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Thursday, December 28, 2006

Did You Loose Contact with Your Supplier This Week?

Following a 7.0 earthquake off the coast of Taiwan this week, much of China and Southeast Asia fell off the map this week.  The earthquake resulted in telecommunications lines being severed in the ocean and many firms did not realize they had lost connection with the rest of the world until the next morning as the quake occurred around midnight local time.

The episode has identified a number of areas of concern for risk planners.  The break was not identified to most people for almost a dozen hours and many firms and people still did not realize the severity of the problem until over a day later.

The slow response from Hong Kong to publicize the problem and then to fix it also increased the perception of risk.  In actuality a break in lines under the ocean can take upwards of seven days to repair under ideal circumstances, but after this earthquake there were many lingering problems including aftershocks that delayed the repair more.

Plus, the rerouting contingency plans proved to be insufficient to handle the demand and many companies were left without access to internet websites outside of their geographic region.  Many more were unable to utilize their VOIP telephone systems and service in Taiwan is still struggling to get back up.

A deal was brokered last week to install a new fiber optic line directly from the US to China, but it will not be ready for another year almost.

This leaves many companies reassessing their risk management plans wondering how they can better protect their supply chain and stay connected through natural disasters whether they strike in Asia or in California or somewhere in between.