THE POINT OF MODULAR PLANTS IS TO CUT DOWN ON PARTS
In ''GM: Modular plants won't be a snap'' (The Workplace, Nov. 9), financial analyst Maryann Keller and Toyota Motor Corp. spokesman Koki Konishi miss the advantage of the modular concept: Conventional car plants have to cope with far too many components, typically in excess of 10,000. At the same time, their suppliers typically have too few parts and therefore lack ''whole product'' capabilities. Modularity offloads parts to suppliers, strengthening both parties.
In an automotive plant with 10,000-plus parts, more money must be invested on nonvalue-adding material handling and storage, plus outsized materials departments and computer systems for inventory management and logistics, than on the value-adding processes themselves. To be efficient, a plant should have no more than a few hundred parts, which the modular concept achieves. More than that is a management nightmare.
The supplier that just stamps metal or just molds instrument panels is in an insecure position, easily replaced by a stamper or molder in, say, an emerging low-wage country. When a supplier upgrades to become a first-tier supplier of whole modules--stampings that are also welded, drilled, and loaded with pretested wiring, or moldings that are stuffed with all the electronic components of a complete instrument panel--genuine, long-term mutually beneficial partnerships are possible. General Motors Corp. could easily botch the job, as pioneers often do. The modular concept, however, is long overdue in an industry that to date has been hopelessly inefficient.
Updated Nov. 19, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.