On May 9, Ford hit the headlines when it had to halt production on its popular F-150 pickup truck. The issue was caused by a factory fire at one a supplier plant on May 2nd . The automaker wasn’t alone as the fire also slowed production for General Motors, Fiat Chrysler and Mercedes as well.
Ford was forced to shut down the truck side of its Kansas City Assembly Plant in Missouri, which sent 3,400 workers home, according to a report in the Detroit Free Press. Workers were also sent home from the the Kansas City Assembly Plant and the Kentucky Truck Plant in Louisville, affecting Ford 7,600 employees in all.
The shutdown was linked to a parts shortage caused by the fire at Meridian Magnesium Products in Eaton Rapids, said Kelli Felker, Ford spokeswoman. For Ford, Meridian Magnesium was a key supplier, as the company bought about one-third of the parts built by Meridian.
“The Ford shutdown is one more example that even with a pretty solid supply chain infrastructure and planning in place, you can still have stuff happen,” said Ronnie Gibson, vice president, innovation for insurance provider FM Global. “Our collective task is to try to understand a supply chain at level and depth that those sleepers don’t take us by surprise.”
Although the calamity was predicted to cause delays that would last weeks, the truck manufacturer managed to turn things around in just under two weeks. Ford reported that, despite fire-related shortages of a number of key components, it will begin producing the F-150 pick up again tomorrow as it resumes production at its Dearborn, MI plant, according to USA Today. Production of F-150 trucks at the Kansas City assembly plant and of the heavy-duty version of the F-150, called the Super Duty, at the Kentucky Truck Plant, will restart on Monday,
“Ford marshaled a global team of experts, that included partners and suppliers, following a May 2 fire at Meridian Magnesium Products in Eaton Rapids, Mich., to quickly refurbish and relocate tooling needed to produce parts for the Ford F-150, Super Duty and five other vehicles — Ford Expedition, Explorer, Flex and Lincoln Navigator and MKT,” the company said in a statement published in USA Today.
Often, hurricanes, floods, and other weather-related events take the most mindshare for those doing supply chain risk planning. However, factory fires and explosions are by far the most common type of supply chain disruptions, said Bindya Vakil, CEO and founder of Resilinc. “I try to tell our clients that supplier factory fires are the most common type of event,” she added. Often, they aren’t immediately affected by it if it’s a second-tier supplier. Often, too, suppliers don’t explain why there are delays.” In fact, fires/explosions accounted for 18% of disruptive events reported to Resilinc last year, according to Resilinc’s EventWatch 2017 Annual Report.
Knowledge is power—so taking an organized approach to understanding which components have the potential to cause delays or stop production is critical. “If you take a structured approach you can expose locations or components that have the potential to cause disruption,” said Gibson.
Early warning of fire-caused shortages is critical, so that OEMs can pull inventory from the channel or second source products, Vakil said. “Unfortunately, many companies are not mapping their suppliers or monitoring the supply chain in order to do proactive mitigation,” she said. Further, factory fires aren’t always newsworthy, and may happen in a country where reports might be made in a different language than the supplier uses.
Creating close ties with important suppliers is another critical strategy, Vakil added. “Vetting and getting approval for a second source can take months or even years,” she said. “Unless a supplier is financially weak, it may be a better strategy to build a transparent and trustworthy partnership. Give the supplier its due and work collaboratively. Ask them to share sub-tier supply information.”
— Hailey Lynne McKeefry, Editor in Chief, EBN