Auto industry rethinks cost-cutting playbook as COVID-19, chip shortages disrupt supply chains

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After a year of getting hammered by the pandemic, a semiconductor shortage and storms that snarled Dana Inc's global supply chain, the auto parts ...

DETROIT: After a year of getting hammered by the pandemic, a semiconductor shortage and storms that snarled Dana Inc's global supply chain, the auto parts maker is reaching for a new playbook.

That cuts against the just-in-time inventory and production approach manufacturers have adopted from Japan's Toyota Motor Corp since the 1980s. The new catchword in manufacturing is"resiliency," underscored by Toyota's February revelation it had built a four-month chip stockpile. "The whole issue is exposing the brittleness, the fragility of the automotive supply chain," said Richard Barnett, chief marketing officer of Supplyframe, which provides market intelligence to companies across the global electronics sectors. BorgWarner Chief Executive Frederic Lissalde told Reuters companies are looking at the total cost of any approach instead of simply its upfront price tag.

Even so, Ford has had to halt F-150 production temporarily at times, and is stockpiling trucks that are missing parts.

 

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