Ford Production Woes Teach Supply Chain Lessons

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Re: We are our own worse enemies!
StephenGiderson   9/17/2018 5:32:46 AM

We cannot truly learn from an experience until a crucial one has hit us. The only way for us to really pick up on things is when a dire situation has come our way and we would have to handle it by all means possible. When we have to put our entire mind and soul into it, then only would the entire experience be memorable. This is always the case and usually it just becomes too late until we realize.

John Benito
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We are our own worse enemies!
John Benito   5/22/2018 12:46:42 PM

Regarding the problem at Ford. In most well run companies you will find that the Financial  group cover themselves, with all sort of protections andinsurances, from exchenage rate fluctuations to Bad Debts, etc. However, in the supply chain /operations area we have worked out many ways to reducce the amounts of inventories that the company should carry to support its business operation. We have done sucha good job, that for example a plant like GM in SH doesn't get the tires for the cars in the assmbly line until 1/2 hour before they are going into the car. Wonderful!We expect the sub-suppliers to carry the stocks, of course not in our books until basically the tires are screwed into the car. Great! However there are many issues with this kind of operations, such as Strikes, fires, Machines breakdowns, electricity support, etc. Few end users (Ford, GM, et all.) really do carry out consistent audits / checks of their suppliers capabilities and commitment to the agreed contractual obligations. These checks usually need people (Not Robots) and these cost money. So, we don't need them and we retrench them. We talk about, having a couple of tier one suppliers but rarely we split equally the requirements between these suppliers. Normally we give 80/90% of the requirements to one supplier for a variety of reasons some Logical and some not so! We do not carry out audits as mentioned earlier and seldom we do Physical checks of the Inventory holdings at the Tier One suppliers, even less if they are tier 2.  So if over 7000 people are not going to get pay who cares? Most certainly there will be enough stocks of FG's to cover a couple of weeks worth of inventory at the dealers or in transit. This is not Bad business is it!! And who's fault is it? Well ours!!Outsouring is great but there has to be strict rules and a commitment to work at arms length with suppliers no matter who they are. Unfortunately, the Operations area is a little more complicated than say: if the exchange rate goes up or down by more than 0.5% don't worry we have insurance.   For what is worth!!! JB  

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