The company is charting the spread of the disease around the world on a big board at its plant in Reynoso because inbound components from other countries are just as susceptible to plant closures and quarantines as finished goods leaving Mexico, said Larry Monaghan, director of transportation and logistics. A shutdown of the supply spigot would halt assembly of computer monitors and flat-panel television screens at LG's three Mexican plants.
Mexico's decision to shut the border last spring to prevent the spread of the H1N1 virus, commonly referred to as the swine flu, hurt the company even though its plants could have continued to operate, Monaghan said during a panel discussion at the Council of Supply Chain Management Professionals' annual conference in Chicago.
LG Electronics was forced to send its employees home for seven to 10 days, which created a huge production backlog.
'It took us six to six-and-a-half weeks to catch up with orders,' he said.
Major retailers inquired last Friday about what contingency plans the manufacturer had in place to deal with a flu outbreak and guarantee the availability of its products, Monaghan said.
The problem is that with just-in-time manufacturing there is little product in reserve to ride out a plant closure.
'As fast as we produce our product, it's basically being consumed. Therefore, you're never really ahead of the game. You're always even or slightly behind,' Monaghan said.
Pete Montano, vice president of sales for Con-way Truckload, said he believed Mexico had a better handle on containing the virus than Asia does. Con-way Truckload provides freight transport to and from Mexico as part of its service mix.
The inability of China to quickly respond to the SARS epidemic in 2003 was one of several factors that caused retailers to diversify their supply sources, noted Jon Langenfeld, a senior transportation and logistics analyst at investment banking firm Robert W. Baird & Co. ' Eric Kulisch
