Silicon Valley needs to develop “supply webs,” not “supply chains,” expert says

Not all tech supply chains are equal.
Last year’s devastating earthquake and nuclear meltdown in Japan and floods in Thailand, the world’s largest manufacturer of computer hard drives, disrupted the supplies of critical components to a number of global tech companies, said Jonathan Wright, a Singapore-based Accenture executive who visited Silicon Valley recently.
“When Fukushima (location of the nuclear disaster) happened, some companies were paralyzed by indecision,” said Wright, a supply management expert. “But there were others that had good information and good people on the ground (across Asia). They were able within days to strike up new supply points, from Korea to China. They pulled ahead of the rest of the competition because they had a much more dynamic model.”
Now, developing back-up suppliers is “front of mind” for most tech companies, Wright said.
Companies need to build a “supply web” consisting of multiple vendors in different regions, he said. And they need to know who supplies their Asian partners to ensure a more diverse flow of components to minimize the risk of costly disruptions, Wright said.
It’s also important for multinationals to build close relations with vendors, he said.
“Trust-based relationships are critical in Asia,” Wright said. Many companies quickly abandoned long-term partners in Japan after the catastrophe, he said. “Those that stuck around — the Japanese valued that.”


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