business

Global automaker supplies threatened by China coronavirus crisis

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By Joseph White

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The silliness of all this is the fact these major companies pay big money to "risk assessment" experts, that have put these companies in this position having their supplies coming from the one high risk country in the middle of a trade war - if the management had taken the "hint" when the trade war started and arranged for back up suppliers in other countries this wouldn't be an issue now.

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This is the inevitable result of globalized supply chains and Just-In-Time inventory management. When things are going normally, you can keep stock levels low and improve profit margins. However, whenever there's a major shock to the system, the whole thing grinds to a halt.

There are stopgap measures mentioned in this article but they are either non-realistic for many products or band-aids at best. The entire way of managing like this is inherently vulnerable to major world events.

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