Is Chrysler Prepared For Supply Chain Disruptions?
If you want to mitigate risk in your supply chain, you need to build robust, collaborative relationships with your suppliers. Why? Because supplier failure can mean supply chain disruption, and that in turn, can spell disaster.
The critical importance of the supplier-manufacturer relationship will be in the spotlight over the next few weeks as Chrysler begins ramping up production again. Car manufacturer like Chrysler and General Motors (GM) have been working with financially stressed auto parts suppliers to ensure that production lines can restart –and U.S. taxpayers have kicked in $5 billion in supplier aid, too. But, even so, no one seems sure how troubled suppliers are going to respond once production resumes. At this point, only one thing is clear: due to decreased and/or restructured demand, the auto parts supply base needs consolidation, and most likely liquidations, as well.
In an article this morning in USA Today, Laura Marcero, a restructuring expert at Grant Thornton, estimates that the auto industry needs 30% to 40% fewer suppliers. Naturally, supplier failure at these levels will have a ripple effect throughout the industry, and this whole scenario represents a textbook example of why you need a solid, working relationship with all stages of your supply chain.
“If they (parts suppliers) go down without much notice, it’s going to impact back up the chain,” Marcero says.
It will be fascintaitng to see how auto manufacturers meet these new supply chain challenges. Are they prepared to weather this latest storm?
