special report: disasters show flaws in just-in-time production
Tsukiji, Japan/DETROIT/san francisco (Reuters)- Just over a week after the earthquake hit the Texas Instruments chip plant that spread here, a gardener is repairing the Japanese garden in the courtyard inside the office building attached to the plant. The garden is a symbol of tranquility, and the gardener swo patterns on fine gravel with rake, like ripples in the pond. Although no one works at the gate or front desk of the office building, the rest of the factory outside the building -- What the locals call \"Tekisasu\" or Texas- There seems to be nothing but tranquility. Dozens of workers in parachuting suits and safety helmets visited outside the factory building. The conference room on the first floor of the factory office building is packed with white-collar workers, although it is a Sunday. TI said the plant will not resume production until the medium term. July. There was no obvious damage to the factory. But if it is structurally reasonable, then Japan is not outside its doors. Asphalt on the road and cracks on the concrete walls of old buildings. They close and buy rations when the gas stations are open. Train schedules have been slashed. A homemade sign on the hotel window says \"Japan: Don\'t let this earthquake beat you. In March 11, a devastating earthquake and tsunami struck northeastern Japan, and soon after, major manufacturers around the world took action. From the conference room at the GM technology center in the suburbs of Detroit, Warren, to the Memphis headquarters of parcel delivery giant FedEx, the staff team rushed to assess the impact on employees, factories and goods. \"Within an hour and 15 minutes, we set up a crisis room after the earthquake,\" said Andy Palmer, senior vice president of Japanese carmaker Nissan, he said in a telephone interview at the Tokyo office last week. \"From there we can see the development of everything, giving priority to the status and benefits of employees. In a globalized economy, manufacturers are increasingly leaning towards lean inventory and \"just-in- Production time-keeping ultra- Small number of parts on hand to avoid holding expensive parts inventory A quick response is critical as disruption to the global supply chain will spread rapidly, factories around the world will be closed and large numbers of workers will be hired. Many manufacturers and suppliers have warned that supply disruptions could affect long- Waiting for the Dream Plane. The most immediate threat to manufacturers comes from the fact that the weakest link in the global supply chain is Japan\'s most famous: high Finally, parts with high technical content like semiconductors are also small in weight. \"The earliest impact will be felt --cost, low- Weight products, \"said John Hoffecker, general manager of AlixPartners LP, a restructuring consultancy. \"They came out of Japan by plane, so the manufacturers don\'t have much buffer on these products. In an interview with Reuters on March 17, Hoffecker said that the real impact of the disruption in the supply of these parts will become apparent \"in about a week. GM says it gets more parts from Japan Electrical type. Chips manufactured by ON Semiconductor, due to infrastructure problems, have been shut down by facilities of Aizu and Gunma, from air conditioning to power steering, lighting, braking system, automotive manufacturers are using, navigation and lighting. It\'s not just a very high problem. Technical production, but also stock. Even a split- In the memory chip factory, which takes a few weeks to produce, the second power failure will eliminate a large amount of goods. Even under normal circumstances, for the most basic parts, it is a long process to re-launch the supplier after the interruption. It requires careful calibration and extensive testing. Therefore, the road to recovery may be long. GM Chief Executive Daniel Akerson said in Sao Paulo, Brazil, on Friday that it could take two weeks to assess the impact -- The situation remains uncertain due to Japan\'s continuing nuclear crisis. Manufacturers with spare power supplies have transferred production to them. For companies that don\'t have a replacement, the competition to find a replacement is going on, and many are chasing the same product. Even if they do find alternative sources, having them produce the right parts is a long process involving design and factory testing. \"The production of any part can move over time, but in the short term it\'s a huge challenge,\" says Fred McKenzie, executive director of consultant and turnaround expert Conway McKenzie · \"It will take a few weeks, and it will take less than a few years. This is certainly not something that can be done overnight. Moving to a new supplier is often not cost-effective. At the same time, manufacturers face tough choices as inventory decreases. As the parts run out, they may be forced to stop the production of certain models, or assign shared parts to popular models to maintain production. \"If you consider risk management in this situation, you will want to protect the vehicles you sell the most,\" said Dan Cheng, leader of. T. Corny\'s car business in the United States. GM has idle a