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Toyota was one of the leaders in just-in-time manufacturing, yet they're doing just fine with the chip shortage. They stockpile parts, and try to understand how
by pradn 5y ago
Toyota was one of the leaders in just-in-time manufacturing, yet they're doing just fine with the chip shortage. They stockpile parts, and try to understand how they work in depth.
> After the [Fukushima] catastrophe severed Toyota’s supply chains on March 11, 2011, the world’s biggest automaker realised the lead-time for semiconductors was way too long to cope with devastating shocks such as natural disasters.
> That’s why Toyota came up with a business continuity plan (BCP) that required suppliers to stockpile anywhere from two to six months’ worth of chips for the Japanese carmaker, depending on the time it takes from order to delivery, four sources said.
> The sources said Toyota has another advantage over some rivals when it comes to chips thanks to its long-standing policy of ensuring it understands all the technology used in its cars, rather than relying on suppliers to provide “black boxes”.
https://www.reuters.com/article/us-japan-fukushima-anniversary-toyota-in/how-toyota-thrives-when-the-chips-are-down-idUSKBN2B1005 https://www.reuters.com/article/us-japan-fukushima-anniversa...
- riskable 5y agoIf all the manufacturers did what Toyota did that would have exacerbated the chip shortage.
- kaesar14 5y agoNot if the other car companies realized that the lead time being so long meant that cancelling their orders was a horrible idea.
- oivey 5y agoThe stockpiled chips would have been made before the shortage, so that doesn’t follow.
- fgonzag 5y agoThat's backwards. It would had prevented the shortage. The shortage is happening because manufacturers cancelled their chip orders from their suppliers because of reduced sales forecasts due to COVID. When the manufacturers cancelled their orders from their suppliers, the supplies cancelled the orders from the foundries, which cancelled their slots and gave them to consumer electronics which had increased demand. When sales of new cars rose, manufacturers called their suppliers for more parts, which called the foundries to increase production only to find out their previous slots had been sold.
- dv_dt 5y agoWell also the climate induced power outages in Texas knocked out three (4?) foundries in the Austin area from suppliers that tended to supply embedded customers. Foundries really really hate to be interrupted and getting them back up seems to be taking longer than anticipated.
- spfzero 5y agoI think I know what you're getting at: If all of the manufacturers suddenly requested private inventories to be set up, the chip manufacturer would be dedicating all of its production to filling up warehouses rather than shipping. It seems like Toyota was farsighted in this.
- yardie 5y agoThis is really ironic given the fact that Toyota was really at the cutting edge of 90s JIT manufacturing and this was one of worries that was raised in the. Their response, "we have multiple sources for parts." [0] But over time those multiple partners migrated to the same geographical locations, and then an earthquake hit. [0] I'm totally paraphrasing here as I remember reading it in some magazine years ago.
- jacques_chester 5y agoThey famously maintained production after that earthquake. It's a common case study of how to adapt to supply chain shocks by being good at running a supply chain in the first place. All the things they needed for resilience -- plentiful data, high trust relationships with suppliers, flexible and skillful workforce -- were things they had built up to support their JIT manufacturing capability.
- roenxi 5y agoIt certainly is ironic, but it is also an interesting case study for the many, many idiots who keep applying LEAN manufacturing as a dogma. Look! See! Toyota isn't dogmatic about everything being Just In Time. They are only doing it because it is the best option at the time and it works. If it isn't the best option (or doesn't work) then they stockpile like a clever person. There are a few people who really need their noses rubbed in to this little example.
- kevin_thibedeau 5y agoThese are the same idiots who applied Jack Welch's BS to non-manufacturing operations.
- totalZero 5y agoToyota also part owns Denso. They're closer to their supply chain than many of their competitors.
- NDizzle 5y agoNo wonder Denso parts are so good.
- ethagknight 5y agoThis may be a dumb question, but is it still "Just In Time" if the parts are just stockpiled on shelves owned by someone else?
- ethagknight 5y agoThanks for all the responses, makes a lot of sense. It seems like the answer is “Yes, from Toyota’s perspective” in that Toyota gets to focus solely on the manufacturing process, and let the others figure out the chaotic bits to get the required parts in the right place at the right time, because that’s a different skill set that certain other corporations are far more adept or have specific resources like rolling stock. To use an analogy: a surgeon operating on a patient, holds a hand out and says “scalpel” and a scalpel instantly placed in hand. Does it matter that their are trays and trays of parts and other people in the room if we are just evaluating the surgeon’s efficiency?
- quotemstr 5y agoSure. That's technically not inventory for tax purposes.
- notyourwork 5y agoI had the same question, I'm not versed on manufacturing processes but "Just in time" would seem to imply inventory is nearly 0 and as parts come in, they are used for assembly and go right back out the door. Perhaps they realized the limits of JIT and have looked at storying inventory based on the impact to assembly continuity?
- wheelinsupial 5y agoWorked in automotive, not at Toyota. > storying inventory based on the impact to assembly continuity? It's always been about that. JIT can be looked at as, "right part in the right quantity at the right time." That can mean "milk runs" where assemblies are delivered to the final assembly plant twice a day. An AM delivery where the last assembly is bolted to a car as the PM delivery arrives. Or it means "kanban orders" where 1 week supply of parts is delivered on a Monday and a refresh the next Monday. Or it means you buy in bulk and get 3 months supply at once. JIT and everything around "Lean manufacturing" and the "Toyota Production System (TPS)" are ideals to strive for. Not everything in Toyota operates according to the ideals. There are certain fundamental things (e.g., stability in material, personnel, machinery, and methods) that need to be in place before starting to reduce inventory. When suppliers have trouble with providing defect free parts, the orders start to increase in quantity and decrease in frequency. These can be subject to 100% incoming inspection if the supplier's quality comes into question enough.
- redstripe 5y agoI don't know if we should give Toyota any praise over their supply chain management. Consider the situation with their electric vehicles. The plug-in hybrid "rav4 prime" has a 2 year wait list. They sold 3200 last year because they don't have any battery capacity. https://insideevs.com/news/466641/us-toyota-rav4-prime-sales-2020/ https://insideevs.com/news/466641/us-toyota-rav4-prime-sales... This is a bit of digression on this thread, but it's stuff like this that makes it seem like traditional car companies are still out to lunch vs Tesla. They're just too slow to adapt and give up what has worked for decades.
- sbelskie 5y agoIsn’t it their first plug-in hybrid? Seems like they could be testing the waters and ended up with way more demand than they anticipated. I guess we will see in a year or two if they can ramp up.
- petersellers 5y agoNo, they've had Prius plug-in hybrids for awhile now (but as far as I can tell, the demand for those haven't been nearly as high as the Rav4 Prime).
- girvo 5y agoThey’ve had the Prius since 2012, I thought? https://en.m.wikipedia.org/wiki/Toyota_Prius_Plug-in_Hybrid https://en.m.wikipedia.org/wiki/Toyota_Prius_Plug-in_Hybrid 128 thousand total cars globally
- ErikVandeWater 5y agoIt seems unreasonable to criticize Toyota on the basis that one model of a car has an extremely long waitlist.
- philistine 5y agoToyota’s blunders with electric vehicles has nothing to do with its supply chain and everything to do with its strategic decisions. The Rav4 Prime has a long wait list because they chose to make a small quantity of them. They partly choose to make so few of them because they’re still trying to make hydrogen happen.