Floods: Inventory strategy set to change | Bangkok Post: learning

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Inventory build-up and diversified parts suppliers will avoid the supply disruptions of last year's floods.

In photo above at the height of last year's floods factory workers wave as they remove inventories from their flooded factory at Hi-Tech Industrial Estate in Ayutthaya.

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Just-in-time in doubt after deluge

Broader sourcing, inventory now key
27/02/2012 
Nareerat Wiriyapong

Manufacturers are diversifying parts supplies to minimise the risk of flood-related disruptions. Some are even questioning whether the widely accepted practice of lean manufacturing makes sense.

Automotive and electronics companies were especially hit hard by last year's floods, the most severe in 69 years, as they were buying from component makers concentrated in the heavily inundated provinces of Ayutthaya and Pathum Thani.

Production was disrupted not only in Thailand but also abroad, as many companies elsewhere buy parts from Thailand.

Suparat Sirisuwannangkura, head of the Federation of Thai Industries' automotive industry club, said carmakers have temporarily shifted their sourcing to safer areas such as Chon Buri and Chachoengsao provinces.

In some cases, imported components have been needed because some parts can no longer be purchased locally.

Some manufacturers are helping suppliers affected by the floods rehabilitate their facilities and restart production

In some cases, machinery has been moved to new locations, said Mr Suparat, also a senior vice-president of Toyota Motor Thailand (TMT).

"Like other makers, Toyota has implemented risk-prevention measures to avoid the repetition of manufacturing disruptions," he said.

If the affected areas are proven flood-free in the next couple of years, then we'll possibly switch our orders back to them again. 

TMT said 20-30% of its suppliers are located in flood-hit zones. 

The Thailand Automotive Institute (TAI) counts 200 automotive plants in the seven industrial estates that were inundated last year including Rojana Industrial Park, Nava Nakorn Industrial Estate and Hi-Tech Industrial Estate. 

Of these factories, 25% were seriously damaged.

TAI president Vallop Tiasiri said a shortage of even one component makes the final assembly of a vehicle impossible.

Sampan Silapanad, president of the Electronic and Computer Employers' Association, said electronics manufacturers have also taken measures to minimise risks by partly switching their parts procurement to suppliers in the Amata and Hemaraj industrial estates on the Eastern Seaboard. 

"If existing suppliers operate at more than one location, then it is easy to switch orders to an area less at risk of flooding," said Mr Sampan.

He added that electronics companies believe concentrating 30% of their parts suppliers in a single area is just too risky.

Other locations should be developed for alternative sourcing. 

"So far, the manufacturers have relied on lean manufacturing. But today, I think the situation has changed, and we may have to adjust the strategy to cope with the risks," said Mr Sampan. 

Suwit Ratanachinda, president of the Thai Logistics Services Provider Federation, agreed. 

He said inventory build-up is recommended in case of floods.

"Relying completely on just-in-time delivery may not be sufficient. Customers are advised to keep some inventories if there is a flood threat," said Mr Suwit.

He said logistics service providers are preparing for greater use of distribution centres in eastern Bangkok such as in Lat Krabang district and on Bang Na-Trat Road, as well as in Chon Buri province.

"We think new floods, if they come, will be equal to last year's in the worst-case scenario," said Mr Suwit. 

He said the floodwaters could be halved if the government implements flood-prevention measures in a timely manner.

"We would like to hear the government announce clearly which areas will be used as floodways and water retention areas," Mr Suwit added.

(Source: Bangkok Post, Just-in-time in doubt after deluge, Broader sourcing, inventory now key, 27/02/2012, Nareerat Wiriyapong, link) 

Parts Supply and the Floods Vocabulary

inventory - goods that a company has bought and stores in a warehouse, factory or store for future use or sale (See Wikipedia) สินค้าที่จัดเก็บในสต๊อก
inventory build-up - increase the amount of goods in inventory

just-in-time - when a factory keeps a small inventory of parts for production, parts arrive when they are needed for production, "a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. Just-in-time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals or Kanban (看板 Kanban?) between different points in the process, which tell production when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality" (See Wikipedia)

just-in-time delivery

logistics - transporting and storing goods on the way from factory to consumer (See Wikipedia) การขนส่งและจัดจำหน่ายสินค้า การขนส่งสินค้า
logistics service providers

distribution - 1. the process of getting a product to customers; 2. giving or delivering things to many people การจำหน่ายออกไป (See Wikipedia)
distribution centres

sourcing - locating good companies to buy things from
broader sourcing - looking at more suppliers before buying something

doubt - not know for sure if something is true or false, uncertain
key - important คนสำคัญ

Just-in-time in doubt after deluge
broader sourcing, inventory now key

diversifying - creating a mix of many different kinds of things, others will succeed even if some fail ความหลากหลาย
diversifying parts supplies

disrupted (adjective) - interrupted and prevented from continuing smoothly by creating problems ขัดขวาง
disruption (noun) - when some process is stopped, interrupted and prevented

manufacturing disruptions
repetition of manufacturing disruptions
flood-related disruptions

minimise - to reduce something harmful or unpleasant to the smallest amount or degree ลดจำนวนลง  ลดให้เหลือน้อยที่สุด
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
minimize risk - make risk as small as possible
minimise the risk of flood-related disruptions

practice - a way of doing something that people do regularly การปฏิบัติ
questioning whether the widely accepted practice of lean manufacturing makes sense.

