The long term implications of Japan’s massive earthquake and tsunami have recently begun to materialize. Over the course of the last twenty years, management principles have centered on efficiency; do more with less. Six Sigma, Lean Manufacturing, outsourcing, and off-shoring have boomed. Perhaps our fascination with reducing costs and optimizing return on assets has manifested in an overly minimalistic view of the world.
The recent supply chain disruptions have illustrated the vulnerability of our thinking as just in time translated into late product shipments, unsatisfied customers, and sluggish earnings, spanning from Toyota to Tiffany’s. The vulnerability may be far greater for smaller companies with less sophisticated logistics and reliance on a smaller web of suppliers.
Thus the central question is shifting away from what is the minimum possible cycle time to what are the supply chain risks and how can they be mitigated? Manufacturers have had to adapt, in some cases reengineering their products to use components or materials that have been suddenly unavailable. Some product development teams have had to adapt, at times looking like a scene from Apollo 13 (when astronauts famously had to construct a part based on the materials they had on hand).
Customers have the right to ask more questions about how their vendors manage supply and what types of contingencies they have in place. As has been evident in recent years, vendors and customers alike must think broadly about what eventualities could disrupt the global marketplace and collaborate on solutions. The horrific events in Japan reflect only the latest in a series of events that are reshaping how products come to market.