Reuters takes a look into the flaws of Japan's just-in-time supply chain

For automakers, just-in-time production means parts and supplies arrive at the assembly plant on a regular basis, and that constant flow of parts means automakers don't have to pay for storage or track tens of thousands of individual items, saving huge sums of money.

Just-in-time is a great thing for automakers when times are good, but what happens when there is a problem with the supply chain? Just such a scenario is playing out in the wake of the earthquake and resulting tsunami in Japan, as many tier one, two and three suppliers are shut down and unable to feed the always-hungry supply chain. As a result, Japanese automakers aren't able to keep factories open in Japan, and General Motors has already shut down two plants due to parts shortages. Is this the extent of the damage, or is there more to come?

Reuters took a close look at the just-in-time supply chain in a special report, and it's definitely worth a read. Experts have repeatedly asked automakers to diversify their supply chains, but the costs of doing so would be prohibitive... until there is a natural disaster like the Japan earthquake and tsunami. Head over to Reuters to read the report.

[Source: Reuters]