Wednesday, October 3, 2012
As mom to a toddler and an eight-month old, the news that global production of disposable diapers could be affected following an explosion and fire at a chemical plant in Japan over the weekend, more than caught my attention.
Nippon Shokubai Coâ€™s plant in Hyogo Prefecture produced acrylic acid, a key ingredient in a resin called SAP that is used in disposable diapers.
According to an NBCnews.com blog post, the plant produces about 20 percent of the worldâ€™s SAP and 10 percent of global output of acrylic acid.
NBC cites the Nikkei business daily saying that operations at the plant are likely to be halted for a long time and other manufacturers of SAP resins are operating in full production mode, leaving little room for back-up production.
Over at Chubbâ€™s business blog Industry Exposure, Barry Tarnef, an assistant vice president and a senior loss control specialist for Chubb, observes that the incident serves as another reminder that supply chains are fragile.
Industrial accidents, natural disasters, labor issues (such as strikes and shortages), production problems and political upheaval, and trade disputes are just some of the main causes of supply chain disruption, according to the Insurance Information Institute (I.I.I.).
The I.I.I. notes that it can take two years or more for a company to recover from a supply chain failure and that the purchase of supply chain insurance can help protect businesses. However, insurance is only part of the solution.
As Loretta Worters, vice-president with the I.I.I. says:
Check out this I.I.I. presentation on how to protect your global supply chain.