TOKYO - Many factories supporting key Japanese industries were damaged in the July 28 Kumamoto earthquakes, disrupting auto parts supplies and forcing Nissan Motor Co., Honda Motor Co. and Toyota Motor Corp. to halt production lines for a period.
Automobile production depends on a complex supply chain built by individual companies that manufactures vast numbers of parts, and even a stoppage in the supply of a single component can bring production lines across Japan to a standstill. That was what happened after the Kumamoto earthquakes a decade ago and a similar situation was repeated following the latest temblor.
Kumamoto Prefecture has attracted factories by promoting itself as a safe area with few natural disasters, drawing plants of many well-known companies from across Japan and becoming the core of the "Silicon Island" cluster where semiconductor production bases are concentrated. But this time those factory groups were also hit, resulting in impacts such as temporary shutdowns.
To prepare for crises such as natural disasters, companies have drawn up business continuity plans, but the BCPs have largely focused on measures centered on each company -- how to keep normal operations going and how quickly to recover even if damage occurs.
On the other hand, measures from the perspective of how to maintain business and production lines when supply networks for parts and other inputs are severed by disasters may still be insufficient.
What is essential for business continuity is building backup arrangements for supply networks.
It is important to build multilayer supply networks by leveraging industry and corporate-group networks in normal times, and attempts to incorporate this approach into BCPs could be called "supply chain-type BCPs."
It is also possible to build supply networks through coordination and cooperation with other industries and other companies within the regions and districts where companies and factories are located. Attempts to create BCPs that help procure necessary parts and raw materials in this way could also be described as "area-type BCPs."
Companies should use these methods to raise the effectiveness of their BCPs as much as possible.
Supply chain disruptions can also occur during international crises. Japanese manufacturers that depended on overseas factories suffered major blows from Thailand's massive floods in 2011 and the spread of COVID-19 infections that intensified in 2020.
Russia's invasion of Ukraine has disrupted wheat exports, driving prices higher and has had a devastating impact on the food industry, and the closure of the Strait of Hormuz triggered by the U.S. attack on Iran has severed supply networks for oil, naphtha and plastic products.
As these examples show, crises that disrupt supply networks are diverse -- not only natural disasters but also wars and conflicts, and global outbreaks of infectious diseases. For Japan, which depends on overseas sources for much of its resources and food, maintaining global supply networks can be seen as an important theme of economic security.
That is why Japanese companies need a posture that enables them to respond to all destructive crises and they should be urged to build robust systems that form multilayer supply networks and enable business continuity under any circumstances. To that end, I propose using the experience of the latest Kumamoto earthquake to review supply networks.
Mitsuru Fukuda, born in 1969, is a professor at Nihon University's College of Risk Management and holds a doctorate in political science specializing in crisis management studies and disaster countermeasures.
