Toyota's Disrupted Global Supply Chain: COVID-19 and The Global Chip Shortage

For the exclusive use of M.
Leyva,
2023.
HBP# TB0648
A09-21-0016
William E. Youngdahl
Kannan Ramaswamy
Toyota’s Disrupted Global Supply

Chain: COVID-19 and the Global Chip
Shortage
Especially in Southeast Asia, the spread of COVID and lockdowns are impacting our local suppliers.1
Toyota’s Purchasing Group Chief Officer, Kazunari Kumakura
It was 2021, and the world was deep into the crisis of the COVID-19 (Corona Virus Disease) pandemic
which had triggered a variety of challenges for organizations worldwide. Earlier in the year, a very large
proportion of new cases emerged in Asia where the delta variant of the virus was wreaking havoc.
Against this backdrop, even Toyota’s supply chain, long admired as an industry benchmark for efciency
and efectiveness, was unable to supply critical parts to replenish inventory in its plants. Southeast Asia,
where Toyota sourced many auto components, was particularly hard hit. Consumer demand patterns
started to shift across the globe. When the virus frst hit, consumer demand dropped precipitously, and
even the leading car rental companies were scaling down their vehicle portfolios and sold of a sizable
proportion of their cars. However, as the Western world was showing signs of a recovery due to the
vaccination efort in the latter half of 2021, consumers rushed to buy new cars. As demand for automobiles
surged, a critical shortage of microchips forced Toyota and other automakers to shut down some of their
assembly lines. In Germany, Opel, Ford, BMW, and Mercedes Benz had all announced that they were
idling some of their plants as a result of the chip shortage. Opel said that it found itself “in an exceptional
situation due to the continuing pandemic and the worldwide shortage of semiconductors.”2 Across the
Atlantic, GM announced that it was idling production at eight North American plants “driven by the
continued parts shortages caused by semiconductor supply constraints from international markets
experiencing COVID-19-related restrictions.”3 Toyota announced that it would shut down 40% of its global
production saying that the decision “for the production adjustment include[s] a decline in operations at
several local suppliers due to the prolonged spread of COVID-19 in Southeast Asia and the impact of
tighter semiconductor supplies.”4 Interestingly, Toyota was the last of the major global automakers to cut
production during the challenging COVID-19 era. It had withstood many disruptions in the past and had
shown a higher level of supply chain resilience in recent years. COVID-19 was the type of challenge that
left even the best performers overwhelmed.
Toyota made several changes to increase supply chain resilience after recovering from the
Fukushima earthquake and tsunami in 2011. The magnitude 9.1 earthquake had disrupted supplier
operations that were vital to Toyota’s plants, and the company was faced with a serious supply chain
challenge that had to be addressed quickly. As part of the series of changes that Toyota undertook in
responding to the disruption, it increased inventory bufer stocks for critical parts and also increased their
supply chain visibility to all tiers of suppliers. Although these changes helped them during 2020, the
shortages of microchips forced the company to reduce production. The auto industry had never
experienced a multi-year parts shortage. This was diferent from prior natural disasters and plant fres. In
those cases, Toyota and its suppliers could rebuild their plants. Components needed to replenish assembly
lines could be sourced from other geographies. The chip shortage was afecting all automakers. Assembly
lines were shut down as engineers scrambled for technical workarounds.
Would the company need to change its Toyota Production System (TPS) and supply chain practices
in a post-COVID-19 world? How long would Toyota have to wait before it received enough chips to
resume full production? What could the company do to prepare for this kind of crippling perfect storm, or
was the pandemic
Copyright © 2021 Tunderbird School of Global Management, a unit of the Arizona State University Enterprise. Tis case
was written by Professors William E. Youngdahl and Kannan Ramaswamy for the sole purpose of providing material for class
This document is authorized for use only by Mikaela Leyva in INTB 2205 (Spring 2023) taught by Kevin Chuah, Northeastern University from Jan 2023 to Jun 2023.
For the exclusive use of M. Leyva,
2023.
discussion. It is not intended to illustrate either efective or inefective handling of a managerial situation. Any reproduction,
in any form, of the material in this case is prohibited unless permission is obtained from the copyright holder.
2023.
a black swan event that didn’t mandate major changes once it was in Toyota’s rearview mirror? These
questions were surely on the minds of Toyota executives as 2021 was coming to a close.
Toyota Production System

