Just read an interesting story in today's Financial Times, quoting the head of Toyota's US operations, Jim Lentz, saying: "The biggest challenge we face is really on the supplier side of the business."
He has "real concerns" about the survival of up to 30 suppliers, according to the FT. And from what I can gather it's a similar picture here in Europe.
One problem for Toyota, as a company executive explained to me several months ago, is that whereas in Japan it has a very tight-knit supply base, with lots of cross-shareholdings, in the US and Europe it is far more dependent on Western suppliers outside of its control.
At the same time, these overseas operations still have a lot of single-source arrangements, which means that the failure of even a minor component maker can shut down production lines. To compound the problem, it's not in the company's "DNA" to hold safety stocks – Toyota being the inventor and chief proponent of lean/just-in-time production.
From what I know, Toyota's purchasing guys have been working their socks off trying to manage this situation. And let's face it, the company still puts most others to shame when it comes to supplier development and long-term relationship building. But it will be very interesting to see whether the painful experience of this recession causes it to rethink any of its much heralded supply chain philosophy and practices.
Good stuff Geraint, you're on my bookmarked 'daily blog list' now!
Cheers
Peter Smith
Posted by: Peter Smith | Monday, 16 March 2009 at 02:10 PM