Manufacturers are diversifying parts supplies to minimise the risk of flood-related disruptions. Some are even questioning whether the widely accepted practice of lean manufacturing makes sense.

severe - very serious and worrying ที่รุนแรง ที่น่าเป็นห่วง
component - a part which combines with other parts to form something bigger ส่วนประกอบ,ส่วนเสริม
component makers  

concentrated - most of it is located in one place or small area มุ่งความสนใจไปยัง

inundated - flooded ถูกน้ำท่วม, จมลงใต้น้ำ
heavily inundated provinces

Automotive and electronics companies were especially hit hard by last year's floods, the most severe in 69 years, as they were buying from component makers concentrated in the heavily inundated provinces of Ayutthaya and Pathum Thani. Production was disrupted not only in Thailand but also abroad, as many companies elsewhere buy parts from Thailand.

temporarily - only for a limited time; not permanent ชั่วคราว

rehabilitate - to return someone or something to a good or healthy condition, state or way of living ฟื้นฟูสุขภาพ
facilities - the buildings, equipment and services provided for a particular purpose  (for example, athletics facilities) สิ่งอำนวยความสะดวก สถานที่และสิ่งอำนวยความสะดวก
rehabilitate facilities

Suparat Sirisuwannangkura, head of the Federation of Thai Industries' automotive industry club, said carmakers have temporarily shifted their sourcing to safer areas such as Chon Buri and Chachoengsao provinces. In some cases, imported components have been needed because some parts can no longer be purchased locally. Some manufacturers are helping suppliers affected by the floods rehabilitate their facilities and restart production  In some cases, machinery has been moved to new locations, said Mr Suparat, also a senior vice-president of Toyota Motor Thailand (TMT).

implemented - when a plan is put into action, actually doing the things in a plan
prevention - the act of preventing something, or things that people do in order to prevent something
measures - actions taken to deal with a problem มาตราการ
implemented risk-prevention measures
proven flood-free
couple - two people who are married or are involved in a romantic relationship คุ่รัก
the next couple of years
switch - to change เปลี่ยน

"Like other makers, Toyota has implemented risk-prevention measures to avoid the repetition of manufacturing disruptions," he said. If the affected areas are proven flood-free in the next couple of years, then we'll possibly switch our orders back to them again.  TMT said 20-30% of its suppliers are located in flood-hit zones. 

plants - factories
automotive plants
shortage - when there is not enough of something การขาดแคลน
vehicle - a machine that you travel in or on, especially one with an engine that travels on roads, e.g., a car, bus, van, truck, etc. ยานพาหนะ
final assembly of a vehicle - the last stage or step in making a vehicle

The Thailand Automotive Institute (TAI) counts 200 automotive plants in the seven industrial estates that were inundated last year including Rojana Industrial Park, Nava Nakorn Industrial Estate and Hi-Tech Industrial Estate.  Of these factories, 25% were seriously damaged.  TAI president Vallop Tiasiri said a shortage of even one component makes the final assembly of a vehicle impossible.

taken measures to minimise risks - taking action to make safe
procurement - process of buying large numbers of supplies for an organisation or company การจัดซื้อ

Sampan Silapanad, president of the Electronic and Computer Employers' Association, said electronics manufacturers have also taken measures to minimise risks by partly switching their parts procurement to suppliers in the Amata and Hemaraj industrial estates on the Eastern Seaboard. "If existing suppliers operate at more than one location, then it is easy to switch orders to an area less at risk of flooding," said Mr Sampan.

concentrating - directing your efforts towards a particular activity, subject or problem
risky - involving the possibility of danger, harm or failure เสี่ยงอันตราย
alternative - another choice; another possible way, different from the usual ways ตัวเลือก / ทางเลือก

He added that electronics companies believe concentrating 30% of their parts suppliers in a single area is just too risky. Other locations should be developed for alternative sourcing. 

adjust - to change something slightly, especially to make it more correct, effective, or suitable ปรับ
strategy - a plan to achieve a goal over a longer period of time (longer than a "tactic")
cope - to deal with a problem or difficult situation, continue to operate and function despite problems รับมือกับ (See glossary)
cope with risk
strategy to cope with risk
adjust the strategy to cope with the risks

"So far, the manufacturers have relied on lean manufacturing. But today, I think the situation has changed, and we may have to adjust the strategy to cope with the risks," said Mr Sampan. Suwit Ratanachinda, president of the Thai Logistics Services Provider Federation, agreed. He said inventory build-up is recommended in case of floods.

sufficient - enough พอเพียง
threat - a danger อันตราย
flood threat

"Relying completely on just-in-time delivery may not be sufficient. Customers are advised to keep some inventories if there is a flood threat," said Mr Suwit. He said logistics service providers are preparing for greater use of distribution centres in eastern Bangkok such as in Lat Krabang district and on Bang Na-Trat Road, as well as in Chon Buri province.

worst - most + bad
scenario - the way that a situation may develop in the future; a possible situation in the future
timely - on time, done in time to get benefits from doing it; happening at the most suitable time ถูกกาละเทศะ
manner - way วิธีการ
in a timely manner - done in time  

"We think new floods, if they come, will be equal to last year's in the worst-case scenario," said Mr Suwit.  He said the floodwaters could be halved if the government implements flood-prevention measures in a timely manner. "We would like to hear the government announce clearly which areas will be used as floodways and water retention areas," Mr Suwit added.

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