April 16, 2020
2:00 pm – 2:30 pm
Webinar – No Cost
Supply chains are disrupted by fires, earthquakes, tsunamis, floods, pandemics, wars, and other natural or human disasters. These events are too unpredictable to have planned responses ready.
Manufacturers need to improvise, and their success depends largely on help from suppliers. The most effective strategy is to protect the supply chain by vigilance rather than inventory. This means keeping accurate inventory data, monitoring the disruptions that can be anticipated, and responding quickly to those that can’t.
Attempting to prevent shortages by inventory does not work with thousands of items, as you end up with full warehouses that happen not to contain the item you need today.
To secure help from suppliers in emergencies, you need to nurture collaborative relationships involving single-source agreements, the regular exchange of business and technical information, and joint problem-solving teams.
There is little general theory on how to do this but examples from past cases, particularly from Toyota’s supply chain. While critics have often claimed that low inventories made Lean supply chains vulnerable to natural disasters, Toyota’s record in actual events says otherwise, in cases including, in the US, the Mississippi flood of 1993 and, in Japan, the Aisin Seiki fire of 1997 and the Fukushima earthquake of 2011.
As it turns out, the combination of vigilance in logistics and relationships made it possible to enlist the supply chain in rapid recovery works better than inventory. In the case of the Fukushima earthquake, more inventory would simply have meant more losses.
Michel Baudin has been working to improve the art of making things for 40 years. Trained in engineering, he got his feet wet in production in the early 1980s, and later apprenticed under master Japanese consultant Kei Abe for eight years, starting his own group in 1996. He has been consulting since 1987 on lean manufacturing implementation in industries ranging from automotive and aerospace to electronics and frozen foods.