General Motors recently recalled nearly 4.3 million vehicles with defective software. The bankruptcy of Hanjin Shipping, one of the world’s largest ocean carriers, left half a million containers with $14 billion worth of goods stranded at sea.
Fiat Chrysler recalled 1.9 million vehicles worldwide for possible airbag and seat belt failures. Samsung had to recall a million of its newly launched Galaxy Note 7 smartphones after some devices burst into flames. And in Europe, Volkswagen was forced to shut down production of nearly 10,000 vehicles after a supplier refused to deliver key components.
These examples all point to two worrying questions: are global supply chains becoming more fragile and if so, why?
The above Volkswagen example is a good place to start to find answers and begin to address this issue begins it soon becomes apparent this fragility is itself, the first signs of a major shift for global supply chains.
Inherent imbalances – from single company to ecosystem
The automotive industry has come a long way since Henry Ford’s Motor Company mke everything that went into its product in-house. Today, 75 percent of automotive parts are not designed or built by car manufactures themselves but by their suppliers.
That means that manufacturing a car is no longer the job of a single enterprise. It’s the job of a complex ecosystem of supply chain partners. And VW is no exception. Indeed, any manufacturer of a complex product such as a car, hi-tech consumer electronics or even clothing relies upon its ecosystem of suppliers far more than the manufacturer may realize.
Read more at Why are global supply chains becoming more fragile?
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