Toyota: the power of partnership On Monday, 3 February 1997, Japan's largest motor manufacturer, Toyota, announced that all

of its Japanese assembly lines had been brought to a halt following a devastating fire at the premises of one of its affiliated suppliers, Aisin Seiki. The company supplied brake master cylinders for several Toyota models and was its only supplier of brake- fluid proportioning valves. The fire had shown up one of the weaknesses of Toyota's famous lean manufacturing system, which runs on minimum stock levels using components delivered on a just-in-time basis from a small number of suppliers. The fire left Toyota holding only half a days stock of vital components. The motor manufacturer's production lines ground to a halt soon afterwards, as did the lines of all other Toyota suppliers. This was not the first time that a catastrophic event had shut down production throughout the Toyota kieretsu. The company had suffered similar problems in 1995 when the Hanshin earthquake severed its supply lines to component manufacturers in and around the city of Kobe. Toyota's rival Honda has long worked a policy of dual sourcing, partly because it does not have such a tightly bound network of suppliers, and partly to hedge against the loss of a key supplier. Honda maintains that there are advantages in retaining a degree of competitive rivalry among suppliers, believing that this pushes forward quality and cost improvements. Toyota's founder Shoichiro Toyota was amongst the first to admit that his company's brand of JIT 'is still not perfect', but remains convinced that this system is still the best available solution, when viewed the longer term. It allows cost reductions through suppliers' economies of scale and engenders a spirit of commitment amongst the affiliates. Toyota requires that the parts makers develop the parts themselves, for a specific model while it is still at the concept stage. Given that the supplier has taken responsibility for the component's development, there is no question that the same supplier would not be given the manufacturing work. Only when such unfortunate incidents as the Aisin Seiki fire do occur, is the company likely to turn to other sources. In this instance around 20 of Toyota's other affiliated suppliers were asked to rally round, and they immediately set about tooling, retaining employees and setting up new production lines in coordinated effort to provide the missing components. Reports indicated that by Friday, 7 February, Toyota had restarted assembly lines all of its plants, successfully restoring output to 90 per cent of its usual level. Full production was resumed by the following Monday. References Nakamoto, Michiyo (1997),'Toyota Slams on the Breaks', Financial Times, 7 February, p. 12. Reitman, Valerie (1997), 'ToyotaStabilizes its Production Levels in Japan on Suppliers' Weekend Efforts', Wall Street Journal Europe, 11 February.

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