Organizations that rely on Japanese manufacturers for goods and services need to prepare for an extended disruption to global supply chains resulting from the earthquake and tsunami in Japan, according to Marsh’s supply chain experts.

Most of the supply chain disruptions  from this catastrophe are likely to be caused by issues associated with access to skilled labor and inventory, infrastructure, energy, utilities, and  transportation.  In addition, companies may face higher costs due to shipping capacity constraints and scarce inventory.

"While the immediate priorities in Japan  have been social, the aftershocks to the global economies from this disaster are beginning to unfold, albeit very slowly,” noted Gary Lynch, head of Supply Chain Risk Management at Marsh Risk Consulting.  “In the weeks since the disaster we have seen panic buying, some improved levels of confidence about supplier capability and capacity, and additional clarity on supply chain dependencies. At this stage,  managers at   multinational  companies with supply chains that  could be impacted by the catastrophe should  continue to assume  that  their  businesses will be severely disrupted for an extended period and will face price volatility, and should develop effective mitigation strateg ies .”

Management at multinational companies need a thorough understanding of their supply chains, including the markets they sell to, the suppliers they rely on, and the critical dependencies that exist along the supply chain.

Lynch added, “Effective planning can sometimes make all the difference whether a company survives or not."

Next Steps

Clients may refer to Marsh's Disaster Recovery Portal for regular updates and Marsh specialists' contact information. Marsh has also set up a hotline where clients may direct insurance questions and notify a potential claim.

Marsh’s local dedicated claims team and client executives have been mobilized to support our clients in their business recovery.

For real-time research and forecasts of natural catastrophes, please refer to Guy Carpenter's Cat Central bulletins. For more information, please contact us at: contact@marsh.com.