Balancing supply chain competitiveness and robustness through "virtual dual sourcing": Lessons from the Great East Japan Earthquake

In view of the unprecedented devastation of the Great East Japan Earthquake (GEJE), the psychological overreaction tends to emphasize the safety aspects at the expense of the basic principle of designing industrial supply chains that achieve competitiveness and robustness simultaneously. Manufacturing firms must identify the "weak links" in their supply chains in terms of dependence, visibility, substitutability and portability. The objectives of this paper are (1) to critically evaluate proposed changes to damaged supply chains such as adding inventory, adopting standardized parts, physically duplicating line production and equipment, and evacuating whole facilities; (2) to propose "virtual dual sourcing", in which the firm facing supply chain disruptions caused by a disaster carefully choose either to quickly recover a damaged line or transfer critical design information to a substitute line. Effective implementation of the virtual dual solution will require simultaneously enhancing the design information's portability, the supplier's visibility, and the firm's capabilities at process recovery and production substitution.