Toyota Supply Chain Challenges in Post-Earthquake Japan

Introduction

Japan has for a long time been known as the major source of the automotive product in the world. It holds four major automotive manufacturing plants in the world. These companies include Toyota, Mazda, Nissan and Honda. In this regard, the March 2011 earthquake that took place in Japan affected the world automotive industry a great deal. The world experienced shortage of automotive products for about six months after the earthquake, with companies such as Honda, Mazda and Toyota which were following lean production principles to the letter experiencing the greatest impact. This paper focuses on analyzing the effect of earthquake on the Toyota supply chain, and the consistency of the new Toyota measure with lean production principle. The paper also evaluates how the new Toyota plan may impact the company’s relation management in the supply chain.

Disadvantages and Advantage of Supply Chain System Used before the Earthquake

Before the 2011 March earthquake, Japanese auto companies were using a supply chain system that adhered to lean production principles. One of the observed Lean production guiding principle was that to maintain parts of inventories as low as possible. One of the major advantages of using this principle was that the companies managed a small error margin in case of supply interruption. Lean production also reduces fixed overhead cost. It also lowers operational costs, and thus playing a major part in boosting company’s restoration and increasing the company’s competitive advantage. Lean production is also believed to lower the time of manufacturing. Moreover it tries to eradicate waste space and thus, the Japan auto industry enjoyed all these benefits that are associated with lean production principles (Shpak, 2015).

One of the major disadvantages of employing the lean production principle is that the company does not have enough in store to assist it to keep on running in case of any interruption in the manufacturing process. Other disadvantages include the fact that in lean production the company has to be in a constant training of its workers to ensure continue adhering into the lean production principle. The leaders also have to remain committed to the lean production principles throughout to be able to enjoy the lean production principles advantages (Shah & Ward, 2007).

Consistency of the Toyota’s Foolproof Plan with Lean Production Philosophy

Toyota Company considered changing its supply chain system after the earthquake experience. In this case, the company considered employing foolproof system in its supply chain system. According to the plan, the system will involve standardizing the japan auto products to ensure that companies can benefit each other in case of supply problem from any company. This is basically meant to reduce chances of supply interruption. The main problem with this is that the companies may focus more on observing the set standards forgetting customers’ needs that change from time to time. Lean production focuses more on customers’ satisfaction (Ciarniene & Vienazindiene, 2012). On the other hand, customers tastes and preferences changes from time to time. They also vary from one customer to another. Standardization of auto products would lower the competition and thus, leaving the group of customers who are interested in certain unique product made by a certain company uniquely unsatisfied by the new products in the market. Therefore the new plan does not comply with the lean production

The second option involves getting a higher supply of specialized parts from its suppliers especially those obtained from one source. In this plan these location will be allowed to hold a higher volume of inventory that before. They also consider obtaining another source for those inventories. This goes against the lean production principles. This is because, the lean principle advocates for reduced level of inventories. However, the current plan goes for increasing inventories for special parts to fight supply interruption. In this regard, the current Toyota plan is not consistent with the lean production principles (Lean-manufacturing-junction, 2014).

The company also wants to reduce dependability of one supplier by ensuring that each of its regions produces their own auto products independently. This is meant to ensure that other regions are not affected by problems experienced in different parts of the world. Manufacturing in different parts increases the total wastage made during production. On the other hand, lean principles advocate for minimization of production wastage. Therefore, the current foolproof plan is not consistent with lean principles (Pettersen, 2009).

Best Recommended Best Supply Chain Strategy for Toyota

It is the aim of every company to remain viable in the market and available at all time despite of the crisis or any other problem that would influence the company’s supply chain. In this regard, the company should consider that its products are available to all its customers to any part of the world at all times. Unavailability can result to lose of a huge number of customers. Therefore, it is important for Toyota to disintegrate its manufacturing plants to ensure that the company can manage to sell its products to all its customers even when all links to a region are cut by crisis. To ensure customer satisfaction, the company should consider maintaining the production standards in all its plants despite of the integration. This can be done by having a central management, central research and design center to ensure that the company maintains the design of their products. The company should also ensure quality supply of raw materials for all its new firms to ensure uniformity, in design and quality and to eliminate the aspect of disintegration in the market. It will also ensure that the company is at the same level of development and advancement in the entire world. In this regard, constant training and engineers meeting would be necessary for the company. Each region should also consider maintaining a high level of efficiency.

Impact of Toyota’s Plan on Relation Management in Supply Chain

The previous Toyota supply chain established a great relation between the companies, its suppliers, its customers and all its workers. This relation may be broken by the current arrangement. This is because the company may need to cut their supply in Japan and get new suppliers for their firms to be established in different parts of the world. In this regard, the company will have to break its relation with a number of suppliers from japan and establish a relation with new suppliers. In addition, each regional plant will be expected to supply to its customers. In this regard, the company supply chain will be regionalized and thus there will be no intercontinental exportation of the company’s products. Therefore, the relation between a plant and customers will be regionalized. Intercontinental shipment will only happen when a regional plant is experiencing problems.

Read also Dell’s Supply Chain

Conclusion

Japan auto companies have been operating under the guidance of lean production principles. However, the emergency of the 2011 March earthquake gave the company an opportunity to experience the disadvantages of employing lean production. The use of lean production principles made the company to experience shortage a few weeks after the incident. In this case the company is considering changing its operation plan. The plan aims at reducing dependency on one firm and creating a number of firms at different parts of the world with similar potential. This will assist the company in ensuring supply to all other parts of the world despite of a problem in one of its firms.

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