When Toyota pioneered the ‘Just in Time’ production philosophy, Japanese car manufacturers
thought it was a near-perfect system.
But after the massive earthquake five years ago crippled parts of the supply chain, the automotive foodchain simply fell apart.
Many companies are sticking with Just in Time, have been working hard to strike the right balance between efficiency and disaster proofing supply channels.
With 30,000 parts involved in one car, it’s no mean feat to change systems, and holding massive inventories at multiple locations pushes costs up significantly.
German chemical maker Merck told Reuters that it had increased local supplies of shimmery pigment Xirallic. Its Fukushima factory was unharmed, but its packed warehouse couldn’t be accessed and forced several manufacturers to suspend some colours.
It now keeps several months worth of the pigment at different locations around Japan and in other regions.
Transmission maker ZF-TRW has doubled the amount of stock it keeps from single-source suppliers to six days.
“Holding more inventory, or adding another production line as a business contingency measure may improve a company’s robustness in the face of disaster, but it won’t necessarily improve its global competitiveness,” supply chain expert Takahiro Fujimoto from Tokyo University told Reuters.
“Companies which take such steps at the cost of competitiveness would probably go bust even before the next disaster occurs.”
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