Toyota defned its Toyota Production System as a production system based on the philosophy of achieving
the complete elimination of waste in pursuit of the most efcient methods. Waste included excess
inventory, extraneous processing steps, defective products, wasted motion, performing unnecessary process
steps, waiting, and transportation. TPS, Toyota’s version of lean manufacturing, relied on two foundational
approaches: jidoka and just-in-time (JIT).5
Jidoka is defned as automation with a human touch. Its origin can be traced to Sakichi Toyoda,
inventor and founder of Toyota. Prior to founding the auto company, Toyoda developed Japan’s frst self-
powered loom in 1896. He subsequently added a device that automatically stopped the loom when a
thread breakage was detected. This minimized any defects and allowed for quick problem detection and
resolution.6 Jidoka was expanded at Toyota to include machine jidoka and human jidoka. Machine jidoka
relies on automated mechanisms for stopping production when defects, or conditions that could lead to
defects, are detected. Human jidoka empowers line workers to stop the production line if they notice any
defects.
JIT involves making only what is needed, when it is needed, and in the amount needed. JIT relies on
pull production control in which production is “pulled” by orders received from its dealers (see Exhibit 1).
Toyota translated demand for diferent models (production plan) into a heijunka sequence plan. Roughly
translated, heijunka is the Japanese word for smoothing or leveling. By creating a heijunka sequence plan,
Toyota was able to smooth out, or balance, assembly line workstations such that they all took roughly the
same amount of time, or cycle time, to complete their sets of tasks.7
The company’s assembly lines produced a mix of auto models with diferent specifcations. The
sequence plan was laid out in a very visual manner in a heijunka box (see Exhibit 2) that stored
production kanban cards for diferent components under a specifc time slot. Kanban cards included the
product number and description, production quantity, and a picture with annotation for the physical
location of the workstation.8 Heijunka helped to maximize efciency while reducing complexity that could
lead to excess work-in-process inventory.
JIT, the use of kanbans, and heijunka worked together to limit the buildup of excess inventory
feeding each assembly supply point. Limits were placed on inventory waiting at supply points. Production
control systematically reduced these inventory limits as inefciencies were eliminated through a process of
continuous improvement. Exceeding inventory limits signaled a need to address new inefciencies.9 To
make TPS work in its assembly plants, Toyota needed suppliers that could supply the required quantities
of subassemblies and parts at precisely the right time and in the right locations. Toyota’s relentless pursuit
of waste reduction, efciency gains, and stability extended to its suppliers.
Toyota’s Lean Supply Chain

