How General Motors Crisis Managed the Japan Supply Chain Disruptions Post the Triple Disaster

Resilient companies are surviving by continuing to dynamically adapt to the supply chain disruptions and cascading failures post the triple Japan disaster that occurred on March 11, 2011.

To get the parts that are essential for their production processes they have been working even with the suppliers of their suppliers going upstream into the complex supply chain networks.

The New York Times is reporting, in a fascinating article, how General Motor's crisis management team, with white knuckles, resolved the crisis situation. GM, which spends about 2 percent of its parts-buying budget in Japan, identified 118 products that it needed to monitor for shortages but has resolved problems with all but five. The company’s chief executive, Daniel F. Akerson, predicted last week that the Japanese disruptions would have no material impact on G.M.’s earnings.

This is in stark contrast to Toyota, which is experiencing shortages of about 150 parts, for its North American plants, since it uses about 15% of its components from Japan.

GM was able to find alternative suppliers and to assist others in going online, even working back across multiple tiers of its supply chain, something that it had never, previously, had to do. However, there is still a chance of a shortfall in semiconductors and other electronics needed for autos and this situation is being closely monitored.

Clearly, companies must view and manage their supply chain networks as systems in their full complexities. One should move beyond the white board with green and red stickers for product and time management.

It looks as though GM will regain its place as the world's biggest auto company.

Akerson was very classy when, as quoted in the article, he said: “I want to win in the marketplace, but I want to win against a healthy and vibrant Toyota and Honda.” “Next year, we’ll put the gloves back on, and I’m sure they’ll go right back at us and we’ll go back at them.”

Our research on supply chain disruptions is relevant in this scenario. Our paper, Modeling of Supply Chain Risk Under Disruptions with Performance Measurement and Robustness Analysis, by Professors Qiang Qiang, Anna Nagurney, and June Dong, appeared in Managing Supply Chain Risk and Vulnerability: Tools and Methods for Supply Chain Decision Makers, T. Wu and J. Blackhurst, Editors, Springer, Berlin, Germany (2009) pp 91-111.

Traffic, Jack Smith, and the Supernetworks Center

As an academic, one of the highlights of a semester is being able to host speakers and to see how students, faculty, and guests in the audience react. As the Faculty Advisor to the UMass Amherst INFORMS (Institute for Operations Research and the Management Sciences) Student Chapter, I oversee its Speaker Series. Last term, we had a wonderful lineup, including the best-selling author of the book, "Traffic," Mr. Tom Vanderbilt, whose blog, How We Drive, is a terrific read. His visit was written up recently in the Winter 2009 edition of "The Commonwealth." The student chapter has posted photos of Vanderbilt's visit and of the visits of other invited speakers.
Also, last Fall, we helped to host "the" Jack Smith, the former CEO and Chairman of the Board of GM and Delta. Jack Smith is a UMass Amherst alum, class of '60. Read about his visit and Q&A.
Hosting speakers of the caliber of Jack Smith and Tom Vanderbilt is always a joy but as an academic doing research and running the Virtual Center for Supernetworks brings its own special challenges and rewards. Read up on our center, compliments of Mr. Lou Wigdor, and for all the exciting activities in the Isenberg School, see the full edition of the 2009 Winter Commonwealth.