Tsunami-Driven Energy Shortages Are Driving Sustainable Thinking in Japan

In a recent discussion with a group of Japanese supply chain executives, the discussion came up regarding the current state of the economy after the massive tsunami of March 2011. Dubbed in Japan as “3-11”, this incident took out many lives, but has also significantly reduced the amount of available energy capacity for the country as a whole. This has caused major restructuring of production schedules, with many large automotive and manufacturing concerns producing on the weekends when peak loads are lower. Japanese energy consumers will soon be facing a government mandate to turn thermostats down in the summer and up in the winter to reduce energy usage, or face the risk of blackouts during the critical season facing summer heat. This is likely to continue for the next four to five years.

The only positive to emerge from this situation is that the Japanese people have become much more conscious of the role of energy in their lives, and how valuable a commodity it is in terms of their daily living. There is increased recognition of the importance of energy conservation, and the country as a whole is being forced to re-evaluate their relationship to energy. People are beginning to question whether all of the lights that shine in Tokyo at night (think of the massive electronic displays in shopping districts) are necessary. There is a massive increase in the halogen lighting markets, and demand for these lights is projected to rise to more than 50% of market share. In a sense, the disaster is driving a renewed focus on innovation in the energy sustainability markets. Investors are looking at new energy savings devices in a new light, seeing an emerging latent demand for these devices. They will also shape the way supply chains will operate, and may impact production schedules, inventory management, transportation and facility location strategies, and other components of supply chain strategy. My bet is that this is not something that is likely to stay in Japan, but will probably move to other countries and industries as well.