So Much for JIT inventory - Ford Starts Stockpiling

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Ed Yourdon posted this article at TB2k and I thought it was worth discussing here.

http://dailynews.yahoo.com/h/cmp/20010921/tc/iwk20010920s0010_1.html

Ford Motor Co. is abandoning its lean-inventory business model in order to guard against possible parts shortages.

Ford Motor Co. is abandoning its lean-inventory business model in order to guard against possible parts shortages that would slam the door on production without warning. It's a major move imposed by the new, uncertain world born Sept. 11. Ford has spent many millions of dollars over several years building the IT infrastructure necessary to manage just-in-time global deliveries that didn't require stockpiles. Now, its systems must be able to handle the fact that engines and other critical parts will be stored.

Ford spokesman Ed Lewis says IT execs are evaluating their inventory- and warehouse-management and other systems to ensure they can be adapted to the new inventory-management demands. Lewis says it's too early to say what kind of changes might be required. Ford is not abandoning its just-in-time inventory management model at factories, where parts are delivered to the factory line within minutes of when they are needed. But critical parts will be stockpiled and warehoused near U.S. plants.

The company closed five North American plants last week after the U.S.-Canada border was sealed and commercial flight was grounded, blocking the flow of parts--particularly engines. Once the borders were reopened, shipments from Canada were delayed by as much as 15 hours due to more-stringent cargo inspections. Fewer international flights mean less airline cargo space and shipping-cost increases of up to 50%.

Lewis says Ford execs are working under the assumption that parts shipments from around the world--including Asia and other overseas locations--will be subject to delays caused by national security issues and border closings that could halt future production without warning. "We are planning for transportation disruptions for years in the future," he says. Ford also is in the process of evaluating--on a contract-by-contract basis--whether to award parts contracts to U.S. suppliers rather than foreign suppliers to limit border crossings.

-- Anonymous, September 21, 2001

Answers

Leave it to Ed to think of the implications beyond the immediate moment.

How much of our stuff comes from overseas - for cars, for appliances, clothing, etc. How much of that will be cut off in the near future? Will that bring jobs back into the US? How expensive will things get - or will they be available at all?

Here is the link to the discussion at tb2k link

-- Anonymous, September 21, 2001


Well, Beckie, on strictly a personal level, what items do you use on a daily basis? Which of these items would it be hard to find "work arounds"? Go buy a supply of those things.

I'm still using my suppy of CDs, cassette tapes, and disks from Y2K. I beefed up my computer "spare parts" box and bought an extra CPU and monitor. I also bought an extra tuner, VCR, and boom box at the latest Going Out of Business Sale at Sun or whatever electronics store it was (yes, I tested the stuff). Just about everything else can be replaced locally or I can devise a work around or live without in some cases. The big thing was replacing my electronic piano with a non-digital spinet. The tone isn't as nice, and I miss all the extras, but I don't have anymore worries about power surges frying my keyboard, either.

-- Anonymous, September 21, 2001


Yep, that's all it took--temporary closing of the US-Canada border and Ford plants were promptly shut.

I wonder what, if anything, we get from Pakistan that we can't get anywhere else? I'm pretty sure we get clothes and textiles from there, otherwise I don't know. Whatever we get, if it's from a factory owned by an American company, it's likely to be torched.

-- Anonymous, September 21, 2001


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