Supply Chain Decisions
The Japanese tsunami of 2011 is a perfect illustration of supply chain volatility and its hidden costs. Japanese automakers supply their North American customers with products built mainly in North America. For example, the Toyota Camry is more "American" than many cars built by Detroit. But the tsunami exposed a weakness: several key parts for North American factories came from Japan, and only Japan. Weeks of backlogs in getting parts to the U.S. came just as auto sales were beginning to turnaround for all automakers, and the bottleneck cost the affected companies a reported $1.3 billion.
Manufacturers need the ability to model "what if" scenarios to anticipate possible supply chain disruptions and then choose the most cost-effective means of avoiding them. Modeling that uses causal data like weather events or war disruptions -- or less ominous events like promotions -- should be a regular part of a robust forecasting business process.
