Many years ago, thirty years to be exact, Japan taught the companies to boost their profit by keeping inventory incline. Together with advantages, there are also risks in the Just in Time production and it is imperative that also taught the American companies as well. Mitsubishi Heavy Industries builds the 787's wing; no one else can do that job. General Motors (GM) decided on Mar. 17 to close its Shreveport (La.) Chevrolet Colorado and GMC Canyon pickup plant for a week because it lacked components. . Deere (DE) is delaying deliveries of excavators and mining equipment. And Honda Motor (HMC) suspended orders from U.S. dealers for Japan-built Honda and Acura models that would be sold in May.
They have used days or even hours of inventory instead of the usual monthly records. Jim Lawton, head of supply management solutions at consultant Dun & Bradstreet (DNB) and a former procurement chief for Hewlett-Packard (HPQ) stated that “If supply is disrupted as in this situation, there’s nowhere to get product.
Early 1980’s, the Americans compete with Japan manufacturers; they have learned the trick of sticking to one supplier for key parts. They argue that it was cheaper to buy in bulk rather than in split orders. Now quake damage has interrupted 25 percent of the world's silicon production because of the shutdown of plants owned by Shin-Etsu Chemical and MEMC Electronic Materials, says IHS iSuppli (IHS), an El Segundo (Calif.)-based researcher. The tragic natural phenomenon caused 130 plants, mostly in auto and electronics to close as of March 22 according to data compiled by Bloomberg.
Only about 10 percent of companies have detailed plans to deal with supply disruptions, says Lawton, who calls logistics the fastest-growing piece of Dun & Bradstreet's business. Shortages may crop up in other countries as companies seek alternative sources, he adds.
Despite all of the risks of the just in time production, companies won’t easily abandon this...