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March 23, 2020

Coronavirus exposes global supply chain vulnerability, need for resilience

Matthew Woodcock, LLamasoft Customer Success Strategist, talked with The Telegraph about the automotive industry's vulnerable state as productions came to a halt amid struggles to get parts due to the coronavirus.

The article states, "As manufacturers have stripped out costs – and passed them down their supply chain – they have also stopped holding stocks of parts, relying on “just-in-time” manufacturing, where items arrive for assembly just hours before being put together to become the finished product."

“The Toyota plant near me might have parts arriving hours before assembly but there’ll be a warehouse somewhere with stocks of seats or whatever,” Woodcock says. “Just because manufacturers don’t have the parts on site doesn’t mean someone isn’t holding them. Coronavirus is unprecedented in scale but for most problems, a week or two of disruption can be handled. But if it’s months, that’s a problem.”

The crisis has companies scrambling to focus on resilience – widening their search of supplies to source parts or getting suppliers to produce in bulk.

“Toyota was famous for sending people deep down into its supply chain to take out costs, now we could see them being sent down to find weaknesses,” says Woodcock.

He warns companies preparing for future uncertainty may not prosper from doing so.

“The next crisis won’t be the same as the one before,” Woodcock says. “You can build up general resilience and that will help, who knows what the next trigger will be? Who would have thought that what at first looked like flu in most people could have got us here?”

Read the full article (subscription required) here.
Original Source