There was an interesting study released by EventWatch highlighting the top 5 supply chain disrupting events of 2016. EventWatch monitors supply chain resiliency and found these five single events to cost the most in delays, disruptions, and risk. Here’s their list:
- 6.4 magnitude earthquake in Taiwan
- Series of earthquakes in Japan through April
- Super Typhoon Haima
- Typhoon Napartak
- Typhoon Medi
Earthquakes provide some of the most difficult Black Swan events for businesses and their supply chain continuity. Many manufacturers of high-tech products have tolerances on their production equipment that are calibrated to within a micron.
When a tremor or small earthquake hits, those machines have to be recalibrated (small recalibrations can take minutes, larger ones can take hours). After a major earthquake, it isn’t uncommon for aftershocks to last months or a year or more. After the major 2011 earthquake and tsunami in Japan, more than 5,000 aftershocks occurred for 12 months of a magnitude 2 or greater. Therefore, the need to constantly recalibrate machines and keep them in cycle is difficult – and assembly lines can suffer significant delays and set-backs, even if the tremors themselves don’t do any damage.
Typhoons are slightly different. There’s a fairly defined season for them and regions prone to strong storms have prepared for them (especially for large multi-national corporations that have been in the region for a while). Although disruptive, recovery is often swift and supply chain continuity can remain intact.
Source: Armada Corporate Intelligence