The supply chain crisis -- and maybe it's time to capitalize and abbreviate it "SCC" -- that's been roiling the global auto industry is proving to be a massive problem. And it hasn't just hurt the Japanese automakers. However, some companies are dealing with it better than others. Like General Motors (GM), which set up the equivalent of logistics war rooms in Detroit.
The New York Times' Nick Bunkley has turned in a gripping account of GM's all-hands effort to battle any potential parts disruptions in the early days after the Japan quake and tsunami. Gripping? Logistics? Well, yeah. This wasn't Navy SEAL teams taking out Osama Bin Laden, but the stakes were still pretty high.
Without the right parts, there are no cars
Let me quote at some length from Bunkley's article:
Four days after the earthquake, G.M. had assembled hundreds of employees into a team that began working around the clock to manage what has turned out to be the biggest catastrophe to hit the auto industry's complex supply chain. G.M. regularly creates contingency plans for supply disruptions, "but nothing on this kind of scale or scope," Stephen J. Girsky, a G.M. vice chairman, said. Through what it called "Project J," General Motors briefly idled two plants to conserve supplies but otherwise found alternative sources for some parts and helped many suppliers get back online quickly enough to keep car and truck assembly lines running...Wow! And it gets better, as GM truly shifted into crisis mode and made sure that it didn't fall behind to the tune of 75,000 vehicles at a critical time in its history.
General Motors has coordinated its disaster response from three "crisis rooms" at its Vehicle Engineering Center in Warren, Mich. Early on, dozens of people crowded into two windowless, seventh-floor conference rooms -- one of which is devoted solely to monitoring the many critical electronic components that G.M. buys from Japan -- while engineers filled a room in the basement.
Logistics are really this important?
A few decades back, no. But the auto industry in the past 20 years has become thoroughly globalized. This has of course created a scale of complexity that would have dismayed production chiefs of yore.
These days, however, companies like GM employ people who spend all their time pondering the supply chain, trying to make it more efficient. The SCC actually couldn't have come at a worse time for GM, following bankruptcy and an IPO that hasn't seem GM's share price elevated to a level that would enable the U.S. Treasury to reclaim its 2009 bailout investment at a profit.
In other words, it was crunch time. And the crisis response was successful enough that GM looks be in solid shape now. Thanks to the New York Times, we have proof of just how seriously the company took the challenge. Think the new GM is just like the old GM? Think again.