Recently I read a news item ( ET Nov16,Delhi, Nandini Sen Gupta & Sumit Chaturvedi) “Auto Cos feel parts pinch/ Component makers unable to cope with sales overdrive”. The news item brings out how the "country's top car makers are struggling to meet an unexpected spurt in year end demand with component makers failing to match a sustained surge in sales since August."
We recall that an year back,the companies were in an overdrive to cut down their inventory and manpower levels. As a result, their vendors had to cut down production. Further down the supply chain, the smaller OEM and material providers were badly hit. Some could manage to stay afloat. Others could’nt.
Now the auto companies will have to go back to reviving these vendors or develop new ones to meet the upsurge. Both options will probably cost more than what they saved in the last financial by withdrawing support.
Reading the news item I had a sense of déjà vu. I remember reading the draft of a talk Prof Eliyahu Goldratt had with the top managers of a Japanese electronic OEM in January this year.

He had advised them that to capitalize on the recovery in the market, a company had to take two actions. First, do not cut capacity. Reducing manpower is painful and hiring, many times involved the long process of training. Companies that laid off people then will most likely be slow to respond to the sales picking up now.
Secondly, he advised them, to help the material suppliers. Those companies were hit the hardest and they will be the last to feel the recovery.
One needs to only study the lead times required at each stage in the supply chain of auto parts to predict how soon will the auto companies be able to bridge the demand-supply gap and capitalize on the recovery. Perhaps Mr Karl Slym, the President & MD of GM India would do well to introspect and examine his company’s actions in the light of Dr Goldratt’s views. Then he would not lay the blame entirely on the doorstep of the component makers.