Putting the Brakes on JIT

Toyota is stockpiling four months of some parts. Volkswagen is building six factories so it can get its own batteries. And Tesla is trying to lock up access to raw materials.

Part $2$

The hyper efficient auto supply chain symbolized by$$ "just in$$ time" is undergoing its biggest transformation in half a$$ century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in$$ demand, freak$$ weather, and a series of$$ accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them.

Part $3$

$"$The JIT model is designed for$$ supply$-$chain efficiencies and economies of$$ scale," says$$ Nissan's CEO.$$ "The repercussions of an unprecedented crisis like Covid highlight the fragility of our$$ supply$-$chain model."

The basic idea of$$ JIT, as explained in Chapter$16,$ is avoiding waste. By having suppliers deliver parts to the assembly line shortly before they go into a$$ vehicle, auto makers$$ don't pay for what they$$ don't use. They save on warehouses and the people to manage them. But as supply chains further globalize the system has grown brittle. The crises are more frequent.

Part $4$

Auto makers$$ don't want to replace JIT$$ entirely, because the savings are too great. But they are moving to undo it to some$$ degree, focusing on areas of greatest vulnerability such as irreplaceable semiconductors.$$ Ironically, Toyota now asks its suppliers to stockpile$$ parts, the antithesis of JIT. After the $2011$ earthquake in Japan hit many Toyota$$ suppliers, the company pushed them to disclose who sells them their components. Over$$ time, Toyota built a database that covers$400,000$ items and reaches as far as $10$ tiers down.

Part $5$

A sister idea to JIT was the use of single suppliers for many parts. These suppliers could master the daily dance of$$ deliveries, cut costs through volume and service the global factory networks that the top car makers operate. Chrysler buys about$400,000$ parts for the $100$ models in its lineup of brandsand $95\%$ of those parts come from a single source.

$$Source: The Wall Street Journal$($May $4,2021).$

Part $6$

Critical Thinking Questions

$1.$ The$$ just$-$in$-$time model is

A$.$

hyper efficient during times of no disruption.

B$.$

intended to force suppliers to deliver parts hourly.

C$.$

is unrelated to the concept of using single suppliers for parts.

D$.$

exhibiting weaknesses resulting from COVID issues.

E$.$

as secure as it was a half century ago.

Part $7$

$2.$ Auto makers are

A$.$

replacing JIT entirely.

B$.$

becoming more brittle and drowning in losses

C$.$

cooperating with each other to$$ "lend" each other suppliers during disruptions.

D$.$

asking suppliers to ignore JIT basics and stockpile parts.

E$.$

building more manufacturing plants to increase output of$$ gas$-$powered cars.