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Nylon 12 Shortage Exposes Lean's Weaknesses

by APICS CEO Abe Eshkenazi CSCP, CPA, CAE | N/A 2012 | 0 | 0
Now Operations Management NowNylon 12 isn’t the name of a new band or the title of a science fiction book. It is a resin automakers around the world use to make fuel and brake lines. After an explosion last month at the German manufacturer Evonik, a Nylon 12 shortage is threatening car manufacturing in a bigger way than any science fiction writer might have dreamed.

According to the Wall Street Journal [Subscription needed], Evonik makes 25 percent of the world’s supply of Nylon 12. It also provides the necessary chemical building block to other makers of the resin. The critical situation prompted a meeting of more than 200 auto executives and representatives from Evonik last Tuesday. 

An Associated Press article on the subject focuses on how the Nylon 12 shortage challenges lean manufacturing as a whole. “So-called Just-in-Time deliveries have helped automakers save billions and run their factories more efficiently,” writes Dee-Ann Durbin. “But the approach also relies on an almost perfect supply chain. And twice in the last year, weak links have been exposed.” The March 2011 earthquake in Japan brought some parts manufacturers to a standstill, and worldwide forced factory shutdowns and car model shortages.

These are hard lessons in risk for auto manufacturers, who have been dedicated to lean and Just-in-Time. Durbin writes that Just-in-Time works well for parts such as bolts and fasteners because there are many suppliers that manufacture them. However, the recession caused parts supply companies to downsize or close up shop altogether. “The remaining firms don’t have the money or staff to stock up on raw materials in case of a disruption. The industry also shrank because carmakers needed increasingly specialized parts to meet government safety and fuel economy standards. Suppliers without those products went out of business.”

Lean for the future?

Consider the definition of zero inventory (Just-in-Time) from the APICS Operations Management Body of Knowledge Framework: “In lean management systems, zero inventory is the ideal state sought in eliminating the waste (muda) of inventory. In an ideal lean system, a single piece of a product or service is moved through the value stream, completed, and delivered exactly at the time the end customer demands it.”

Is this understanding of Just-in-Time still a pillar of auto manufacturing? Is the Just-in-Time concept evolving with the industry?

In an actual toolbox, different tools work for different projects. You wouldn’t use a hammer to drive a screw. The same is true for methods outlined in the APICS body of knowledge. Lean is one way of doing things, but it surely isn’t the right answer for everyone in every situation. Automakers around the world now are forced to look deeper in their toolboxes.

APICS offers a variety of conference opportunities that can help you and your business find answers to your most pressing challenges. For example, with the theme “Elevate your Supply Chain’s Performance,” the 2012 APICS International Conference & Expowill take place October 14–16, 2012 in Denver, Colorado. More information about APICS conference and learning opportunities is available at apics.org.

Idea exchange

Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.

  • Is zero inventory an obsolete model?
  • What can the auto industry learn from the Nylon 12 crisis?
  • Does your industry rely on an "almost perfect supply chain?"
  • What is the future of Just-in-Time?

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