Supply Chain Manager!  It is your job to never ever shut down a car assembly line with 15,000 parts.  It is your job to keep inventory as low as possible – lean.  It is your job to anticipate the risk involved – earthquakes, tsunamis, snowstorms, union strikes, manufacturing issues, and the list goes on.  And to source globally for the best-cost producer.

Key job skill – masochist!

STORIES:

Japan Tsunami 2011 (Forbes, 3/2012)

Damage and workforce displacement left critical suppliers and subcontractors for automakers, technology firms and countless other industries short on parts or completely out of supply. In Japan, a factory manufacturing 60 percent of global car engine airflow sensors was shut down during the disaster, pitting competitors against one another in the fight to access scarce materials. Companies with finely tuned inventories saw their cost-cutting efforts and just-in-time strategies eaten up by the financial and reputational cost of supplier disruptions.

In the face of shortages, one company was unable to secure similar inventory and was forced to purchase higher-cost, spare supplies in the open market. They were forced to pull engineers out of research and development to redesign their products and production to accommodate these spare parts, which lead to lost innovation and delayed a new product launch, which only intensified the sales disruption. In another case, a factory that was the sole supplier of brake parts for a major Japanese automobile manufacturer was destroyed. The production disruption immediately shut down the manufacturer’s just-in-time supply chain, forcing 18 plants to close for nearly two weeks resulting in a total loss of sales on the order of $325 million.

2012 Issues (Gate Point Research, 2012)

• Unplanned demand (68%), supplier failure (62%) and natural disaster (60%) are the primary sources of supply chain disruption.
• Among responders, supply chain disruptions originate almost equally between the demand side and tier one suppliers.
• Nearly a quarter of responders report that they do not have the tools in place to resolve a supply chain disruption.
• 34% of responders are not aware of supply chain disruptions until more than 24 hours after it occurs; nearly 20% take more than a week to respond.
• 38% of responders rated visibility into their tier-1 supplier inventories as a priority or high priority for the next year.
• Supply chain disruptions in 2011 caused 68% of responders to make adjustment to their existing solutions/processes.

But the lean practitioners say inventory is an evil; need continuous improvement.  The way to force CI is to reduce inventory.

Then the financial folks say inventory is one of the two biggest assets on the balance sheet.  Keep the company profitable on the “books,” have lots of inventory.

Love being a masochist!