On March 3, Dana Corp., a key supplier of axles, brakes and truck frames to Detroit auto makers, filed for Chapter 11 bankruptcy. In doing so, Dana became the 4th major auto parts supplier to file for bankruptcy in the past 14 months (Tower Automotive, Collins & Aikman and Delphi – of recent Shingo Prize fame).
The Virginia-Pilot published this article citing the regular loss of market share, high labor cost and overcapacity woes of Detroit automakers as the main culprits. Then comes the quote from C. Scott Pryor, a law professor who specializes in bankruptcies:
“Part of it goes back to the automobile manufacturers insisting on this ‘just-in-time' manufacturing and shifting a lot of their costs on suppliers”
Why does Just-in-Time take the blame? I hate to see a good, proven, useful tool be blamed without any recognition at all of poor implementation and bad leadership. Like any other lean tool, JIT is not meant to be used as a stand alone process; and it is not meant to push problems elsewhere up or down the supply chain. It's a tool that if applied correctly with the right supplier partnerships, can help expose process issues and waste that need to be driven out of the system.
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Look at the source. It’s a shame that a newspaper would print a quote from a lawyer on the topic of manufacturing. It’s like asking me a legal question. Why?
Even if “costs were shifted to suppliers”, isn’t that a GOOD thing for the company? How would that drive you into bankruptcy? Ugh.
So…does the alternate to this lawyer’s comment lead him to believe that large batches of just in case inventory are somehow cheaper for suppliers? I’m trying to draw another logical conclusion from this statement and am having trouble doing so.
In response to Mr. Graban’s comment, I am guessing the lawyer’s statement is directed at the now bankrupt automotive suppliers who are squeezed between rising raw material costs on one side and the additional supply chain costs pushed on the suppliers as a result of misdirected OEM just in time programs on the other side. There comes a point in the supply chain where costs can no longer be pushed down. The choices then are to complain about your customers, labor agreement, health care, energy costs, etc. and declare bankruptcy or fight and become leaner and work to get better customers.