The Toyota Production System required precise coordination throughout all of the links in its global
supply chain. Toyota achieved this by rigorously vetting new suppliers and building deep relationships
over time. Like other automakers, Toyota, an original equipment manufacturer (OEM), had several tiers of
suppliers. Tier 1 suppliers were responsible for major systems such as seats and dashboards. Tier 2 suppliers
supply components to the Tier 1 suppliers. Tier 3 suppliers supply individual parts and materials to Tier 1
and Tier 2 suppliers. Many of the suppliers had other automobile companies as customers, each with their
own set of expectations. In some instances, Toyota spun of supplier companies that were formerly
vertically integrated parts of the company. Examples included Nippon Denso, an air conditioner
manufacturer, and Aisin Seiki, a parts and components manufacturer.10 Given their heritage, these
suppliers started with deep understanding of the Toyota Production System.
To improve coordination and deepen supplier relationships, Toyota believed Tier 1 suppliers should
be as close to the factory as possible, even on-site with Toyota when feasible. Toyota’s Tier 1 suppliers
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delivered various
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parts and systems just-in-time as needed by a Toyota assembly plant. Proximity provided several benefts
to both Toyota and its suppliers. Many Tier 1 suppliers were responsible for detailed component design.
Suppliers’ engineers worked closely with Toyota’s counterparts to ensure that design expectations were met.
Similarly, Toyota production specialists worked with supplier counterparts to continuously improve their
production processes to reduce waste and improve efciency. Joe Lewis, business development manager at
Blue Springs Metal and Georgetown Metal Processing, a Toyota supplier, shared his company’s
experience in working with Toyota:11
Over the years, we’ve developed a strong relationship with the Toyota stamping departments.
During our first major model change at [Toyota Motor Manufacturing, Mississippi], Toyota—as
well as our teams—needed to develop fully transparent ways of exchanging information across
companies. We [worked closely] together and with seamless support. Many of these practices we
still hold today, and they continue to provide greater creative input, increased trust, and enhanced
stakeholder relationships.
Tier 2 suppliers supplied parts and components to their customers who were Toyota’s Tier 1
suppliers. Given the relative commoditization of parts and components supplied by Tier 2 suppliers and
their Tier 3 suppliers, less emphasis was placed on forming deep engineering relationships. However, each
link in the supply chain required coordination with suppliers to receive the right quantity of the right parts
and components to the right location at the right time. This required relationships formed primarily by
working together to improve processes. Toyota had little to no visibility into Tier 2 and Tier 3 suppliers.
Tier 1 suppliers were responsible for these lower-tier suppliers.
Increasing Supply Chain Resiliency: The Fukushima Tsunami

On March 11, 2011, a magnitude 9.1 earthquake occurred of the northeast coast of Honshu in the Japan
Trench. The earthquake generated a tsunami that arrived at Japan’s coast within 30 minutes. The fooding
disabled three nuclear reactors, destroyed more than 123,000 houses, and forced many of Toyota’s suppliers to
cease operations.12 Over 300 Toyota suppliers reported damaged facilities. Since Toyota plants typically
held only several hours’ worth of inventory for many parts, they relied on frequent inventory
replenishment from their suppliers.13 Many Toyota plants quickly ran out of components needed for
assembly. A single missing component could shut down production of at least one car model.
After 2011, Toyota ensured that multiple suppliers would supply each component. In rare cases, a
supplier was a sole source given a patent or unique set of capabilities. In these cases, Toyota pushed
suppliers to add an additional facility at a diferent location. The company also concluded that long lead
times for certain components made it difcult to cope with devastating shocks such as natural disasters.
This was particularly true for semiconductor suppliers. Under normal conditions, these suppliers were
able to maintain the capacity needed to supply Toyota or one of its Tier 1 suppliers with semiconductors
while also maintaining some safety bufer of inventory. Facing devastating food waters and closing of
supplier plants, safety bufers were quickly depleted. Toyota responded by developing a business
continuity plan that required semiconductor suppliers to maintain a safety bufer of anywhere from two to
six months’ worth of chips, depending on the order to delivery lead time. The company also worked with
its Tier 1 suppliers to create a database that included detailed information on suppliers down the entire
supplier ladder. Information included what components the supplier makes, plant locations, and suppliers
of the component parts. This was the frst time Toyota had a complete picture of all levels of suppliers in
its global supply chains. And, fnally, the company committed to establishing regional supply chains with
all required suppliers. This would provide opportunities for shifting to another region’s suppliers to avoid
complete shutdowns.14
After the Fukushima disaster, it took Toyota four months to get production inside Japan back to
normal levels and an additional two months to restore production levels at assembly plants outside of
Japan. Toyota needed no convincing to implement the previously described solutions to increase its
abilities to both resist disruptions and recover operational capability after a disruption occurred.15 At the
time, the company did not factor a potential global pandemic into their supply chain resiliency, however.
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COVID-19
Coronavirus disease 2019 (COVID-19) was caused by a new coronavirus frst identifed in Wuhan, China,
in December 2019. Although most people infected with COVID-19 had mild symptoms, COVID-19 also
caused severe illness and even death. Some groups, including older adults and people who had certain
underlying medical conditions, were at increased risk of severe illness. By December 4, 2021, 265.42
million cases had been reported across the globe with 5.25 million deaths.16
Full or partial lockdowns required to address the public health crisis, combined with rapid drops in
consumer demand and production, led to a global recession. It was also the frst economic recession since
1870 to be triggered solely by a pandemic.17 Rising infection rates and death counts, combined with
economic upheavals and social isolation, created tremendous tension between the call for science-based
precautions (e.g., lockdowns, testing, contact tracing, social distancing, and mask wearing) and the need to
restart economies and reconnect on a human level. In May 2020, the United Nations raised alarm bells
over a looming global mental health crisis.
Psychological distress in populations is widespread. Many people are distressed due to the
immediate health impacts of the virus and the consequences of physical isolation. Many are afraid
of infection, dying, and losing family members. Individuals have been physically distanced from
loved ones and peers. Millions of people are facing economic turmoil, having lost or being at risk
of losing their income and livelihoods. Frequent misinformation and rumours about the virus and
deep uncertainty about the future are common sources of distress. A long-term upsurge in the
number and severity of mental health problems is likely.18
The release of several vaccines and the subsequent vaccination of millions of people during the
fourth quarter of 2020 provided some well-needed reasons to be optimistic that return to some new
normal would be possible. Despite this progress, COVID-19 breakouts continued throughout 2021 with
new, more virulent virus variants, causing signifcant concern.
Toyota’s Initial Responses to Coronavirus

