Japanese Tiers 2 and 3 supplier impact of the tsunami

A Wall Street Journal story (March 26, 2011) describes production shortages at Renesas Electronics, a divison of NEC, and a supplier of chips to intermediates like Hitachi , Bosch and Siemens, who in turn create auto components to control engines, transmissions etc.  The company, which accounts for 41 % of chips ordered by Japanese auto OEMs, reports that production is at 50 % of normal rates.  Power shortages, the result of the disabled nuclear plants owned by Tokyo Electric Power Co, broken walls in facilities, and raw material supply from the company’s suppliers, all contribute to this global ripple effect.  The company does have many plant locations, so adjustments in production rates may cushion the impact. How should production rampup and parts allocation be managed – jointly across auto makers or by this supplier or by the component manufacturers ? At what point might the downstream impacted companies demand that the layouts and other details be shared with chip manufacturers so that the OEM impacts can be decreased ? Some suggest that this disruption exposes the impact of Just-In-Time invemtory, but could it increase the incentives for collaboration and restoration of supply ?

Advertisements

About aviyer2010

Professor
This entry was posted in Collaboration, Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s