Speedy Recovery At Western Digital After The Thai Flood
During this most recent monsoon season, Thailand experienced the worst flood in history with 13.6 million people affected and 815 dead. Over 8,000 square miles of farmland were damaged and 65 of Thailand’s 77 provinces were flooded. This massive flood created a major supply chain disruption, including at Western Digital (WD) who is the largest global provider of hard disk drives. In mid-October 2011, Western Digital’s plant near Ayutthaya in Thailand was submerged under six feet of corrosive floodwater, which contaminated the entire facility. While other factories such as Honda took 6 months to recover, the media were impressed to witness that WD managed to reopen the factory within 46 days. What is WD’s secret recipe for success?1
Their success has everything to do with WD’s supply chain risk management plan that was designed before the flood:
- Monitor And Assess Risks. Monitor rain forecast, floodwater level, conditions of dams and dikes in surrounding regions and areas, and assess the likelihood of flood and the potential impact on the plant as well as WD’s suppliers in Thailand.
- Proactive Measures. Prepare the plant against floodwater entering the plant, which includes sandbags, water pumps, generators, first aid kits, and essential foods. In addition, the team would prepare an evacuation plan that includes boats on standby.
- Mitigation Plans. Develop mitigation and contingency plans by moving inventories and some equipment from the ground floor to higher floors to avoid potential damage from floodwaters. In addition, the team would work with management in Thailand, Malaysia, and United States to develop contingency plans in case production in Thailand was disrupted.
- Communication Plans. Develop a communication plan with all employees, all key suppliers, and all other WD units throughout the company.
During the flood, WD deployed the various contingency plans by shifting production to Malaysia, and by asking Thai Navy divers to retrieve submerged equipment. After the flood, WD began its recovery operations by decontaminating the facility quickly and by refurbishing the retrieved equipment. Through close communication and coordination, WD restored its operations quickly in Thailand and minimized disruption. Within just three quarters after the Thai flood, WD broke a new record in volume and in revenue!
1 For details, the reader is referred to a teaching case by Bunya and Tang, "Resilience Response and Speedy Recovery at Western Digital", UCLA Anderson School Teaching Case, 2013.
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