Smartville: Extras (6)

Leanness, Stock, and Supplier Strain

In the current supply chain management literature, “lean thinking” principles hold that high stock or inventory levels within a process leads to problems. These may be as simple as storage costs, inconvenience, or cash flow problems. However, excess stock can mask many serious problems within an organization’s supply chain, such as overlong set-up times and bottlenecks. This is demonstrated in the “River and Rocks” analogy: reducing inventory enables management to identify potential problems and address them. Progressive inventory reduction could also be seen as a kaizen principle of continual improvement, since kaizen promotes attainment of efficiency through reductive measures (Schonberger, 1982).

In its design of the car, plant, and process, MCC has taken the concept of leanness through supplier utilization to a new level. The design requires suppliers to work hard to keep the chain operational, which might, for the suppliers, be a negative aspect of the system. Indeed, repercussions emanating from supplier stress could impact negatively upon MCC. If Tier 1 suppliers follow suit and force lower tier partners to hold high quantities of stock at cost to their bottom lines, hostility could result. MCC’s reputation may also suffer if its image of greenness and cooperation is replaced in the public’s opinion by the image of a corporate bully. Pressuring suppliers could also lead to human tensions within the plant. Increasing demands could force suppliers to collectivize in order to strengthen their bargaining power or even launch a takeover.