Supply Chain Dive: John Taylor on automotive supply chain sourcing, inventory
The automotive industry is especially vulnerable to supply shocks due to its use of just-in-time manufacturing, which relies on lean inventories. But some experts don't expect this to change even given the recent disruptions. "While companies are taking some major hits for [a] couple quarters, the decades of savings from lean inventory, outsourcing to specialist component producers, global sourcing, and sole source suppliers far surpass these short term reductions in profit," John C. Taylor, chair of the department of marketing and supply chain management at Wayne State University, said in an email, adding that lean and JIT strategies are likely to continue. At times, near-sourcing or insourcing makes sense for auto manufacturers, but this won't always be an option, Taylor said. Automakers "would love for components to all be built near assembly plants, however that means the supplier must have multiple plants near each customer assembly plant, and that is not going to be possible with high fixed cost facilities like semiconductor foundries," he said.