The Vulnerability and Complexity of Our Global Supply Chains -- What the Disasters are Revealing

Last week, while I was in Canada to give a seminar on perishable supply chains in health care at McGill University, I picked up a copy of The Globe and Mail, which is the national Canadian newspaper.

I love Canada, and not only because I was born there, but also because of its people, its landscape, history, excellent schools, and health care. Since April I have been invited to give three talks there (two at McGill University and one at the University of Waterloo) and whenever I am back I always feel very welcome and at peace there.

I was very impressed by the coverage of the disruptions to global supply chains due to the horrific floods in Thailand by The Globe and Mail, a week ahead of coverage in The New York Times, I might add.

The article, Why the mad migration of parts to your iPhone matters, was especially interesting and highlighted that it may take a crisis (and we certainly have had our share of disasters this past year) for the complexity of global supply chains to be noted.

The Thai floods are now having major disruptive effects. According to the article, Honda Motor stopped production in Malaysia due to a lack of parts from Thailand. The computer industry is now bracing for a shortage of hard-disk drives after Thai factories were flooded.

Indeed, it is expected that the Thai floods may disrupt global electronic supply chains for several quarters.

The number of deaths from the floods in Thailand has now surpassed 500 so the toll on the loss of lives and human suffering is also huge.

I managed to reach one of our former students from Thailand, who, just this past August, successfully defended his PhD in Management Science at the Isenberg School of Management and was awarded the doctorate officially in September from UMass Amherst.

Part of his response, sent last week:

Dear Prof. Nagurney,

Thank you very much for your concerns.

The flood situation in Thailand is indeed very bad. Some say it is the worst ever in the past 50 years of Thai history.

As I am sure you have seen the news. Lots of agricultural areas have been affected and will be under water for at least 3 weeks, same as half of industrial area of Thailand. In brief, it affects more than 3 million people, they either have to evacuate or else live in an upstair-level of their homes, surrounded by water and disconnected from the outside world. There are now lots of logistic and supply-chain problems, e.g. to get food and other consumer products to people who insist to live there underwater in their homes, or to move people from affected villages to evacuation zones. Worse than that, in my opinion, the government has no experience in dealing with this kind of situation ... Now the water is at the doors of BKK (Bangkok), some have entered! So we now totally freak out and are afraid that BKK will be under water soon. The government even declared a special public holiday last week to clear people out of BKK. Most schools delayed the start of the new semester to 11/15 or even later than that (normally schools start on 11/01). Now BKK is totally paralyzed, people do nothing except wait for the water to come.

In my case, I've already fled BKK to my family hometown (which is still safe from the water). So my family and I are now safe and sound. However, my home in the suburb of BKK is now under water (not totally submerged, but half of it). Fortunately we have moved important stuff out before the water reached.

I think it will take a month or more before everything turns better, but truly hope it is sooner than that. Again, thanks for your kind concerns. I will update you as soon as there is any major news about this catastrophe.