Toyota Creating a More Resilient Supply Chain

Toyota Motor Corp is revamping its supply chain, so that it can recover within two weeks after a massive earthquake like the one that devastated Japan this spring.

The March 11 earthquake and tsunami forced Toyota and other Japanese automakers to suspend much of their production for months. Even today, some parts of the supply chain have not been fully restored.

But now, Toyota is busy establishing a buffer against supply chain risks, Reuters reports.

According to the article, the company is focusing its efforts on three main areas:

Standardization. Toyota wants to increase standardization of parts across Japanese automakers, so if one factory is down, the pats could be manufactured elsewhere.

Supply. The company is working to ensure the supply of specialized components that can only be manufactured in one location. Its hoping to mitigate risky by: increasing supplier inventory, implementing "anti-quake" measures at factories and developing technologies that would increase options for materials used.

Independence. Toyota wants to make each global region independent in parts procurement, so the effects of a disaster in one region don't ripple worldwide. (As the article points out, this would also prove an effective buffer against the strong yen, which is causing Toyota even more pain than the March 11 quake.)

It will be interesting to learn more about the changes Toyota makes and the benefits that result, and I assume automation and process integration are also key components of the improvements being planned. All in all, the company estimates that the entire project will take five years to complete.

Although the earthquake and tsunami dealt Japanese auto manufacturing a crushing blow this spring, a new study from PRTM suggests that European and North American auto suppliers , by contrast, are now undergoing a "stunning, high-speed recovery" from the economic crisis that caused worldwide auto sales to plummet a few years ago.

TAGS: Finance
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.