Toyota Cites 2011 Japanese Earthquake as a Paradigm to Prepare for Semiconductor Bottleneck

Despite the semiconductor shortage that has rattled many automotive industries, Toyota does not feel it will be affected in the near future. The Japanese multinational automotive manufacturer, as reported by CFO Kenta Kon, has taken the initiative to “[incorporate] some impact of tight supply into its production forecast for the year.” Furthermore, Toyota is also using the lessons it learned from past obstructions, namely the 2011 Tōhoku earthquake and tsunami.

Following the devastating disaster, the organization administered a comprehensive account on how to improve its supply chain, with April of that year resulting in a 78% annual decrease in production. According to Kon, Toyota sought to review the “multiple tiers of [the company’s] suppliers,” thus cultivating an apparatus that allows the organization to know what distributors and assets are prone to damage in the event of such calamity; and it is because of these lessons that the automobile manufacturer is confident it will survive. 

Kon also pointed out that, since Toyota frequently assesses its supply of semiconductors and reviews alternatives, switching to a new product when necessary is much easier.

Mike Ramsey, a vice president and analyst for automotive and smart mobility at Gartner, pointed out that “[designing] a system that allows for different parts to be swapped in is not easy,” yet says it is necessary in the event of global disruptions. Moreover, he notes the significance of flexibility when manufacturing a product, so that it is not entirely reliant on a “specific chip,” which can work to avoid bottlenecks in the future. In addition, diversifying customer-supplier connections is vital, and this includes separating and organizing products by level of demand (i.e., a business continuity plan). 

IHS Markit senior principal analyst for automotive, Phil Amsrud, expects panic buying from managers to push supply challenges well into next year — even after production returns to normal.

Fortunately, Kon appears confident Toyota’s diligent preparation has them well-positioned for both short and long-term success.   

Source: Supply Chain Dive