Wally Buran on Supply Chain Risks – Explosion at China iPad Factory
HEADLINE: Explosion at China iPad Factory Shows Supply Risks
SUMMARY: An explosion at one of two factories that make Apple’s new iPad 2 highlights the risks of a global manufacturing strategy that has cut costs but concentrates production in a few locations. Foxconn Technology Group, the contractor that manufactures Apple’s IPhones and iPads, said the blast killed three employees and injured 15, and that production was suspended. Coming as global auto and electronics makers struggle with parts shortages caused by Japan’s March 11 tsunami, the disaster emphasized the pitfalls for companies whose global sales depend on one or two factories.
ANALYSIS: The most common disaster is fire. This explosion follows that path. Common or not, the supply chain impacts are clear here.
Unless you have been Rip Van Winkle for the past several years, the IPad has exploded from a brand, marketing, and awareness standpoint. Apple has enticed companies to advertise how their products use the IPad, further driving demand.
Apple has built great demand. Shareholders have high expectations. If there are no components, there are no IPads. Uncertainty has killed many products and companies. Supply chain failure has killed more.
- Are your suppliers ready?
- Have they identified and planned for their risks?
- Have you?
“How do you know?” is a great question to ask. Sarbanes-Oxley requires public companies to answer the question on financial matters. Business continuity requires you to answer it for your company’s supply chain. What is your role in your supply chain preparedness?
Wally Buran is the Edenfield Executive in Residence at the Georgia Institute of Technology and Executive Vice President of Firestorm Solutions. With Georgia Tech, he serves on the Advisory Boards of the School of Industrial and Systems Engineering, the Supply Chain and Logistics Institute and helped build the Tennenbaum Institute for Enterprise Transformation. More…