Toyota’s initial response at the end of January 2020 was to ofer condolences to those who had been
afected by coronavirus. The company also made a donation to support the purchase of medical supplies
and personal protective equipment, or PPE.
I offer my condolences to all those who lost their lives, as well as my sympathy to those who have
been affected by the outbreak of Coronavirus. At the same time, I would like to express my sincere
respect to the healthcare professionals and government officials who are on the front lines day
and night.
Toyota has a number of team members that work and live in China. I may not be able to
understand the true feelings of the local people, but from our desire to help, Toyota has decided to
donate 10 million CHY through the Red Cross Society of China to assist in the purchase costs of
medical supplies such as masks, glasses, protective clothing, etc.
We, Toyota, will continue to monitor the situation and be mindful of the feelings of those in the
midst of this outbreak, and focus on safety and security as the highest priority.
Akio Toyoda, President, Toyota Motor Corporation19
Although Toyota was initially responding to the COVID-19 disaster in China where the virus frst
surfaced, it soon became clear that virus was rapidly spreading globally. In March 2020, 118,000 cases
were reported in 114 countries.20 By April, demand for automobiles had declined signifcantly as many
dealerships closed and potential customers were at home sheltering in place hoping to avoid the virus. As
consumer demand declined, Toyota reacted by reducing production in several of its assembly plants in
Japan (see Exhibit 3). In subsequent months, Toyota reduced the number of operating days for specifc
assembly lines in its plants. The peak hit in June 2020 with 28 assembly lines afected across its assembly
plants around the world. A total of 145 operating days were removed from Toyota’s global production in
April. By August 2020, only three assembly lines were afected with just six operating days removed from
production. After months of sheltering in place, demand for automobiles was increasing.
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Toyota executives were pleased to start getting back to some version of normal. By the end of 2020,
Toyota total sales in number of autos was 10.5% lower than 2019 (see Exhibit 3). Despite this decline,
Toyota’s decline in sales was less than the 16% average decline for all automakers (see Exhibit 5). The
work that Toyota completed after the 2011 natural disaster to make its global supply chains more resilient
was paying dividends. While other automakers were running out of critical components, Toyota was able
to replenish stock for several months from the inventory bufers established to help recover from natural
disasters. During the fourth quarter of the 2020 calendar year, global sales were up 6.8% year-on-year.
This increase in sales, combined with the rollout of coronavirus vaccines, provided reason to be optimistic
that Toyota was recovering quickly from a very challenging year.
Global Chip Shortage and the Delta Variant

