Risky supply chains

I often find plane flights a good time to catch up on reading, and yesterday’s journey to Hi Chi Minh City to speak at a Strategic Integrated Marketing Communications conference proved an opportune moment to read Oxford Metrica’s 2012 Reputation Review.

An interesting and mercifully brief take on recent top corporate reputation events, the report re-visited events such as the Olympus governance scandal and Research in Motion global service outage and demonstrated the importance of governance, product/service quality and workplace in driving reputation. It also showed the damage that crises can have on shareholder value.

The report also highlighted the rising importance of supply chain risk as a key reputation driver,  graphically demonstrated by the impact of the Fukushima/TEPCO earthquake and nuclear disaster on Japanese consumer electronics and auto (see below) companies.

As the chart above indicates, the disaster had relatively little impact on Nissan, whose local manufacturing plant at Iwaki was back up and running within a week. Yet the impact on Toyota, with a higher percentage of its manufacturing in Japan and a considerably more local and less competitive supply chain, was far greater.

The morale? An overly concentrated supply chain is a significant potential reputation risk.

A more recent example? Ask Apple.

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