REPORT: COMPANIES SHOULD NOT ABANDON JUST-IN-TIME

REPORT: COMPANIES SHOULD NOT ABANDON JUST-IN-TIME    Enhanced security procedures and border delays have hit “just-it-time” logistics, but manufacturers and importers should not give up what remains an effective management technique, according to a report by Mercer Management Consulting.
   The consultant confirmed that the problems of supply chain disruption and unpredictability are most acute at companies employing just-in-time delivery, where inventory arrives at the production line exactly when it is needed.
   “Tighter security and other measures have caused delays in shipment of critical parts and components from suppliers abroad, which has impaired manufacturing schedules and delivery of products with high perishability,” the report said. Ford Motor, for example, shut down five of its U.S. factories shortly after Sept. 11, in part because of late deliveries of parts from Canada.
   “Although we expect these disruptions to continue, manufacturers should not abandon just-in-time techniques,” Mercer said. In the automobile industry alone, it is estimated that companies have saved more than $1 billion a year in inventory carrying costs in the past decade by using just-in-time. The consultant said this benefit must be weighed against the adverse impact of the recent disruptions and plant closures.
   Mercer urged manufacturers, retailers and suppliers to adapt the way they manage their operations “to avoid losing more money.” They should reassess their inventory management, sourcing and transportation, it said.
   “Manufacturers, retailers and suppliers will have to adapt for new contingencies and examine their supply chain design in light of new trade-offs,” it said.