Every automobile had dozens of microchips that controlled everything from window motors to navigation
systems. A microchip (or chip) is a set of electronic circuits on a small fat piece of silicon. Chips came in
many forms and served diferent purposes. Logic chips typically processed information to complete some
task, whereas memory chips stored information. Microcontrollers were essentially a complete computer
on a chip. Before the pandemic, automakers’ annual demand for microchips numbered in the hundreds of
billions. In contrast to peer industries that used long-term (~12 months or more) purchase agreements for
procuring chips, the automakers used a much shorter time horizon for their purchases. Auto industry
contracts with semiconductor suppliers were typically binding for no more than three months, and often
even just a few weeks.21 When production declined in 2020, Toyota and other automakers cancelled orders
for semiconductors to prevent excess inventories. At the same time, demand for more complex
semiconductors boomed in other industries that were responding to the new work-from-home
phenomenon. Demand for electronic devices such as computers, printers, displays, networking
equipment, and video-conferencing equipment for work and entertainment surged. As demand for autos
picked up in late 2020 and 2021, automakers had to compete for the attention of chip manufacturers who
had already shifted their focus elsewhere. By that time, other industries ofering longer-term contracts had
largely exhausted global chip-making capacity.
A freak snowstorm triggered power outages in Texas, causing Samsung Electronics, Infneon
Technologies, and NXP Semiconductors to close their Austin, Texas, area chip-making factories in
February 2020.22 It took the companies over a month to get their factories back to full capacity. Just as
these chipmakers were recovering, in March 2021, a Renesas Electronics factory in Japan was shut down
after a major fre. The factory, which supplied 30% of worldwide auto production, did not resume full
operations until June 2021.
Toyota was better prepared to deal with this shortage given their just-in-case bufer inventory of
microchips, but the company did not consider such a prolonged shortage caused by increased demand
from other industries, power outages, and fres. And nobody predicted that the coronavirus would continue
to wreak havoc throughout 2021. It was a perfect storm of colliding circumstances.
The delta variant of coronavirus was frst detected in India in December 2020. Medical researchers
discovered that people infected with the delta variant had 1,000 times more viral load than those infected
with the original strain. It was also much more aggressive in its ability to replicate and spread.23 The
knock-on efects of COVID-19, combined with the global chip shortage, had already had a dramatic
negative impact on automakers. CNBC reported that the chip shortage alone would cost the automakers
US$ 210 billion in 2021 alone.24
Addressing the Global Chip Shortage

Most automobiles were ftted with cheap but reliable microchips that were designed over a decade ago.
Intel made its own chips but some companies such as Qualcomm outsourced chip production to foundries
that served as contract manufacturers. Building new microchip fabrication facilities involved capital
expenditures that ran over US$1 billon. Expanding production of microchips for automobiles essentially
translated into investing in old technologies to produce low-margin commodity chips, a prospect that was
quite unattractive to many players. To help overcome this hurdle, several countries ofered signifcant
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subsidies for constructing new semiconductor fabrication facilities, but even with companies breaking
ground on new facilities, the chip shortage was projected to extend well into 2023 or 2024.25
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Toyota had enough bufer inventory, along with what they could still get from suppliers, to last
through December 2020. While Toyota appeared to be focused on fne-tuning and recalibrating its vaunted
TPS approach, its solutions were largely aimed at managing known unknowns. Some of its competitors
had taken a diferent fork in the road to recovery.
Toyota’s Competitors: A Diferent Response to the Global Chip Shortage

