The world has changed! Over 80% of Japanese companies begin supply chain diversification

Japanese media reported that with the U.S.-China trade war and the epidemic hitting the original supply chain, a survey of executives from large Japanese companies conducted from March 12 to Monday (March 29) showed that 84% of 94 companies with one factory in Japan said they have started reviewing their supply chains to deal with the epidemic, up from 72.1% in May 2020.

Of the companies that said they are changing their supply chains, 39.4% said they are reducing their dependence on any single market, while 38.3% said they are trying to reach out to different suppliers, as needed. Companies surveyed also adjusted their past practices by increasing inventory and upgrading supply from local plants.

Isao Teshirogi, CEO of Shionogi Pharmaceuticals, said the outbreak has given the company the opportunity to re-examine its dependence on certain regions, and that future operations should not only focus on cost, but also strike a balance between quality and supplying items from multiple countries.

Fujitsu President Takahito Tokita also said that although the company could not take advantage of the globalization of its supply chain to resist every risk in the world, it could still enhance its ability to recover from the crisis.

Mitsubishi Chemical Holdings CEO Hitoshi Ochi, on the other hand, pointed out that it is important to establish self-sufficient businesses within the country or region, taking into account other factors such as trade protectionism.

Toto, a bathroom company, will prepare for potential economic stagnation in Japan and other countries in the supply chain by finding current suppliers, sub-suppliers, and supply alternatives to sub-suppliers. For its part, Speed Land will build a new transmission plant in the U.S. in 2023 to assemble cars in the U.S. without relying on Japanese-made parts.