Friday, July 20, 2007

The Earth Moved Just in Time

For want of a piston ring...

TOKYO -- For want of a piston ring costing $1.50, nearly 70% of Japan's auto production has been temporarily paralyzed this week.

Blame it on kanban, the just-in-time philosophy of keeping as little inventory on hand as possible. The strategy keeps inventory costs down and ensures quality. It generally works because Japan's auto makers have long prided themselves on the almost familial relationships they have with a handful of suppliers of custom parts that deliver several times a week or even daily.

The strategy also has a downside, as became evident after the 6.8-magnitude earthquake that hit central Japan on Monday damaged Riken Corp. Riken, which supplies all major Japanese car makers, makes the sought-after $1.50 piston ring but has been unable to make deliveries. And because piston rings and other key parts are made specifically for each car maker and little inventory is kept in hand, it is nearly impossible for auto makers to simply switch to another supplier at the last minute.

....The Riken closure has forced Toyota Motor Corp., the nation's No. 1 car maker by sales, to cease production for at least a day and a half at all 12 of its domestic plants, causing a loss of output of at least 25,000 vehicles, about 60% of which are made for export. Honda Motor Co. said it would close a plant that produces the popular Civic and Fit models today, resulting in the loss of 2,000 vehicles. Nissan Motor Co. also will halt operations on several production lines at three of its plants today and will shut down all four of its plants tomorrow and Monday.

Mitsubishi Motors Corp., Mazda Motor Corp., Suzuki Motors Corp. and Fuji Heavy Industries Ltd., which makes the Subaru brand of vehicles, also have stopped or slowed down production.

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