Economic Benefit of Modern Manufacturing Flaws

Why Has the Small Dent in my Hood Left Me with an Indefinite Rental? 

It was a fateful chilly morning in the beginning of January 2022 when my beloved Ford Taurus experienced what I consider a punch to the face; she was backed into by a CRV with a large spare tire on the back. Although it didn’t appear as extensive external damage, a crunched hood and broken grille begged to differ. I brought her to the nearest trusted body shop later that day who gave me words of advice I will always appreciate- go through insurance and expect it to take a while. 

We contacted insurance who made sure that I would be set up with a rental while it was repaired, another thing I learned to appreciate only after the fact. Monday, January 31 arrived, and she was dropped at the body shop, me being picked up by the rental company. A week later, I called the body shop, wondering, “shouldn’t I have received a final time estimate by now?” They laughed, saying that in a perfect world I would, but in Ford’s world, it’s up to wait for my, “hood to be released by Ford.” Not knowing that that means, I took it upon myself to look into what my brother explained as Ford’s “just-in-time” manufacturing. 

Written by Ford in 1922, he explained this new age of manufacturing in his book, My Life and Work. They found that, “… in buying materials that it is not worthwhile to for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time…” Well, Ford didn’t exactly figure that out too well, as it took Toyota and Japanese manufacturers until the 1970s to perfect it. Ford and other vehicle manufacturers followed suit- only supplying for the quantity demanded, not allowing market equilibrium to shift out from under it. Well… until now. 

Supply chain issues and automobile shortages mean my car’s hood isn’t exactly on the top of Ford’s docket of demanded goods. Ford even knew this, writing that, “if transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever.” Alas, transportation is not perfect and automobiles are not invincible, meaning that the hood of my 2013 Ford is not just on a shelf; just as Ford insisted was not necessary. Eliminating inventory and surplus goods meant maintaining profit for Ford, while the relative inelasticity of cars creates a price and quantity both at their will. As for me, we’re more than four weeks out and Ford still hasn’t decided that it is (just) in time to manufacture my car’s hood. 

Ford, H. (1922). My life and work: Henry Ford. IAP. 

2 Replies to “Economic Benefit of Modern Manufacturing Flaws”

  1. I appreciate the historical perspective. How do you think this disruption will change car makers’ inventory strategies in the future? Has profit declined enough to incentivize a new approach?

    • I don’t think it’ll end up changing much- like Helen noted yesterday, it’s expensive to store inventory of “dated” parts. Ford’s profit has grown since 2020 (partially due to the new electric truck) which makes me think they’re not afraid to leave people waiting with rentals through this. It’s interesting considering the demand for cars (I’m satisfied in my rental) compared to parts, as I’m still demanding that hood!

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