Volcanic eruption intensifies the risk of JIT airfreight deliveries

Ash and smoke from the Icelandic volcano did more than interrupt passenger travel. It also shut down automotive manufacturing plants due to a shortage of parts that were stranded at various airports, along with people.

Another hazard of the long, global automotive supply chain reared its ugly plume last week as parts destined from suppliers to manufacturing plants around the globe were stranded in the airport shutdowns. A report from SupplierBusiness, an HIS Global Insight Co., noted that the impact of grounded airlines was being felt as far as the U.S. and Japan for BMW and Nissan, respectively.

“Manufacturers resorted to emergency transport, including expensive air charters, to avoid production delays. And with a freight backlog of up to two to three weeks, and the potential for further disruptions, the industry faces continued uncertainty,” said the report.

The eruption of the Iceland volcano couldn’t have come at a worse time, the report noted, with inventories low and just starting the rebuilding process. “Most OEMs have managed to avoid stopping production, but there has been a price to pay with specific problems at the supplier level, particularly between Tier Twos and Tier Ones, such as electronic components from Asia to Europe,” said the report. “Because of this, BMW had to stop production at three plants in Germany, due to a shortage of interior and electronic parts. BMW’s plant in South Carolina also suffered a reduction in output due to a lack of transmissions from Germany. Nissan’s Oppama plant in Japan was also affected by a shortage of air pressure sensors from Ireland.”

The situation highlights the fact that, increasingly, air transport is used to ship lightweight components from suppliers to plants around the world. This is particularly true for electronic components. “Global platform strategies have led to a dramatic rise in the international movement of components,” stated the report. “Recent events could lead to a reassessment of localization plans and supply chain strategies, including lean and just-in-time replenishment and an increased focus on supply chain risk assessment.” Clare Goldsberry

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