korea and Taiwan, leaving the country dependent on its neighbours. Industries from auto manufacturers to consumer electronics firms wait for chips, to no avail. But now, the Japanese government looks likely to put real funding behind its semiconductor industry, with top officials emphasising their support.
Domestic supply chains have never been more important. Rather than remain tied to international shipping routes during shortages and delays, governments are doing everything in their power to develop local lines of supply. But the question remains: can Japan pull it off?
How Will Japan Pay For It?
Herein lies our first issue. Japan’s debt has rapidly increased over the past few years, and the semiconductor industry will need roughly a trillion yen—US$9bn—in this fiscal year alone. This cost, however, pales in comparison to what Japan could lose if it fails to keep up with Europe and the US. Both nations have launched aggressive funding measures to revive their local semiconductor industries. And if Japan refuses to invest due to its debt, it could slow down progress in fields ranging from artificial intelligence to autonomous driving.
According to Tetsuro Higashi, the former president of Tokyo Electron and Japan’s top government advisor in semiconductor strategy, ‘If we miss this opportunity now, there may not be another one’. Yet one advanced wafer fabrication factory can cost more than US$10bn, and any money poured into the industry will go fast. That’s why Japan, rather than invest trillions and trillions in failing domestic firms, is considering a second option.
What Do They Plan To Do?
Japan now intends to look abroad and convince overseas chip foundries to come to its shores. Its past failures mostly centred on trying to merge domestic firms that were already going through tough times. ‘This sort of made-in-Japan self-reliance approach hasn’t worked out well’, said Kazumi Nishikawa, a director at the Ministry of Economy, Trade, and Industry’s IT division. ‘This time the goal is to offer a strong incentive for an overseas logic foundry to come to Japan’.
As follows, Japan will now reach out to industry partners and leaders in other countries, including the industry heavyweight Taiwan Semiconductor Manufacturing Co. (TSMC), to build Japanese bases. According to the South China Morning Post, the heart of Japan’s mission is a US$337.2mn research and development project in Tsukuba that will involve TSMC and more than 20 Japanese firms. ‘I think we need to cooperate with our overseas counterparts’, said Akira Amari, a senior member of the ruling Liberal Democratic Party. ‘[And] TSMC is the world’s top logic chipmaker’.
Indeed, if that’s Japan’s strategy, the future looks bright. TSMC recently set up a venture near Tokyo to research energy-efficient 3D chips with several Japanese partners. And in the future, the multinational chipmaker may consider expanding its Japanese operations—that is, if government incentives pave the path forward.