TRAVERSE CITY, Mich. - Parts suppliers to Japanese automakers in North America enjoy a major advantage over suppliers to the U.S. makers: They have less money tied up in inventories and warehouse space.
A new survey shows that Toyota, Nissan and Honda do a much better job of accurately forecasting parts requirements than do General Motors, Ford and DaimlerChrysler.
The survey by University of Michigan Professor Jeffrey Liker demonstrates what suppliers have known for years: Unpredictable production schedules cost them money.
The survey results, released this month during the University of Michigan Management Briefing Seminars here, also reveal a strong connection between lean production and stable forecasting. The least efficient automaker, GM, was more than five times as likely to change a weekly forecast as Toyota Motor Corp.
Traditional mass production requires suppliers to maintain large inventories to accommodate big fluctuations in demand. These inventories need expensive warehouse space.
The survey also concluded that suppliers to lean automakers spend less on emergency freight shipments, a costly byproduct of bad scheduling.
A key goal of lean production is to avoid wild swings in production rates. Toyota, Honda and Nissan offer more stable short-term forecasts than the U.S. makers.
Liker surveyed 110 suppliers with sales over $100 million. The respondents had at least one domestic and one Japanese customer in North America. Liker conducted his survey in 1997 and 1998.
Liker predicted domestic automakers will improve: 'Things are changing rapidly. American OEMs would probably look better today than they did a year ago.'
The survey rings true with Tim Evavold, global business process manager for Visteon Automotive Systems. Dearborn, Mich.-based Visteon, which is both a supplier and a buyer of parts, is implementing a new production scheduling system to reduce costs and control inventories.
Evavold said the new scheduling system gives suppliers a six-month forecast that is updated each week. Without that flexibility, he said, 'you could end up bringing in material that you don't need.'