Goal: Curb key production 'pinch points'

Toyota asks suppliers for disaster plans

Goal: Curb key production 'pinch points'

Bob Young, Toyota: "We're asking suppliers what they would do and how much time would they need" to re-launch production after a disaster.
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YORK TOWNSHIP, Mich. -- To protect itself from production bottlenecks caused by unforeseen disasters, Toyota Motor Corp. has asked 400 North American suppliers to identify any key parts that are produced by just one factory.

The automaker has also asked the 400 to develop backup production plans in case a single-source factory shuts down unexpectedly.

Bob Young, Toyota's North American purchasing chief, says he wants to identify all "pinch points" that could occur if a key plant is disabled by fire, flood, earthquake or other disasters.

"We're assuming they'll be able to salvage the tooling" from the stricken plant, Young said during an interview at the Toyota Technical Center here, near Ann Arbor. "We're asking suppliers what they would do and how much time would they need" to re-launch production.

Some suppliers might maintain reserve stocks of components. Others might obtain certification to produce parts in a second factory, if necessary.

But there are limits to Toyota's disaster planning. The automaker will not ask suppliers to reserve production capacity for emergency use. "We are not willing to pay them for that capacity," Young said. "It would be very expensive."

To identify production pinch points, Toyota's North American operation has begun an online census of its second- and third-tier suppliers, Young said.

The automaker already has conducted a census of its suppliers in Japan, Young said. Toyota began its North American census this year; so far, it has identified 75 percent of its Tier 2 suppliers and 40 percent of its Tier 3 vendors.

The list will never be complete, Young acknowledged. Five percent of Toyota's suppliers have refused to identify their own subvendors, claiming that it is proprietary information.

Toyota and other automakers have been mapping their supply networks in the wake of the 2011 earthquake and tsunami in Japan.

The disaster knocked out production of more than 1,200 parts -- shuttering all of Toyota's Japanese assembly plants for weeks and hampering production in North America.

As it turned out, the entire auto industry had relied on a Merck plant in northern Japan to supply an aluminum-flaked paint pigment.

Automakers worked around the clock to find substitute paints on short notice.

Young would like to minimize the likelihood of such fire drills. But he admits he will never completely eliminate them.

Even if Toyota had completed its North American census in 2012, the company would have failed to spot the bottleneck that occurred when an explosion wrecked Evonik Industries' nylon factory in Marl, Germany.

Toyota and other automakers discovered they couldn't obtain adequate supplies of nylon 12, which is used for fuel and brake lines.

"Even with all this data, we would not be able to see that pinch point," Young acknowledged. "The ultimate goal is to get people to think about this. Suppliers should ask themselves whether they are designing a part with high-risk implications."

You can reach David Sedgwick at dsedgwick@crain.com.


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