Even the virtuous may be hit by Y2K

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Infoseek news March 31 1999 <:)=

LONDON, March 31 (Reuters) - Chief executives of the world's biggest manufacturing companies are probably sharing the same recurring nightmare.

The dream sequence starts in the boardroom with congratulations and back slapping. The talk is of perception and dynamic action. The problem with the millennium computer bug was spotted early. Millions of dollars were spent fixing it.

All the company's computer systems are now ``millennium compliant,'' to use the jargon.

So it will be business as usual after clocks strike midnight on December 31, 1999?

Don't bank on it.

Because this is where the chief executives' dreams turn into nightmares. It doesn't matter if your computer systems work perfectly as 2000 dawns, because of the old saying -- a chain is only as strong as its weakest link.

A company is immune to the millennium bug only if its weakest supplier is clean too.


A big car manufacturer can have more than 4,000 suppliers, with a huge pyramid of ever smaller organisations producing down the supply chain. But if the company which makes the five cent metal holder to display the manufacturer's badge on the front fails to deliver, the whole process has been torpedoed.

``You can test in-house till the cows come home,'' said Jonathan Crab, analyst with technology consultancy Spikes Cavell.

``Anything external is by its nature uncontrollable. This is potentially a nightmare especially where you are dealing with suppliers that are way outside the sophistication of your company,'' Crab said.

The supply chain danger has been made worse by the introduction over recent years of the so-called Just-in-time (JIT) system of supply.

The Japanese inventors of JIT thought a neat way of cutting costs would be to end the costly practice of building up huge stocks of parts at assembly plants making products like cars, refrigerators, computers, or pharmaceuticals.

This was not only costly in terms of money tied up. It also took up huge amounts of space in expensive warehouses, and cost fortunes in wages.

Why not save large amounts of money and bolster the bottom line at the expense of suppliers? They would deliver hourly or daily, just the amount of product the organisation required, only at the time when the production process needed it.

This meant that all stocks were effectively moved out of warehouses and on to suppliers' trucks. Warehouses were sold and staff fired. The bottom line swelled.


The crucial enabler for JIT was the computer. This provided a sophisticated electronic ordering system for parts and management of a Byzantine supply organisation.

But the whole process is now threatened by the millennium computer bug.

The millennium computer problem stems from the once common practice of computer programmers using only two digits for the year in dates, like 97 for 1997. This has the potential, when dates change in 2000, to confuse computers and microchips embedded in machines, causing them to produce flawed data or crash.

If a small company in an elaborate supply chain is crippled by the computer bug, the whole process will judder to a halt. The chain is even more vulnerable if it is run from top to bottom by computers which automatically decide how many components should be delivered at a precise time and location.

``The Achilles heel for big manufacturers is their heavy reliance on small to medium sized businesses,'' said Ann Coffou, analyst with the Giga Information Group in Norwell, Massachusetts.

Coffou said companies would find it hard to dump JIT because warehouse space will have been sold. She said manufacturers will have to make quick decisions about alternate supplies for items deemed crucial.

``In pharmaceuticals this can be impossible. Often there's only one supplier,'' Coffou said.


Tom Oleson, research director at the technology consultancy IDC in Framingham, Massachusetts, said where possible, manufacturers should make sure they always have alternative sources.

``If you have to use a single source supplier you should seek an absolute assurance that they can cope,'' Oleson said.

He said the automotive industry had gigantic supply chains. General Motors had about 4,500 suppliers for its pick-up trucks and commercial vehicles.


Oleson said companies should have disaster recovery plans, and might have to reinstate obsolescent working methods.

``You need to have alternative means of getting the job done. Faxes, paper, and things like that,'' Oleson said.

Tom Gormley of Forrester Research agrees.

``They will have to build up stocks again, and get ready to start using paper and faxing rather than electronic communications. You can't be running production based on JIT if there's a chance of suppliers not being Y2K compliant,'' Gormley said.

Chris Webster, head of Year 2000 services at Cap Gemini, reckons that up to 40 percent of U.S. manufacturers and 20 percent of Europeans will be planning some kind of stockpiling.

Webster said that because of the difficulty deciding which components to stockpile, this promises to clog up the system with vast amounts of inventory.

Giga's Coffou believes some companies might decide discretion is the better part of valour and shut down for the millennium holiday.

``Large machinery manufacturers in the U.S. and chemical makers typically close for the last two weeks of the year. They might usually do some retooling and maintenance, but they all might be in better shape if they shut down anyway,'' said Coffou.

Copyright 1999 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

-- Sysman (y2kboard@yahoo.com), March 31, 1999


A. Old Old Old news. If you guys can get after me for posting something two days old, why do you bother posting stuff that is a rehash of things posted a dozen or more times over a month ago?

B. There is always a warehouse down the chain somewhere. It is not all reliance on JIT. Incidentally - the first JIT I know of was started because it had to be started - the goods go bad in a few days. Bakeries have been delivering JIT for a very long time - predating computers by quite a bit. Ask any grocer or baker. (And their warehouse is a grain elevator - plus a few other things.)

-- Paul Davis (davisp1953@yahoo.com), March 31, 1999.

I knew that there would be trolls that would not understand this thread, Norm, Lisa, Y2kpro, and other.Paul didn't immediately come to mind. Paul, get a clue will you?

-- Mike (boxman9186@aol.com), March 31, 1999.


You obviously haven't been around very long. Paulyanna has been clueless for a long time.

-- Nabi Davidson (nabi7@yahoo.com), April 02, 1999.

Moderation questions? read the FAQ