factory in the state of Luis Anna, producing pickup trucks with low sales, plus a Spanish factory suspending production and canceling two shifts at a German car manufacturing plant Opel manufacturing factory \"We are optimizing the use of parts that are caused or may be in short supply by the Japanese earthquake,\" spokesman Klaus said . \"Peter Martin. Details of the extent of damage in Japan have been delayed, especially since in the days after the 9 th, communication with severely affected areas was not possible. Magnitude 0 earthquake. While many companies have provided the latest information on which plants do not work, Austin, TX- The employees of aerospace semiconductor provide a rare glimpse of how to deal with the disaster. The coastal city of Sendai is 10-meter (33 feet) The tsunami after the earthquake caused catastrophic damage. There is a factory where feisikar makes accelerometer, pressure sensors and other chips for cars that have been shut down after the tsunami. Spokesman Rob Hartley said Believing that employees in the other parts of Japan rented trucks after the earthquake to obtain emergency supplies such as dry food and water, colleagues in Sendai are transferring production to other facilities and transferring inventory to customers. \"We operate a global supply chain, so the resources, skills, problem-solving capabilities and creativity we invest every day continue to apply in our current environment, Hartley said. A few days after the disaster, major local manufacturers said their factories were affected. Toyota Motor Company 38% of cars are produced in Japan According to consumer electronics giant Sony Corp. , several manufacturers say they don\'t know when production will resume. Big suppliers like Shin Etsu Chemical, the world\'s leading silicon chip maker, and Texas Instruments, a chip maker, also reported that the earthquake destroyed production. Japan produces 57% of the world\'s wafers and about 20% of the semiconductor. Texas Instruments declined to say which customers were affected by the closure of the Miho plant, the Japanese garden. However, the list of TI customers obtained by Reuters includes Apple, Nokia and Autoliv Inc, the world\'s largest mobile phone manufacturer. On its website, Autoliv said it provides parts to all major automakers, with GM being its largest customer, accounting for 14% of sales in 2010. It is not possible to determine which of them are provided by Miho factory. The factory also produces digital optical processing chips, a key component of many video projectors. Texas Instruments is the main manufacturer of DPL chips, so their stable supply is critical to projector manufacturers such as Optoma Technology Inc. and Vivitek Corp. A spokesman for Vivitek said that Vivitek is working closely with TI to monitor the supply of key chips and guarantee their supply. NSK Co. , Ltd. , Japan\'s largest ball bearing manufacturer, said that all of the company\'s factories were not damaged, but because of the uncertainty of the power supply, it did not know when it would be able to resume full production. The list of NSK auto customers obtained by Reuters looks like the World Health Organization of Global Automakers, including giants such as Ford Motor, Fiat and Volkswagen -- Although it is not clear which customers receive parts from NSK\'s Japanese factory. Chris Swartwout, vice president of human resources, supply chain and logistics for NSK North America, said he was unable to discuss which customers of the company were affected. \"We are really at a stage where we are trying to understand the supplier situation,\" he said . \". \"The situation is still being assessed. \"GM\'s crisis room at Warren\'s technology center in Michigan is one of the four companies the company has around the world -- One for North America, South America, Opel/Vauxhall and GM International. Diana Tremblay, GM\'s global chief manufacturing officer, said the company\'s staff was growing. She visited about 25 people last Thursday. It also lists all factories, all models and key components around the world, such as power systems. With the advent of information on the broader supply base of GM, there are often conference calls and email updates. Tremblay said GM left the factory\'s decision to stop production until the last minute. Last Thursday, she said, she decided to idle its factory in shrifport, Illinois, which made It is necessary to sell Chevrolet Colorado and GMC Canyon pickup because the workers are \"4/10\", that is, they work 4 10- Shift from Monday to Thursday and need to be informed before the weekend. General Motors cannot say how long the plant will be closed or how other plants will be affected, Tremblay said. \"There is no game here, we just don\'t know,\" she said . \". \"I can assure you that this is not because of a lack of effort. Low-flying FedExweight, high- Technical departments outside Japan, also set up a global planning team immediately after the earthquake, and began helping customers assess the situation after finding that all its employees had fled the disaster unscathed. \"We are very lucky,\" said Doug Cook, vice president of international planning and engineering at FedEx. He said that in addition to shutting