The Automotive Sector is an industry that is constantly having to adapt it’s production strategies to cater for demand. With a high emphasis on trying to keep production costs to a minimum and being able to deliver the vehicles around the globe, with little or no disruption. This is why many car manufacturers choose the lean production philosophy, but does it work in a global supply chain?
The lean production philosophy’s main focus is on just-in-time delivery and low inventories. This has been a vital strategy in how the automotive industry has experienced the growth it has to date. Although through the development of global vehicle platforms it has resulted in some of those lean supply chains having to travel greater distances, making the automotive sector experience disruptions to their supply chain. Just one missing component can bring a halt to production and at a cost of $10,000 to $100,000 a minute it’s definitely a risk you want to minimize.
By establishing manufacturing facilities in key markets it can encourage suppliers to make the same move. By choosing this approach it can help control transportation costs and risks. This approach also comes with it’s challenges such as increasing your exposure to natural disasters and countries with limited infrastructure.
The Automotive sector has been at the forefront of the use of advanced risk management approaches. By conducting a detailed risk analysis it will enable manufacturers to mitigate the risks of supply chain disruption.