KOLIN, Czech Republic - Opening the greenfield Toyota Peugeot Citroen Automobile factory here dramatically expanded the Czech supplier base.
Although many existing Czech suppliers to local manufacturer Skoda also won work for the joint venture between Toyota and PSA/Peugeot-Citroen, a number of new partsmakers opened local operations as well.
Both old and new suppliers learned quickly how to feed the joint venture. About 80 percent by volume and value of the parts for Kolin are Czech made.
"The biggest advantage we have here are the suppliers," TPCA President Masatake Enomoto says.
TPCA suppliers with existing Czech operations include Spain-based Grupo Antolin for headliners and Hayes Lemmerz for wheels. Japanese suppliers with new local plants include Denso; Fatuba; TG Safety Systems, a joint venture between Toyoda Gosei and Toyota Tsusho; and Tokai-Rika.
For both new and old suppliers, Toyota has introduced its so-called milk run, a collection system of picking up parts at the parts plants, and kanban lean-production principles.
"This has shown the Japanese effort to tightly manage a lean supply chain," says Roman Zak, operations manager at AIMTEC, a Czech logistics consultancy company based in Plzen, which is about 100km southwest of Prague.
But the plant is still improvising on its logistics. A promised permanent motorway connection remains unfinished, so local residents are angry about parts trucks rumbling through the center of Kolin and nearby villages. The problem is likely to intensify as the factory starts producing six days a week in September.
Outbound logistics from the TPCA factory are also in flux. While PSA subsidiary Gefco will handle outbound logistics for Peugeot and Citroen, Toyota still has not completed its logistics site for central Europe.
By selecting the village of Ratbor, 10km southwest of Kolin on the far side of the factory, Toyota has stirred up a flurry of local complaints over truck traffic.
Even Skoda, the Czech division of the Volkswagen group, has logistics problems at its three Czech assembly plants.
Skoda is expanding its northern Czech plant in Kvasiny to make about 50,000 to 80,000 Roomster small minivans year, but it is still 75km from the nearest motorway.
"We use the rails," Skoda spokesman Vladimir Sulc said.
"If we believed the promises that the government made years ago, we would have had the highway from Prague to Hradec Kralove this year," only 45km away from the plant.
The Kvasiny factory expansion is key to Skoda's plans to grow its annual production from 450,000 units to 600,000 by 2009. Other moves include expanding kit-assembly operations in India and the Ukraine and building Octavia models at a VW plant in China by 2007.