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The Risks of a Long Supply Chain
May 7, 2008

A Crushing Issue: How to Destroy Brand-New Cars - WSJ.com While this is a story about Mazda shipping cars from Japan (a location where Toyota still makes many U.S.-bound cars, even with their North American expansion), it might give you pause if you're chasing cheap labor in China or Vietnam. Have you fully considered the supply chain costs, not only in inventory but in the increased risk of product being damaged in transport? I'll give Mazda credit for not letting these cars become the equivalent of dollar store castoff products -- the legal risks were too high. You could argue they valued quality and potential customer risk over the financial loss involved in just destroying the cars. I assume they had insurance (yes, this is confirmed in the WSJ print article). It's a pretty rare occurrence, but still something to be concerned about, when compared to producing locally. Reading the article, there was quite a bit of creativity and "kaizen" required in the disassembly process. Hopefully, this is a big job they only have to do once.

But the circle of international freight continues:

"... metal shards -- most no bigger than an ashtray -- sprinkle onto a mountain of scrap near Schnitzer's dock. There, a freighter prepares to take the scrap back to Asia where it will get recycled.

Mr. Wilson looks on and concludes: "It'll all probably end up coming back as cars."

Posted by Mark Graban on May 7, 2008 | Comments (0)