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Published: 27 November 2009
Automotive supply chains "stretched to breaking point"
New types of contingency planning are required if expensive supply chain failures are to be avoided, according to one specialist
Record levels of automotive supply chain failures are raising questions about the ability of existing planning techniques to cope with recovering manufacturing volumes, according to one specialist in the field, Evolution Time Critical (ETC).
The company says that today’s best-practice analysis and contingency planning systems are no longer sufficient to prevent delays in deliveries, which in the auto industry can result in losses of up to €1M every minute if a production line has to be stopped.
“We have clear evidence that failures are being caused by increasing production volumes pulling on already highly lean supply chains working across infrastructures that are often also pared to the bone,” said ETC's managing director Brad Brennan.
“Our biggest concern is that many companies are relying on contingency planning techniques that are no longer sufficiently robust to provide guaranteed on-time delivery.”
“Take air charter as an example,” continues Brennan. “We were recently asked to solve a problem when a manufacturer accurately identified a forthcoming issue with a large quantity of material needed to maintain production.
"They had tried to implement their traditional contingency plan of air charter, but that day all the spare capacity in the region had been booked by a vehicle manufacturer with a pressing ramp-up problem.”
“The client’s plan did not look at this next level of failure,” says Brennan. “The only solution they had been offered was to wait for an aircraft to reposition from an airport several hundred miles away after completing another delivery, adding a further four hour delay.”
In this instance, the ETC team ascertained the arrival rate of product needed to maintain uninterrupted production and implemented a dual-mode solution. A light aircraft was available at a smaller airport, so this was immediately chartered to carry a small batch of components that would increase the time window available for the main shipment to arrive. A double-manned truck was then organised to deliver the balance of the shipment.
In another example, Brennan cites a customer awaiting urgent components that had been locked in a transit warehouse for the weekend.
“We had to use our industry contacts and spend hours on the telephones on a Saturday afternoon to locate someone who could have the warehouse unlocked and help to us recover the critical parts.”