down facilities closest to the damaged Fukushima nuclear power plant, the company also operates normal services inside and outside Japan and is checking whether all export packages have radiation. Japan\'s FedEx account managers are working \"Day after day\" with customers to see if they need alternative delivery and pick-up locations and to evaluate the situation on the ground, Cook said. \"Information is vital,\" he said . \" \"It enables people to understand what is happening. Norman Black, a spokesman for rival UPS, said that if the customer determines that production must be transferred, the company is ready to help them transfer items to other factories overseas. Getting information is now a problem because the supply base under top suppliers is opaque. A. \"in terms of the supply base, companies tend to focus on less than they are . \"T. Said Cheng. \"Going deeper than the entire supply base is very time-consuming and costly. Property insurance company Chubb Corp. barry Tarnef, a senior risk expert, said that the ambiguity of the supply base may obscure the fact that somewhere in the supply chain, A company may \"control most of the market \". \"If something happens to a company, it may shut down the whole industry,\" he said . \". For years, experts have advised manufacturers to diversify their supply base. After all, recent history is full of examples of extensive supply chain disruptions and their consequences for manufacturers that rely on too few sources -- From the September 11, 2001 attacks to Hurricane Katrina in 2005 to the Icelandic ash cloud that closed the European Sky last year. Following these events, some companies have implemented strategies to diversify suppliers and production. But according to Gad Allon, associate professor of management economics and decision-making science at the Kellogg School of Management at Northwestern University, they are exceptions, not rules. \"A few companies have a good understanding of operational risks,\" he said . \". \"Most people don\'t. \"Toyota has been gradually implementing a strategy to produce all models in multiple factories around the world. But that doesn\'t include Prius, which is in trouble because Prius is only made in Japan. Multiple suppliers can also reduce the risk of disruption. \"You should have only one strategic vendor, should you hedge your bets and have some layoffs? James DeLoach, managing director and risk management expert at consulting firm Protiviti, said. \"These are tough questions. But once you call, you have to play your own card. That\'s why companies are facing these problems now. ” TrueCar. Com\'s Jesse topurak said that before the earthquake, the average price of the Prius model in California was $300 lower than the dealer\'s invoice. Within four days, the price was $1,000 higher than the invoice price. Toprak said prices will continue to rise as prices rise Mileage Prius is very popular among environmental consumers. But in the long run, if the price is too high, customers who are interested in Prius will save money at any cost. \"At some point, math doesn\'t make any sense to most people,\" Toprak said . \". Sunil Chopra, professor of operations management and information systems at the Kellogg School of Management, said the temptation of a single supplier is that they make the lives of manufacturers easier and cheaper to manage. \"If you save 5 p per unit, then the $100 million you may lose in a disruptive event will not appear in your results today,\" he said . \". \"That\'s why we push the company to single --sourcing. But to make up for this huge loss, how many units do you have to produce, 5 p per unit? Chopra and other Mike Krechevsky, like D & B supply management solutions, expect the events in Japan and their impact on the supply chain to force major manufacturers to consider whether a reserve plan is needed. \"This will open a lot of eyes,\" Krechevsky said . \". \"Many organizations will take a step back and look at this and see if they have an emergency plan for something like this. But Chopra said that after experiencing previous disasters and past experience, the company talked about diversity, which shows that when the dust settles, manufacturers will choose cheaper options to improve them. \"We will now see a surge in companies talking about diversity,\" he said . \". \"But as memories disappear, decision makers will not consider disruptive events to the extent they should consider. \"After six months, they will reduce the risk again. \"If the Japanese earthquake would force suppliers to rethink, there is obviously nothing aboutin-Time production. People who have not been interviewed on this article expect any changes. GM\'s Tremblay has been working in the company since its 18 th birthday on 1977. At that time, the inventory was much larger, bringing \"a lot of extra costs and a lot of extra confusion. \"A few years ago, there was a lot of inventory around you,\" she said . \". \"The biggest change is that there is no more inventory around. It\'s better not to have all the inventory. \"But when there is an interruption in your supply chain, the opposite is true,\" she added . \". \"This is the trade-off. \"Overall, this is still the right thing to do.