Supply Chain Disruptions, Congestion, Risk, and Foreign Affairs

Kyle Johnson, who was a Jack Welch Scholar at UMass Amherst, and graduated from the Isenberg School with a degree in Operations Management, and now works in high tech recycling, sent me an email message this past week that he thought of me when he was reading an article in Foreign Affairs and provided me with the link to it.

The article, "Japan's Disaster and the Manufacturing Meltdown -- What the Earthquake and Tsunami Revealed About Globalization," by Marc Levinson, highlights the dangers of single sourcing that the Japan triple disaster has painfully shown, which has impacted the automotive and high tech industries severely. Levinson also noted his 2008 article in Foreign Affairs, in which he presciently wrote:

“Congested shipping lanes and highways make transit times uncertain,” “and this uncertainty hurts profits.” Moreover, the push for ever-greater port security will further slow transit; physical inspection of shipping containers could delay delivery by two to three days or more. “Even if the proportion of containers pulled out of the flow of traffic is small, importers will be forced to reckon with the possibility that their goods might be delayed in transit. In some instances, importers will adjust by keeping more stocks in their U.S. warehouses at any one time.”

Just think of all the time that is now being spent to check for radiation of goods being imported from Japan!

In 2009, Drs. Qiang, Dong, and I wrote the article, Modeling of Supply Chain Risk Under Disruptions with Performance Measurement and Robustness Analysis, which appeared in the book, Managing Supply Chain Risk and Vulnerability: Tools and Methods for Supply Chain Decision Makers, T. Wu and J. Blackhurst, Editors, Springer, Berlin, Germany, pp 91-111. Our study extended previous supply chain research by capturing supply-side disruption risks, transportation and other cost risks, and demand-side uncertainty within an integrated modeling and robustness analysis framework. Moreover, we included congestion in the model and proposed a weighted performance measure to evaluate different supply chain disruptions.

Highlights of other research on supply chain risk I wrote about in an earlier blogpost, which was motivated by, in part, the frustration at the developing events in Japan and the suffering of the people there.

In our Fragile Network Economy, the identification of the performance of supply chain networks prior to disruptions and the determination of which nodes and links really matter needs to be done before disasters strike!

Lean manufacturing may be more than short-sided, it may be, frankly, foolish.