Toyota’s competitors had decided to re-evaluate their product lines to assess areas where engineering
might be able to address the known unknowns associated with parts availability. Tesla and GM identifed
controllers as a potential solution for dramatically reducing the number of microchips used in their
automobiles. Essentially computers on a chip, controllers could perform the functions of many basic
commodity-level microchips found in automobiles. Having the relative luxury of bufer inventories of
chips, Toyota found itself in catch-up mode without any publicly shared, technology-based solution.
Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to
compromise to drive electric automobiles. Despite the global chip shortage, Tesla delivered 241,300 cars
worldwide in the frst quarter of 2021, a record for the company.26 By late 2021, Tesla’s market cap was
over $1 trillion, yet the company still prided itself on its ability to act with the agility of a startup. During
an earnings call in July 2021, Elon Musk, Tesla’s CEO, stated, “We were able to substitute alternative
chips, and then write the frmware in a matter of weeks. It’s not just a matter of swapping out a chip; you
also have to rewrite the software.”27 The company was working on designing, developing, and validating
19 new variants of controllers that could reduce the number of chips in their automobiles. They had also
identifed suppliers who could commit to supplying the new controllers. During that same earnings call,
Musk also acknowledged that for the rest of 2021, Tesla’s growth rate would depend on the slowest part in
their supply chain. Musk confessed that the microchips that control seats and airbags were in short supply.
Despite Tesla’s technical prowess, it seemed that even they could not engineer their way out of all chip
shortages.
In November 2021, General Motors announced that they were working with seven chip suppliers on
three new families of microcontrollers. They estimated that using controllers instead of more traditional
semiconductors would reduce the number of unique chips by 95% on future vehicles. Unlike Tesla, GM
did not plan to use its own engineers to design, develop, and validate chips.28
Some automakers eliminated certain features that depended on microchips. GM started building
some of its full-sized pickup trucks without software that managed fuel consumption. Tesla began
removing adjustable lumbar support from the passenger seats of some models. Given the limited number
of microchips, automakers made tough choices about product design and product line priorities. GM
shifted some microchips from less popular to more popular models. Another approach was to build the
vehicles without certain chips and park them in large lots for eventual completion when chips became
available. This approach was referred to as a build-shy strategy. By the end of March 2020, Ford had
20,000 vehicles parked and waiting for chips.29
The global chip shortage was expected to cost the global auto industry over seven million units of
production in 2021.30 Toyota survived the shortage better than its peers, except for Tesla, by carrying a
large bufer inventory of microchips. Tesla’s engineering solutions, combined with relatively fewer cars
produced (241,300 vs. Toyota’s 2,148,000 in Q1 2021), helped them weather the storm better than others.
GM and likely other automakers were just beginning to investigate engineering-based solutions by the
end of 2021. But shortages continued, as did coronavirus.
Ongoing Supply Chain Disruptions

