Ford Starts Stockpiling

By Steve Konicki, InformationWeek

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

Ford Motor Co. is modifying its lean-inventory business model in order to guard against possible parts shortages that would slam the door on production without warning. The company, which has long used an inventory model in which it stores little inventory, is now stockpiling engines and other critical parts at some U.S. plants.

It's a significant 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 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.

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.

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.

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

-- Martin Thompson (mthom1927@aol.com), September 21, 2001