Toyota facing supply chain issues

Toyota facing supply chain issues

Japanese car manufacturing giant Toyota has warned customers that they might have to wait for up to four years for its new Land Cruiser SUV due to delays caused by Covid-19. These delays are, for the most part, related to a lack of workforce due to staff absences from Covid-19. Consequently, Toyota has announced that it is slowing production at several manufacturing plants all over Japan, owing to an increase in Covid-19 infections among Toyota’s workers and in the factories which supply essential car parts.

In a statement released to explain these delays Toyota said “As Land Cruiser is very popular, not just in Japan but around the world, we apologise as it is expected to take a long time before we can deliver the product. There is a possibility it could take up to four years if you order now. We will continue to shorten the delivery time and we appreciate your understanding” 

 

Covid-19 is not the first-time that Toyota’s supply chains have faced disruption as the company has already coped with disastrous events such as the 2011 earthquake and tsunami in Japan which had a devastating effect on the country. In the months after the 2011 tsunami Toyota completely reassessed their entire supply chain and started again to rebuild the 78% of production that they’d lost.

The Toyota supply chain model

Toyota are leading proponents of the ‘lean manufacturing’ model as they first developed their Toyota Production System in the 1940s, which quickly gained global influence as other companies adopted this methodology. There are two core concepts to the Toyota system, firstly ‘jidoka’, a form of intelligent automation where equipment is programmed to come to a halt when an issue arises to ensure that faulty products are not produced. The second concept is referred to as ‘Just-in-Time’, a concept where each step within the manufacturing process only produces what’s needed for the next one.

These two concepts were put in place as part of an overall philosophy to eliminate waste during manufacturing and aim to work in the most efficient way possible, building on continuous improvement over the years.

Toyota has sought to revise and improve upon its methodology since the events of 2011 and used the disruption to positive effect. Since their supply chain had been almost entirely cut off, the company worked alongside suppliers in Japan to produce a comprehensive database of supply chain information to support the Japanese manufacturing industry. Toyota also implemented a strategy which was devised to split the procurement of their supplies from three different sources, with the main one supplying 60% of materials. Dividing their raw material supplies up in this manner meant that should one part of their supply chain fall, they would have two backup options already in place.

While it remains to be seen how Toyota will resolve its supply chain issues, an interesting development came in December when the company said that it is happy to use scratched or blemished parts from suppliers as the world’s biggest car producer tries to trim costs amid a production-curbing global chip shortage and rising material costs.

Toyota’s acceptance of good enough by using parts it would have thrown away in the past marks a significant change both for a company renowned for stringent quality control and for Japanese manufacturing practices that have often prioritized perfection over speed to market. This may be the first hint at the direction Toyota might take in the future as it seeks to eliminate its supply chain issues.

“We are careful about the outside of our vehicles, the parts you can easily see. But there are plenty of places that people don’t notice unless they really take a good look,” Takefumi Shiga, Toyota’s chief project leader for vehicle development said during a press briefing.