The global automakers seemed resigned to a continuing shortage of chips and the unpredictable efects of
COVID-19 that was far from contained. Not only was the delta variant of the virus still wreaking havoc in
some countries, there were new variants that were also cropping up and some, such as the omicron
variant, were showing resistance to existing vaccines. It appeared that this was no black swan event of the
regular kind. Toyota continued to face supply chain disruptions beyond the semiconductor shortage. The
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shortage in chips had grown to encompass other critical materials as some of the automakers had
reported. Ford Europe’s Chair
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of the management board, Gunnar Hermann, said, “It’s not only semiconductors,” adding that lithium,
plastics, and steel were all in relatively short supply. “You fnd shortages or constraints all over the
place.”31
Toyota learned from its recovery from the devastating earthquake and tsunami in 2011. The
company challenged its long-standing belief in relentless inventory reduction by carrying a large bufer
stock of microchips and other critical components that could be difcult to source after a natural disaster.
Toyota also worked to ensure that multiple, geographically distributed suppliers would be available for
each of their components. After working with their Tier 1 suppliers to create a database, they had
complete visibility of all levels of suppliers in their global supply chains. Despite these changes to create
more supply chain resiliency, the company never anticipated a multi-year shortage of key components.
Would Toyota need to change its production and supply chain practices in a post-COVID-19 world, or
was the pandemic a black swan event that didn’t mandate major changes once it was in Toyota’s rearview
mirror?
Endnotes
1
Toyota Cuts Shows COVID Ravaging Even Best Supply Planners. SupplyChainBrain RSS. https://www.supplychainbrain.
com/articles/33623-toyota-cuts-shows-COVID-ravaging-even-best-supply-planners.
2
Ash, S. Chip shortage spurs new wave of car plant closures in Germany. https://techxplore.com/news/2021-09-chip-
shortage-spurs-car-closures.html.
3
BBC. 2021. GM to idle eight North American amid chip shortage. https://www.bbc.com/news/business-58416930.
4
Boudette, Neal. 2021. Toyota to cut production 40% in October because of the chip shortage. https://www.nytimes.
com/2021/09/10/business/toyota-production-chip-shortage.html.
5
Toyota Production System: Vision & Philosophy: Company. Toyota Motor Corporation Ofcial Global Website.
https:// global.toyota/en/company/vision-and-philosophy/production-system/.
6
Jidoka—Manufacturing High-Quality Products: Toyota Myanmar—Together Tomorrow Toyota. Toyota Motor
Corporation. http://www.toyota-myanmar.com/about-toyota/vision-philosophy/toyota-production-system/jidoka.
7
Heijunka—Toyota Production System Guide. Toyota UK Magazine, 31 May 2013.
https://mag.toyota.co.uk/heijunka- toyota-production-system/.
8
TPS Pillar Seven: Production Smoothing (Heijunka). Bader Martin, 19 July 2020. https://badermartin.com/tps-pillar-
seven-production-smoothing-heijunka/.
9
Schonberger, R. J. 2001. Let’s Fix It! Overcoming the Crisis in Manufacturing. New York: Free Press. pp. 70–71.
10
Lioudis, Nick. Who Are Toyota’s Main Suppliers? Investopedia, Investopedia, 2 Dec. 2021,
https://www.investopedia. com/ask/answers/060115/who-are-toyotas-tyo-main-suppliers.asp.
11
Toyota Drives Change with Supplier Diversity Program. Toyota, 13 Aug. 2021.
https://pressroom.toyota.com/toyota- drives-change-with-supplier-diversity-program/.
12
On This Day: 2011 Tohoku Earthquake and Tsunami. National Centers for Environmental Information (NCEI), 12
Nov. 2021. https://www.ncei.noaa.gov/news/day-2011-japan-earthquake-and-tsunami.
13
Schrefer, Roger. Quake Changes Little in Toyota’s Supply-Chain Strategy. WardsAuto, 16 May 2012, https://www.
wardsauto.com/industry/quake-changes-little-toyota-s-supply-chain-strategy.
14
Kubota, Yoko. Japan Earthquakes Rattle Toyota’s Vulnerable Supply Chain. Te Wall Street Journal, Dow Jones
& Company, 19 Apr. 2016. https://www.wsj.com/articles/japan-earthquakes-rattle-toyotas-supply-chain-
1460986805.
15
Steven A. Melnyk and David J. Closs. Understanding Supply Chain Resilience Supply Chain 24/7. http://www.
supplychain247.com/article/understanding_supply_chain_resilience/.
16
Coronavirus Pandemic (COVID-19)—The Data—Statistics and Research. Our World in Data.
https://ourworldindata. org/coronavirus-data. Accessed on November 29, 2021.
17
Global Economic Prospects, World Bank Group, June 2020.
18
Policy Brief: COVID-19 and the Need for Action on Mental Health, United Nations, 20 May 2020.
19
Toyota Provides Aid for Measures against Coronavirus: Corporate: Global Newsroom. Toyota Motor Corporation
Ofcial Global Website. https://global.toyota/en/newsroom/corporate/31463023.html.
20
Who Director-General’s Opening Remarks at the Media Briefng on COVID-19—11 March 2020. World Health
Organization, World Health Organization. https://www.who.int/director-general/speeches/detail/who-director-general-s-
opening-remarks-at-the-media-briefng-on-COVID-19—11-march-2020.
21
Burkacky, Ondrej et al. Coping with the Auto-Semiconductor Shortage: Strategies for Success. McKinsey & Company,
Oct. 2021. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/coping-with-the-auto-
semiconductor- shortage-strategies-for-success.
22
Samsung, Infneon, NXP Close Texas Plants. Sourcengine. https://www.sourcengine.com/blog/samsung-infneon-
nxp- halt-production-texas-winter-storm-2021-02-18.
23
Anthes, Emily. The Delta Variant: What Scientists Know. Te New York Times, 22 June 2021.
https://www.nytimes. com/2021/06/22/health/delta-variant-COVID.html.
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24
Wayland, Mike. 2021. Chip shortage expected
2023.
to cost auto industry $210 billion in revenue in 2021.
https://www.cnbc. com/2021/09/23/chip-shortage-expected-to-cost-auto-industry-210-billion-in-2021.
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25
Shead, S. 2021. Major automakers fear the global chip shortage could persist for some time. https://www.cnbc.
com/2021/09/06/vw-ford-daimler-fear-chip-shortage-could-persist-for-some-time.html.
26
Tesla Delivers a Record Number of Cars as Other Manufacturers Struggle amid Chip Shortage. USA Today,
Gannett Satellite Information Network, 5 Oct. 2021. https://www.usatoday.com/story/money/cars/2021/10/05/tesla-
delivers-record- number-of-cars-despite-chip-shortage/119016356/.
27
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8 A09-21-0016
2023.
Exhibit 1. Illustration of the Toyota Production System
Source: Adapted by authors from “Toyota Production System—Maximising Production Efciency.” Toyota Motor Europe, https://
A09-21-0016 9
2023.
Exhibit 2. Heijunka Box
Source: Adapted by authors from “Heijunka Box.” Wikipedia, Wikimedia Foundation, https:// en.wikipedia.org/wiki/Heijunka_box
Exhibit 3. Reduced Operating Days in April 2020

