May 19, 2024

G.M. Pieces Together a Japanese Supply Chain

Toyota, which gets up to 15 percent of the parts used in its North American plants from Japan, is experiencing shortages of 150 critical parts. The company is operating at about 30 percent of normal capacity in the United States, with full operations not expected before November or December.

But American automakers are mostly winding down their disaster response operations — and though some supply problems remain, they are taking stock of a crisis averted. Analysts said the near-term outlook remained bleak for the Japanese automakers, while their rivals in Detroit, Korea and Europe are past the most difficult period.

The largest American automaker, General Motors, which spends about 2 percent of its parts-buying budget in Japan, identified 118 products that it needed to monitor for shortages but has resolved problems with all but five. The company’s chief executive, Daniel F. Akerson, predicted last week that the Japanese disruptions would have no material impact on G.M.’s earnings.

That is a big change from the early weeks after the March 11 disaster, a period Mr. Akerson described as “white-knuckle time” when numerous plants came close to halting work and just one of the potential supply problems could have prevented G.M. from building 75,000 vehicles.

“It was pretty tense,” he recalled in an interview.

Though G.M. obtains considerably fewer parts from companies in troubled areas than its Japanese competitors, its handling of the problems, as recounted by executives and employees involved in the effort, reveals how closely Detroit teetered toward disaster.

Four days after the earthquake, G.M. had assembled hundreds of employees into a team that began working around the clock to manage what has turned out to be the biggest catastrophe to hit the auto industry’s complex supply chain. G.M. regularly creates contingency plans for supply disruptions, “but nothing on this kind of scale or scope,” Stephen J. Girsky, a G.M. vice chairman, said. Through what it called “Project J,” General Motors briefly idled two plants to conserve supplies but otherwise found alternative sources for some parts and helped many suppliers get back online quickly enough to keep car and truck assembly lines running. The outstanding problems are essentially limited to semiconductors and other electronics. Because these devices are widely used in vehicles and substitution options are generally limited, G.M. executives said they were not entirely in the clear.

“We still have issues,” said Robert E. Socia, G.M.’s vice president for global purchasing and supply chain, “and the issues we have now are getting tougher to solve.”

General Motors has coordinated its disaster response from three “crisis rooms” at its Vehicle Engineering Center in Warren, Mich. Early on, dozens of people crowded into two windowless, seventh-floor conference rooms — one of which is devoted solely to monitoring the many critical electronic components that G.M. buys from Japan — while engineers filled a room in the basement.

Maps and dry-erase boards on the walls track the status of each affected supplier, the parts G.M. buys from them and the plants that need those parts to stay open. Using a color code, suppliers out of commission were labeled in red. Any that were unscathed but lacked reliable power and water supplies were labeled in yellow. The goal was to turn them all green.

The team, which requested and quickly received portable air-conditioners to fight the heat created by working long days in close quarters, ultimately identified the 118 problematic items, Bill Hurles, the executive director of G.M.’s global supply chain, said. Issues with 33 of the products did not become known until early April, mostly because they involved disruptions at sub-suppliers that G.M. rarely interacted with directly.

Article source:

Speak Your Mind