Let me give a big ole’ Texas-sized hat tip to Bob Emiliani for sending me the sad article with the headline “General Motors Lays Off Workers at NY Plant.” This is in addition to General Motors Co. (GM) suspending its Shreveport, Louisiana, assembly plant last week due to a choke in supplier parts coming from Japan.
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The media will let GM off the hook because the parts shortages are the result of the tragic Japan earthquake. But the media also loves to pile blame on just-in-time (JIT) supply chain practices (or more broadly, criticize lean methodology).
Ironically, GM appears to be following the JIT practices often associated with lean without also following what Toyota calls the “respect for people” principle. A truly lean-thinking company like Toyota would not lay off those workers. GM did. GM chose to.
So let’s beat up on JIT for awhile
Here are the facts of the GM story.
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Comments
Just-in-Case Inventory
I presume that the JIT/Lean bashers are advocating the Just-in-Case inventory system. And, based on their blaming lean for the impact on businesses from this particular episode, the amount of inventory they recommend must be "Have adequate inventory on hand to deal with events that have a probability of occurring at least once in 150 years." Hmmm. If we include hurricanes, floods, volcanic eruptions, asteroid strikes, terrorist attacks, other acts of war and sabotage, etc. this would be a fair amount of just-in-case stock. An amount so large, in fact, that any unforseen economic downturn (2008 anyone?) would lead to bankruptcy and perhaps complete failure of the enterprise. Then again, this is an area that General Motors can speak to from experience.
Life is all about managing risk. Risk will always be there, and we'll always have to deal with risk trade-offs. While flexible, agile, lean production systems are not risk-free, they are better able to respond to changing events than systems based on huge buffers of just-in-case stock. GM seems to be slow to learn this. And they paid a price for their approach in 2008, as did the US taxpayer.
Thomas Pyzdek
http://www.sixsigmatraining.org/store
JIT inventory
I have only one thought on this article about GM laying off workers because of non-availability of parts from japan: Why have they ignored the requirements of clause 6.3.2 ISO/TS 16949 - contingency plans? Sure the clause only mentions utility interuptions, labour shortages, key equipment failure and field returns but by implication should be extended to anything which could impact on meeting customer requirements. One could even list the current situation under utility interuptions because the unfortunate folks of Japan certainly have no electricity in some places.
Seriously, though, there should always be an alternative supplier in the event of such situations. JIT and lean are great but a contingency plan is vital.
Syd Harling
South Africa
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