Toyota is 80% of the way towards having a supply chain that could recover within two weeks of an earthquake like the one in March that is still affecting supplies six months later – but it will take about five years to finalise a more robust chain.
Purchasing boss Shinichi Sasaki told Reuters that Toyota is “making checks now to see what needs to be done to enable a recovery within two weeks when the next one – expected in the (central) Tokai region – hits,” adding that the checks are “about 80% done”.
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Toyota and other carmakers were forced to halt production both inside and outside Japan for months after the earthquake and tsunami cut off the supply of hundreds of parts from the country’s devastated northeast.
Sasaki said Toyota was taking three steps to fight supply chain risks that he expected would be completed in roughly five years.
The first is to further standardise parts across Japanese automakers so they could share common components that could be manufactured in several locations, he said.
The second is to ask suppliers further down the chain to hold enough inventory – perhaps a few months’ worth – for specialised components that cannot be built in more than one location, or take anti-quake measures that guarantee safety against any tremor or tsunami, he said.
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By GlobalDataThis was to prevent a repeat of what happened this time with Renesas Electronics whose production of certain microchip controller units is still a few weeks away from full restoration.
Part of the second step would involve developing technology that would provide more options for parts and materials, such as substituting rare earths found mostly in China.
The third step is to make each global region independent in its parts procurement so that a disaster in Japan would not affect production overseas.
Toyota last year built 43% of its 7.6m vehicles in Japan and exported more than half of that.
