sábado, 21 de enero de 2012

Supply chains: a reminder of vulnerabilities...

PIP and SOPA have dominated the news the last several days but those legislative proposals are not the only IT-related issue that bears mention. Soaring prices for hard drives are a vivid reminder of the vulnerabilities of long distance, geographically concentrated supply chains.

Last year, Thailand from suffered devastating floods. Before the flooding, 40% - 45% of the world's hard disk production was done in Thailand. Attaining pre-flood production levels is taking much longer than expected and consumers are feeling it higher prices: certain models sold in the US cost 40%-50% more than before the flooding.

Companies in a myriad of industries became painfully aware last spring that they were unknowingly exposed to the tsunami in Japan through their supply chains. Perhaps this latest demonstration of how geographically concentrated production can create vulnerabilities will underscore the importance of looking at a wide range of factors when choosing amongst suppliers and investment sites.

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