Supply Chain Disruption Hits Automakers Following Japan Quake

JW Yates

New York City, NY

According to recent reports circulating on the web, the ongoing auto parts shortage in Japan may lead to a sharp decrease in worldwide car production throughout 2011. European, Asian and American car makers rely heavily on auto parts produced in Japan, and, as with most modern manufacturing systems, they rely on just-in-time delivery to maintain rigorous production schedules. Even a temporary delay in supply delivery can have lingering effects on output.

One analyst’s report, cited in The Wall Street Journal on Tuesday, predicts that auto production may be cut by 15% to 30% in the next year. This estimate would suggest that 20 million fewer vehicles will roll out of factories than expected before the recent quake tragedy and nuclear crisis in Japan.

http://blogs.wsj.com/drivers-seat/2011/03/29/could-shortages-cut-car-production-by-30/?mod=e2tw

Many industry watchers say that US auto producers will likely experience a lesser impact than their Asian counterparts who rely more heavily on Japanese parts. Still yet, there are fears that, as the supply chain disruption continues, consumers will start seeing fewer choices of vehicles, longer waits and higher prices in the short-term.

The BBC reports that Toyota Motors will curb its North American production due to parts scarcity, and General Motors as well recently announced suspension of production at one its US plants due to parts shortages.

http://www.bbc.co.uk/news/12858580

If the situation in Japan worsens, or becomes more protracted, there is little doubt that assembly lines across the world will face further slow-downs as a result. Auto manufacturers are not the only businesses reeling from this month’s record-breaking quake and tsunami. Already big-time electronics players like Toshiba have experienced supply chain disruptions since the crisis began. Industry watchers here and in Asia are scrambling to make predictions about what’s to come.

The true toll of Japan’s disaster may not be seen for some time, as manufacturers rely on stock parts and supplies that were already in transit when the quake struck. Once supplies on hand run out, further shutdowns are imminent.

One thing is for certain: if Japan continues to struggle with its ability to generate electricity nationwide, there is little hope for restoring auto parts production to pre-quake levels. In addition, the human toll, and the scope of the social tragedy in the wake of the disaster, may have inestimable effects on Japan’s productivity in the near future.

These various factors have compounded to make Japan’s manufacturing future unpredictable at best. This most recent example of supply chain disruption serves as a reminder that, no matter what industry you are in, it is essential that you keep as close an eye as possible on every aspect of your supply chain. In a world of interdependent production models, every industry must be able to react quickly to supply chain problems. That is why so many modern manufacturers rely on Supply Chain Management Software and Product Lifecycle Management tools to help oversee and control their supply chain.

If you are concerned about supply chain oversight, or would like to find out how a PLM system could help you weather the storm of supply disruption, please get in touch with us here at BMS. Our VerTex software system could be the management tool you need to prepare for the next global supply chain crunch.

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