An industry that’s lean to a flaw

An industry that’s lean to a flaw

Lindsay Chappell is the Mid-South bureau chief for Automotive News in Nashville Tenn.

There’s an industry lesson to be considered from last week’s production crash at Nissan Motor Co. But it’s not the obvious one.

Nissan lost about 20,000 vehicles from its production schedules in Tennessee, Mississippi and Japan because it couldn’t get enough fuel-injection control units from Hitachi Ltd.

Hitachi couldn’t make the controllers because it couldn’t get enough semiconductors from Swiss supplier STMicroelectronics NV. STMicroelectronics couldn’t supply enough semiconductors because everybody and his brother are now clamoring for more at the same time.

The obvious lesson here is that the industry -- and the planet -- needs more semiconductor production capacity.

But that’s not the real lesson.

The real lesson is that the auto industry needs more warehouses.

“Warehouse” is deemed to be an impolite term these days. If you store parts in a warehouse, you’re running a bad business, the thinking goes. You don’t have a lean operation and therefore aren’t cost-competitive. Inventories on shelves aren’t where they are supposed to be.

Warehouses cost money to operate. Supply chains that require them are thick and lazy and wasteful. And the whole scenario fosters poor quality.

This is what the industry has memorized over the past two decades of re-education.

On the other hand, there stood Nissan for several recent days, a very lean and cost-efficient global supply chain, with factory lines halted and the lights turned off on two continents.

Which is worse?

Maybe warehoused inventory is, indeed, a symbol of supply-chain imprecision. But automaking today is a little like tightrope walking: Even the best tightrope walker likes to have a safety net below.

You can reach Lindsay Chappell at lchappell@crain.com.