Japan created just in time manufacturing, the method in which parts arrive at the plant just prior to the time they’ll be used. It was widely adopted by the auto industry, because it saves money and improves quality. Pre JIT, automakers would keep weeks or months of safety stock sitting in warehouses to make sure the lines kept running in the event of an interruption.
But now you can count JIT as one of the earthquake/tsunami’s industrial victims. Here’s why:
Plants that rely on Japanese parts are now running out of them. That includes General Motors, which announced a shutdown of its Shreveport, Louisiana assembly plant, where parts made in Japan are critical to the assembly of Chevrolet Colorado and GMC Canyon pickup trucks.
It’s sadly ironic that pickup trucks— quintessential American vehicles and big profitmakers for GM—can’t be assembled because critical parts are supplied Japan. Yet sourcing parts in Japan or Asia is not unusual for GM, since it builds vehicles all over the world. More significantly, the parts shortage in Louisiana underlines one of the weaknesses of JIT manufacturing— it’s exposure to supply chain risk. Supply managers in Shreveport are not unmindful of what a natural disaster can do to supply chains; they live in a hurricane zone. Still it’s not likely that anyone in GM would have modeled what would happen if a monster earthquake and tidal wave hit critical suppliers half a continent and one ocean removed. Automakers have reduced supply chain risk by bringing vendors’ operations right onto car manufacturing sites, or by having them set up shop nearby. It’s standard practice at Honda and other Japanese companies. But you can’t do that for everything. You just try to manage the risk. This time they couldn’t.