Resilience strategies for complex supply chains: Mitsubishi

0
59

From Dr. Paolo Trucco and Dr. Alessandra Negri.

Mitsubishi Motors Corporation is a multinational automotive manufacturer belonging to the Japanese Mitsubishi Group. In 2016, the company suffered a significant loss due to improper conduct in fuel economy testing, and while its annual sales did reach 15,866 million €, this amounts to 16% less than the previous year. In the same year, operating income was 42 million € and the number of employees was 29,604. Mitsubishi actually dates back to 1870, but Mitsubishi Motors Corporation was officially established in 1970. The company continued to grow, developing a global network with manufacturing and R&D facilities all around the world. Focused on a customer-centric approach, Mitsubishi Motors aims at providing cutting edge vehicles, continuously developing and manufacturing new products with superior driving performance.

Since Mitsubishi Motors Corporation has a subsidiary in Thailand, it suffered a supply chain
disruption in 2011, due to the severe flooding hitting the country between July 2011 and January2012. Even though its plants were not directly damaged, the severe weather halted production due to flood damages at its local suppliers. The production suspension lasted approximately one month and caused product shortages: sales were cut by 23,000 units, corresponding to a profit of morethan 1 billion €. Despite the decrease in net sales, the company reached positive results due to the diversification of products, together with
other factors such as reductions in materials and other costs.The high dependence of the company on manufacturers in Thailand made it more vulnerable to the supply chain disruption. A higher geographical variety of suppliers could help to be more independent from such a localized event.

However, Mitsubishi Motors could rapidly resume the production by procuring parts through different channels, including Japanese producers. Therefore, the high number of production facilities in different countries positively affected not only the flexibility of the company, but also its velocity, and it allowed collaboration among different plants. Moreover, it leveraged the high number of suppliers, temporarily shifting to other parts providers and collaborating with them, putting together their best efforts towards resuming production. As a result, Mitsubishi Motors was able to restart production earlier than expected and the production shortage lasted only one month.