December 29, 2008
ANY WEAK LINKS IN YOUR SUPPLY CHAIN?
UPS forwards a study on how major companies with global supply chains may not be doing enough risk assessment to help them weather the tough times ahead.
Lean manufacturing means depending on your suppliers to give you what you need when you need it. But that means any supplier problems immediately impact your business, and unless you have a contingency plan, a failed supplier can bring you to a halt.
I was struck in particular by one counter intuitive statement:
Consider: the Detroit 3 are swimming in inventories of parts, supplies, work-in-process and finished goods. They would have been much better off selling out of some products every year than overproducing and driving the value of every vehicle lower. But that would have been unthinkable.
It will be very interesting to see how all this shakes out, and which practices emerge as truly successful in what promises to be the toughest business environment in a century. On the one hand, we have analytical tools and transportation infrastructure unavailable to any previous businessmen. On the other, so do all of our competitors.
Game on.
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Lean manufacturing means depending on your suppliers to give you what you need when you need it. But that means any supplier problems immediately impact your business, and unless you have a contingency plan, a failed supplier can bring you to a halt.
I was struck in particular by one counter intuitive statement:
"...a significant minority of businesses are falling back on increased inventory to address resilience problems, an expensive and ineffective approach. Almost half the companies surveyed expect to hold additional stock and raise inventory even more in the future.
This is the "nesting" instinct that is so hard for lean manufacturers to overcome in the first place. People seek the comfort of stockpiles they can see and touch, even if it costs them more than any other solution - alternative suppliers & components, partial shipments & backorders, even canceling marginal sales.Consider: the Detroit 3 are swimming in inventories of parts, supplies, work-in-process and finished goods. They would have been much better off selling out of some products every year than overproducing and driving the value of every vehicle lower. But that would have been unthinkable.
It will be very interesting to see how all this shakes out, and which practices emerge as truly successful in what promises to be the toughest business environment in a century. On the one hand, we have analytical tools and transportation infrastructure unavailable to any previous businessmen. On the other, so do all of our competitors.
Game on.
Posted by: JBD at
12:02 AM
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