[bratticus]

Just-in-time supply lines could fall victim to financial crisis

by Sam Abuelsamid
autoblog
Jan 1st 2009

One of the key improvements in automotive manufacturing efficiency over the past three decades may soon fall victim to America's current economic turmoil. Toyota made "just-in-time manufacturing" a common term and it has since been adopted by the entire industry.

Unfortunately, in order for just-in-time to work, assembly plants need a stable supply base that can reliably deliver the right parts at the right time, every time. If a company's suppliers are in danger of shutting down due to lack of funds, they cannot reliably function without an inventory bank of parts. The net-net is that if one or more automakers goes belly up in the coming months, numerous suppliers are likely to follow that company down the drain.

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Carmaker hopes to mitigate effects of U.S. supplier bankruptcies

Makiko Kitamura and Alan Ohnsman / Bloomberg News
Tuesday, December 30, 2008

Toyota Motor Corp. and Honda Motor Co., Japan's two largest carmakers, may modify their so-called "just-in-time" manufacturing system to avoid having any possible supplier bankruptcies disrupt their production.

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Any emergency measure to stockpile parts would be costly, analysts say. Increasing inventory would mean renting warehouse space to store parts, while supplementing components from overseas would increase shipping costs.

[Tanada]

Good riddance too them.