{"id":200334,"date":"2021-05-07T19:07:00","date_gmt":"2021-05-08T00:07:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/05\/07\/fragility-has-its-costs\/"},"modified":"2021-05-07T19:07:00","modified_gmt":"2021-05-08T00:07:00","slug":"fragility-has-its-costs","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/05\/07\/fragility-has-its-costs\/","title":{"rendered":"Fragility Has Its Costs"},"content":{"rendered":"

It looks like manufacturers in general and the automobile industry in particular, are taking a few steps back from just-in-time manufacturing<\/a>.  It appears that they have discovered that the system where they accumulate little or no inventory may save a few bucks, but when it breaks, it gets ugly fast:<\/p>\n

<\/a><\/p>\n

Toyota Motor<\/a> Corp. is stockpiling up to four months of some parts. Volkswagen<\/a> AG is building six factories so it can get its own batteries. And, in shades of Henry Ford, Tesla<\/a> Inc. is trying to lock up access to raw materials. <\/p>\n

The hyperefficient auto supply chain symbolized by the words \u201cjust in time\u201d is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them. <\/p>\n

\u201cThe just-in-time model is designed for supply-chain efficiencies and economies of scale,\u201d said Ashwani Gupta, Nissan<\/a> Motor Co.\u2019s chief operating officer. \u201cThe repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.\u201d<\/p>\n

\u2026\u2026\u2026<\/p>\n

The basic idea of just in time is avoiding waste. By having suppliers deliver parts to the assembly line a few hours or days before they go into a vehicle, auto makers don\u2019t pay for what they don\u2019t use. They save on warehouses and the people to manage them. <\/p>\n

But as supply chains get more global and car makers increasingly rely on single suppliers, the system has grown brittle. The crises are more frequent.<\/p>\n

\u2026\u2026\u2026<\/p>\n

A freak snowstorm in Texas in mid-February shut down a refinery that feeds production of 85% of resins produced in the U.S. Those resins go into components from car bumpers to steering wheels. They\u2019re some of the least expensive raw materials in a car, but they go into seat foam, and dealers can\u2019t sell a car without seats.<\/p>\n

At the end of March, Toyota shut down production at several U.S. plants due to the shortage, according to a schedule seen by The Wall Street Journal, hitting production of some of its bestsellers, including the RAV4 sport-utility vehicle. <\/span><\/p><\/blockquote>\n

Obviously, excessive inventory can be as much of a problem as not enough, but when you have inventory levels that are measured in hours, as opposed to weeks, when something goes wrong, you are completely f%$#ed.<\/p>\n","protected":false},"excerpt":{"rendered":"

It looks like manufacturers in general and the automobile industry in particular, are taking a few steps back from just-in-time manufacturing.  It appears that they have discovered that the system where they accumulate little or no inventory may save a few bucks, but when it breaks, it gets ugly fast: Toyota Motor Corp. is stockpiling …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1249,987,1016,1221,1003],"tags":[],"class_list":["post-200334","post","type-post","status-publish","format-standard","hentry","category-engineering","category-fail","category-international-commerce","category-manufacturing","category-philosophy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/200334"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=200334"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/200334\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=200334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=200334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=200334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}