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Supply Chain Shocks

Max Vernier


Supply chain shocks are inevitable, but it is possible to organize in ways that decrease the net effect of shocks and hedge against extremely disruptive events.

Case Study:

The 2011 Japanese Tsunami and its effects on the auto industry supply chain.


The central paper, by Richard Baldwin, takes a historical look into how/why supply chains developed and their effect on industrialization (specifically autos). This will serve as my background for looking at how supply chains are actually disrupted. I will use several articles with statistics regarding the aftermath of the Tsunami in Japan, as well as anecdotal data from Delphi, a global parts supplier. The other listed papers give excellent insights into the ways in which supply chains work and thus, how they are disrupted.

Escaith, Hubert and Fabien Gonguet. “Supply chains and financial shocks: Real transmission channels in globalised production networks.” 16/06/2009

Baldwin, Richard. “Trade and Industrialization After Globalization’s 2nd Unbundling: How Building and Joining a Supply Chain are Different and Why It Matters.” National Bureau of Economic Research, Cambridge, MA. December, 2011.

Thun, Jorn-Henrik and Daniel Hoenig. “An Empirical Analysis of Supply Chain Risk Management in the German Automotive Industry.” International Journal of Production Economics, 2011, vol. 131, issue 1, pages 242-249.

Uttamrao, Kale Shailendrakumar. “Effectiveness of Supply Chains for Auto Component Manufacturing Industries.” Advances in Management, 2009.


The numbers alone show downward trends in sales and such for suppliers, manufacturers, and raw material producers up and down the supply chains. But I will also take a close look at retail prices and raw material prices that fluctuated after the storm.


Economic shocks happen all the time, but certain preventative practices can help hedge against supply chain shocks: globalization, regional supply chains, dual suppliers (diversified portfolio of suppliers), joining versus creating, and a few others.


  1. Trey Hatcher Trey Hatcher

    Based off of your analysis, why is it that you think globalization hedges agains supply chain shocks? It seems like it could be difficult for management to coordinate with suppliers across the world and adequately address supplier issues and workforce deviance, such as strikes, particularly when they’re reliant on one country for a certain rare resource or technology.

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