Toyota Supply Chain Case Study

Background

In the era of globalization, supply chains starting from raw materials and reaching to end users are extended through various companies, as a consequence, any major disasters from any part of the world whether natural or man-made, directly affects the flow of businesses. The impact of those disruptions should be taken as a signal to find alternative solutions to enable managing the arising risks that companies may be exposed to one day (Rice, 2011).

In this paper, we will evaluate the vulnerability of Toyota’s supply chain pre 2009 recall crisis and 2011 Japan’s earthquake in addition to the measures taken by Toyota’s management to build a crises-proof supply chain for the any future risks.

Introduction

The earthquake and tsunami

JIT which revolve on the reduction in stock by decreasing overproduction, stock on hand, and work in process gave to allow more flexibility with their production decisions, but on the other hand if a supplier of raw material had a breakdown and couldn’t deliver the goods on time for any reason, the supplier may need to shut down the entire production process. Thus, a delay in delivery of the final product to customers by Toyota (Brown, 2005).

Another important reason to failure is that Toyota produces more than 60% of its vehicles in Japan in which two thirds of suppliers are from the same region (i.e. northeastern Japan) and that puts a huge pressure on Toyota 's manufacturing capacity (Speculations,

• Toyota foster a shift in the Paradigm towards business continuity

Toyota senior management and engineers have worked diligently to reduce the number of parts bottlenecks by moving production from one facility to another in addition to the standardization of all assembly lines prior to any occurrence of disruption, they also “commonized about half of the about 5,000 parts in a car, A top goal: lower per-part costs to offset the higher costs of duplicate manufacturing plant” (MacKenzie, Barker, and Santos, 2014).they learned that finding Alternate suppliers enables meeting the current demand of customers and maximizing profit despite its high cost.

Toyota has also boosted production in North America and decreased imports from Japan. In 2014, about 76% of the vehicles it sold in North America were built in the region, it is estimated that by the end of 2015, Toyota will have the capacity to produce 2 million vehicles a year in North America (Boudette, 2014). This integrated approach creates flexibility in moving production from one site to another especially when one plant goes down (Greimel, 2016).

• Constantly monitor the supply