An interesting study in supply chain logistics will play out next week, as U.S. automaker Chrysler (now controlled by Italy's Fiat) ramps up production again. The company ceased all production when it filed for bankruptcy-court protection on April 30.
With the ramp-up comes a slew of supply chain issues, USA Today reports. Industry watchers fear for smaller suppliers, who don't see income from the parts they supply for up to 45 days, the story says. These companies could buckle under the strain to deliver parts on schedule because they don't have cash for materials or wages.
Given the supply chain's complexity, such a hold-up can have a cascading effect. As in the aviation industry, smaller suppliers make parts for the components that bigger suppliers assemble and ship to the prime manufacturer, in this case Chrysler. For example, a rear-view mirror missing its glass could stall an assembly line, the story says. (Or, in Boeing's case, a lack of fasteners slowed down progress of its 787, which has yet again been delayed.)
Small suppliers, small parts. Big impact.
So far auto industry suppliers have been hanging in there, but in spite of efforts to monitor their health many still are expected to fail, says Jim Gillette, an industry analyst for CSM Worldwide cited in the story. Says Gillette: "It's more or less a Darwinian situation now."
It will be interesting to see how Chrysler handles any issues as they arise. Next week marks an opportunity to make positive changes, as well as an opportunity to put past 'lessons learned' to work. It could also be a major headache (to put it lightly) for a company looking to play catch-up for the past two months.