Toyota Production: Updated Feb. 9

 Article Source:  https://mainichi.jp/english/articles/20220121/p2g/00m/0bu/031000c 

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TOKYO (AP) -- The shortage of parts caused by the coronavirus pandemic is further denting production at Toyota, Japan's top automaker.

Production at 11 plants in Japan will be halted Friday, Saturday and next Monday, Toyota Motor Corp. said.

That comes on top of reductions planned for February that were announced earlier. Those reduction will be on various days at eight of its 14 plants in Japan, including assembly lines making the Prius hybrid and Lexus luxury models.

Ideas:

Toyota over the past several months has been consistently saying we are Ok one week and then later saying we have to delay production again.

What this might show, for Toyota and other companies, is they need to expand their supply sources and the idea of Toyota's keeping a very small supply days are over if the logistics and supply challenges continue.

To make sure that they have a sufficient supply of parts and materials, Toyota and other companies might have to carry more than they need for the current production cycle, just in case there are going to be supply and logistics challenges in the future.

So Toyota and other companies are going to have to re-configure their supply strategies and production strategies for whatever logistics and supply challenges that come up again.

Whether using data science, business intelligence or whatever works for them they need to come up with new scenarios to fit the potential challenges they might face.

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Supplies are running short because of a lack of computer chips, which are crucial in auto parts. Plants in and out of Japan have undergone lockdowns and stoppages related to COVID-19 measures. Toyota has not given details.

Production in January will be reduced by 47,000 vehicles, when accounting for the latest changes, according to Toyota. For the fiscal year through March, production will now fall short of the 9 million vehicles the automaker had targeted, despite healthy demand for Toyota offerings. All manufacturers are scrambling to secure the tight chips supply, worsening the crunch, Toyota said.

"We are doing our utmost to deliver our vehicles to our customers as soon as possible," it said in a statement. "We deeply apologize."

Ideas:

Its been almost a year now since the global chip shortage was first identified and companies by now should have had strategies in place for future potential challenges.

Not just Toyota and Japanease companies but all companies globally that use chips in their products, which is going to make procuring chip even harder.

Unfortunately companies are slow to respond to external shocks or challenges such as the chip shortage. 

Sometimes they don't have or haven't developed any contingency plans for challenges that they haven't expected such as the chip shortage. Perhaps a chip shortage was never considered or something that they haven't experienced before.

And also with the challenge of securing rare-earth metals which are now very important for chips the challenges of manufacturing plants having enough raw materials is going to be even greater challenge in the future.

And add in that not just cars, but almost any and all electric products are competing for chips supplies is going to make the challenge even greaters.

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Toyota has periodically released information about COVID-19 among its workers. Toyota said four workers at a line at Tsutsumi plant in Toyota city, Aichi prefecture, became sick, so it was shut down. Earlier in the week, 14 workers tested positive at another line at the same factory, shutting down daytime operations for four days.

The pandemic has disrupted not only the auto sector but various areas, including shipping, the oil supply and meat packing, serving as a reminder of the connectivity of the world and the importance of the humblest worker.

Matteo Fini, vice president, who analyzes auto supply chains and technology for IHS Markit, said supply problems aren't expected to go away for some time, and they are serious, costing manufacturers as much as $50 million a week.

Ideas:

All of this is somewhat old news or more precise what is going on globally and not just in Japan. 

What this might mean is it might force manufacturers to do is to move even more into robotics for their manufacturing needs with even less workers on their manufacturing lines.

While Japan has been, for the most part a people reliant business or businesses the pandemic might get Japanese manufacturers to re-think the idea of less workers and more robots in their plants.

Yes, the world now is very connected an no part is separate from any other part related to how the pandemic has affected supply chains related to many industries.

Early in the pandemic,for example, meat-packing plants in the US and probably still were hit very hard by the pandemic, and for a while, maybe now, there were periods of specific meat shortages in the US, as many of the workers contacted the virus.

Supply challenges are probably going to continue as the world is now experiencing the omicron virus situaton. As there hasn't been a lot of news related to South-East Asia yet, as it didn't really affect the manufacturing plants in that area until the summer of 2021.

So if manufacturers are losing money, most likely whomever is next and then next in the supply chain is going to see an increase in prices as manufacturers are going to try and re-coup their shutdown losses in the future.

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That means the cost-savings from the famous "Toyota Way" of lean manufacturing, based on having as little inventory as possible for "just-in-time" production, may no longer pay off, said Fini.

"The recent experience of these input shortages is forcing automakers to go against everything they have done in the past 30 years when it comes to supply chain management," he said.

"Carmakers are now considering taking on inventory for certain parts because, in relative terms, it costs peanuts to have that inventory compared with having a line stoppage."

Ideas:

Yes, the pademic and supply chain challenges are going to force companies like Toyota and the previous way the managed their supply chain with maybe having to completely re-do or partly re-do how they control their supply parts, especially those that are critical or those that are consistently in short supply.

Most likely not all companies are going to be able to do what Toyota can and will do because of market power or because of supeior resources but companies are going to have to come up with new supply chain management strategies for the future.

Now might be the best time to re-tool their supply chain management strategies before the situation gets any worse in the future and or to be as learn how to be as flexible as possible to be able to repsond as quickly as possible to any future logistics challenges.

Companies that can't or won't change to meet the present and future needs are going to be left behind as the global landscape is changing rapidly because of the virus pandemic.

Have a nice day and be safe!