The unpredictable natural disasters occurring around the world, and the ongoing COVID-19 pandemic, for which no end is in sight, have produced rapid and dramatic transformations in our daily lives and in company business models.
One of these transformations involves the supply chains of the manufacturing industry. In the past, the procurement divisions of companies needed to evaluate and reduce procurement costs. In recent years, frequent disasters have caused “supply shocks,” severing supply chains and cutting off the supply of materials. This has led to a shift in what procurement departments focus on, from “cost” to “stable supply,” and more importance than ever is being placed on assessing the states of entire supply chains. In Japan, the experience of the Great East Japan Earthquake in 2011 led many companies to reinforce their natural disaster responsiveness.
The spread of the COVID-19 has also caused a “demand shock,” as consumers refrain from non-essential and non-urgent consumption.
This has been accompanied by a supply shock, making the bottlenecks of current supply chain more apparent.
From 2000 onwards, as the tide of globalization accelerated, more and more companies transferred their production activities overseas in order to achieve greater economy and efficiency. As a result, production facilities became concentrated in a handful of countries.
Globally speaking, the greater reliance on China, in particular, is said to have had a major impact on the stable supply of products in the face of the pandemic. The global supply chains built by Japanese companies must now be reconsidered from the perspective of balancing “economy and efficiency through production centralization” and “the ability to handle supply interruption risks.”
As the increasing uncertainty of the world, the resilience of supply chains is needed more urgently.
The Toshiba Group has been instituting procurement reforms, including disaster countermeasures, for over a decade, and has put in place a system that can be operated in-house. It is using its experiences with the various disasters that have occurred in recent years to build resilient supply chains that stay strong in the face of emergencies.
It is a particular important point to create mechanisms for acquiring field data through communication with suppliers. For example, when using supplier strategies, category strategies, and the like to create detailed strategies and engage in procurement activities, it is vitally important to use field data, such as specifications, quality, cost, market conditions, purchase prices, and disaster data -- and, in particular, high quality data. It is difficult to acquire and store this high quality data entirely in-house, which is why it is essential to build systems for collaborating with suppliers.