Resilience strategies for complex supply chains: Goodyear

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From Dr. Paolo Trucco and Dr. Alessandra Negri.

The Goodyear Tire and Rubber Company is one of the world’s leading tire companies. It develops, manufactures, markets and distributes tires for several applications. Founded in 1898, it currently employs nearly 66,000 employees and has operations in most of the world, with 48 facilities in 21 different countries. In 2016, its sales amounted to €13,694 million and its operating income was €1,793 million. Goodyear’s mission is to deliver quality products driven by integrity, innovation and teamwork, striving to serve customers in the best way. The catastrophic flood in Thailand in autumn 2011 halted many manufacturing operations, including Goodyear’s main aviation tire manufacturing facility in Bangkok. The company worked around the clock to bring the manufacturing facility back to full production as soon as possible. However, the re-start was subject to many factors, such as equipment status, availability of materials, and the ability to ship product and materials in and out of Thailand. Eventually the plant was completely restored but only in the third quarter of 2012. Despite the fact that other facilities outside of the affected region ramped up aviation tire production, the shutdown in Bangkok led to a decrease in the available supply of tires for the commercial airline industry in February and March 2012, determining a business loss of $16 million.

However, some of the complexity drivers characterizing its supply chain allowed Goodyear to react to the incident. As mentioned, the first countermeasure adopted was to ramp up production in facilities outside of Thailand: the company started a new line of tire manufacturing in Virginia and restarted production in Georgia, Arizona and the Netherlands. The presence of many facilities around the world enhanced the flexibility of the company as well as the collaboration among different plants. The high quality of Goodyear’s products also contributed to flexibility. The company reminded aircraft operators to follow the recommended tire care and maintenance procedures to safely ensure a strong tire.

This was also possible thanks to the regular communication that Goodyear maintained with
its customers. Since October, a regular contact with commercial airline customers was also established, keeping them updated on a potential global shortage of aviation tires. The company also leveraged assistance and support from its suppliers to enable the fastest possible return to full supply of global aviation tires, in addition to restoring full production at the Goodyear facilities in Bangkok.

Finally, the company pursued other viable sources of tire supply for its customers, leveraging assistance from other aircraft tire manufacturers. Goodyear’s trust in its competitors derived from its ability to build alliances in the industry, as indicated by the mergers and acquisitions characterizing its history, which also increased collaboration.