Plants and Production Lines Reduction in Operating Days
Takaoka Plant, #1 production line 3 operating days from Apr. 3 to 7
Tsutsumi Plant, #1 and #2 production lines 3 operating days from Apr. 3 to 7
Tahara Plant, #1 production line 6 operating days from Apr. 3 to 10
Tahara Plant, #3 production line 8 operating days from Apr. 3 to 14
Toyota Motor Kyushu (TMK), #1 production line 9 operating days from Apr. 3 to 15
Hino, Hamura Plant, #1 production line 2 operating days from Apr. 3 to 6
Source: “Regarding Japan Domestic Production (as of March 23): Corporate: Global Newsroom.” Toyota Motor Corporation Ofcial G
10 A09-21-0016
2023.
Exhibit 4. Number of Toyota Autos Sold
Source: Adapted by authors from “Toyota’s Global Sales and Production Up Year-on-Year in February for Sixth Consecutive Month: Sales, Product
A09-21-0016 11
2023.
Exhibit 5. 2020 Changes in Auto Sales (Industry Average vs. Toyota)
Source: Adapted by authors from data found in Toyota’s 2020 Annual Report and “2020 (Full Year) International: Worl
A09-21-0016 12

Toyota's Disrupted Global Supply Chain: COVID-19 and The Global Chip Shortage

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Toyota's Disrupted Global Supply Chain: COVID-19 and The Global Chip Shortage

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Toyota’s Disrupted Global Supply

Toyota Production System

Toyota’s Lean Supply Chain

Increasing Supply Chain Resiliency: The Fukushima Tsunami

Toyota’s Initial Responses to Coronavirus

Global Chip Shortage and the Delta Variant

Addressing the Global Chip Shortage

Toyota’s Competitors: A Diferent Response to the Global Chip Shortage

Ongoing Supply Chain Disruptions

Exhibit 1. Illustration of the Toyota Production System

Exhibit 2. Heijunka Box

Exhibit 3. Reduced Operating Days in April 2020

Exhibit 4. Number of Toyota Autos Sold

Exhibit 5. 2020 Changes in Auto Sales (Industry Average vs. Toyota)

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