Chinese factory explosion provides stern test for contingency planning
China’s worst industrial incident in the last 12 months recently highlighted the potential for renewed supply chain disruption in the increasingly global automotive industry footprint, warns emergency logistics specialist Evolution Time Critical. Following the explosion at Kunshun City in August, assembly downtime has been avoided through utilisation of buffer stocks and efficient forecasting, but greater supply chain contingency planning will help protect vehicle manufacturers against future financial and reputational damage caused by such incidents.
“In this instance, buffer stocks have enabled the Tier 1 to maintain supply while the Tier 2 that suffered is out of action, which has allowed time to source alternative supplies in order to meet ongoing orders,” says Evolution Time Critical managing director, Brad Brennan. “However, today’s lean automotive production processes and inventory controls often do not allow the luxury of extensive buffer stocks, and emergency logistics expertise is able to provide a failsafe solution for companies requiring a temporary bridge in supply while longer term solutions are sought.”
The blast at the Tier 2 supplier plant has resulted in 69 deaths and 200 injuries, and many of the vehicle manufacturers for which it provides components will need to source alternative stocks while the Chinese factory recovers.
“We have seen vehicle manufacturers operate increasingly global production strategies and display agile footprints in the last 12-18 months in particular,” continues Brennan. “This confidence in switching locations has been supported by improving supply chain visibility at all levels and this has naturally led to a greater in-built contingency and resistance to incidents such as the tragedy in China. More robust practices mean that while vehicle manufacturers are now more prepared to handle severe supply chain failure than in the past, continued development and implementation of contingency planning is crucial to provide a safety-net for a diversifying industry operating higher-risk strategy.”