FRAGILE AND ROBUST NETWORK CHANGE IN TOYOTA MOTOR CORPORATION

By SivaPrakasm

FIRE AT THE KARIYA #1 PLANT OF AISIN SEIKI

 1) Fire at Kariya #1 Plant Toyotas sole source of P-valves (for brakes).

2) Thus at the time of the fire, the entire TPS faces shutdown and irrevocable loss of Sales. 3) Toyota executives were dismayed to learn that they needed 200 variants of the part. 4) During the afternoon of the day of the fire (Saturday), Toyota and Aisin call for a core group meeting (Toyota and several of the Tier 1 suppliers) to collaborate on emergency planning. The meeting is convened at Aisin. First steps to filling emergency replacement production were taken. A second expanded group meets on Sunday to supplement planned production of earlier meeting.

FIRE AT AISIN

5) Core group immediately connects to their suppliers. A worldwide network is tapped (example of Denso sourcing drill bits from the US). This simple bullet oversimplifies the extensive problem solving that occurred within each emergency supply cluster.

 6) Aisin pitches in as it can, distributing its blueprints, materials, and people without regard to protecting its proprietary know-how. It maintains a central role of reviewing prototypes and deliveries. 7) Toyota plants close as system inventories run out. Pride-based race to deliver first ensues. Some examples: Denso steps forward to manage logistics, its engineers solve many problems for other emergency producers that are disseminated at Aisin organized meetings. 8) (Examples continued) Toyota itself turns to its high-tech R&D prototype department. -Koritsu Sangyo, a tiny Tier 2 supplier to Aisin, emulates Aisin approach and delivers first prototype and production P-valves. There are many other examples of sacrifice, problem solving, and innovation among the 62 ultimate suppliers. -Includes Brother, the sewing machine company, that had never made auto parts before. The first 1,000 valves were shipped on 2/5. Other vendors quickly follow. 9) Daily vehicle output of vehicles resumes on 2/6 and is up to 13K by 2/10. By that time 62 firms were manufacturing P-valves. Full production was resumed by 2/17.

Continues.

TOYOTA BUILDS ITS SUPPLY CHAIN TO ENHANCE NETWORK LEARNING

Phase 1: Supplier associations for Tier 1 suppliers (kyohokai, BAMA) Phase 2: Toyota consults for free to Tier 1 suppliers Phase 3: Nested networks and learning groups spanning Tier 1 and 2 suppliers (jishyuken, PDA); interfirm employee transfers (shukko)

TOYOTA WAY
Across the chain, Toyota builds
Affiliation, loyalty, shared goals, mutual dependence Open knowledge-sharing based on a common semantic Teaming norms Trust that all will be treated fairly Dense collaboration networks

INTERVENTIONS
Toyota makes a point of maintaining high quality relations with its entire supplier network, several other suppliers immediately took up production of the Aisin-built parts by using existing capability and documentation. Thus, a strong, long-term relationship with a few suppliers is better than short-term, price-based relationships with many competing suppliers. Toyota uses this long-term relationship to send Toyota staff to help suppliers improve their processes. These interventions have been going on for twenty years and have created a more reliable supply chain, improved margins for Toyota and suppliers, and lowered prices for customers