Luke Thompson
In today's global economy, a localized disaster in one country can have massive repercussions for other countries worldwide. When a 9.0 magnitude earthquake and subsequent tsunami battered the northeastern shoreline of Japan last week, the destruction sent reverberations through many technology companies who's products rely heavily on Japanese-made components. While the complex global supply chain has proven to be quite resilient, there always exists a delicate balance that must be struck in order to keep factories and stores operating as usual.
In the aftermath of the tragedy in Japan, many plants that produce essential technological components have closed indefinitely, leaving many companies scrambling to find alternative means of production. For example, Japan produces 35% of the lightweight flash memory used in smart-phones and tablet computers. To further complicate the matter, many companies only stockpile a small amount of product at any given time. Without a continual flow of goods, factories and stores quickly dry up their product reservoirs.
I believe that the unavoidable strain on the global supply chain as a result of this terrible disaster will force companies to reevaluate their sources of production. While localizing production may cut down on costs under normal conditions, it allows for the possibility of major negative financial repercussions. To avoid this crisis in the future, companies will be forced to further globalized their production lines to compensate for the possible loss of certain markets.
http://www.nytimes.com/2011/03/20/business/20supply.html?pagewanted=1&_r=1
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