Protecting customers from supply chain disruptions

Toyota supplier Aisin Seiki famously suffered a fire in 1997. (How famous? The fire has its own Wikipedia entry.) The fire threatened to shut down multiple assembly plants but Toyota’s supply base rallied to the cause. Some suppliers quickly learned to make parts they had never processed before and what could have been a catastrophe for Toyota was ultimately a modest blip in its performance.

Now Automotive News reports on an American story that has a similar feel, all be it on a smaller scale (Competitors help carpet maker after flood, Oct 11). The story concerns Autoneum Holding’s plant in Bloomsburg, PA, which makes carpet for GM and Chrysler. Tropical Storm Lee brought record flooding and ultimately resulted in five feet of water in the plant. The plant was evacuated on September 7th and workers returned four days later. Several days after that, they were ready to re-launch production but not at rate that would keep up with their competitors.

“Our customers have a huge appetite [for carpeting] right now,” [John] Lenga[, CFO of Autoneum's U.S. operations] says. “There was limited capacity, and we were trying to secure as much material as we could for our customers.”

After surveying the damage, Autoneum asked its competitors for help. Dorsett Industries, Lyle Industries Inc. and others agreed to produce some additional carpeting for their rival.

But there was a problem: Those companies could not replicate all of the necessary manufacturing functions – tufting, dyeing and extruding – for production of the raw carpeting before it was converted into a finished product.

International Automotive Components, an interior trim supplier based in Southfield, Mich., near Detroit, could handle those production steps, but the extra workload forced that company to run its carpet factories around the clock.

The end result? Although production of 100,000 vehicles was at risk, GM and Chrysler lost few vehicles and should be able to make up production over the next few months.

This is an interesting twist on recovering from supply chain shocks. In the Aisin Seiki case, Toyota was in a position to call the shots. Aisin Seiki was a subsidiary and Toyota was the affected plant’s main customer. Here, Autoneum is truly an independent firm and is dealing with multiple buyers. Hence it had to take the lead in putting together a recovery plan.

The article may be overstating the case that “competitors” bailed them out. While Dorsett and Lyle may bid against them for contracts, this would probably not be their preferred way of winning work away from Autoneum. Also, they have little gain from Autoneum reporting to GM that no one is willing to help out. Also, they would probably appreciate a similar helping hand if anything were to go wrong at one of their own plants.