In a Michigan office building, there’s a large whiteboard on the wall where the issues of the world are written and tracked down to the smallest detail. It’s a mess.
Those brightly colored papers hung above the fireplace — which follow earthquakes and tsunamis, forest fires and floods, coronavirus hot spots and even conflicts — aren’t simply concerned with the issues of the globe.
Bob Young’s troubles are the same as they have been for the past several years.
In the town of Saline, Young, who is the group vice president of purchasing supplier development for Toyota Motor North America, and his staff are responsible for maintaining the region’s assembly and component plants operating to the greatest extent feasible. Young’s job has been difficult for more than two years, during which time he has dealt with COVID-19, a spate of natural disasters, civil conflict, labor shortages, and, most recently, a war between Russia and Ukraine.
With what appeared to be a tired chuckle last month, Young explained that our environment is often some kind of controlled disorder, but that the last few years had been “a little more chaotic than we’re used to.”
The threats to Toyota and Lexus vehicle production and delivery to dealerships in the United States were listed on his whiteboard on March 21, according to the company’s website.
Toyota Motor Corp. announced last month that global April production would be reduced by 150,000 vehicles, to 750,000 vehicles, and that output would be down 10 percent in May and 5 percent in June compared to estimates made at the beginning of the year, illustrating how these events are affecting its manufacturing. The following day, following a 7.4-magnitude earthquake that rocked Japan, the business said that it would suspend production for three days, beginning on 18 lines at 11 plants in the country, resulting in the loss of 20,000 units of manufacturing.
Despite the fact that Young’s “laundry list of issues” was not surprising — semiconductors, labor availability, global and regional logistics disruptions, natural and human-made disasters — the list appears to be growing in the face of conventional wisdom that the threat of major disruptions from the pandemic is diminishing.
So, what’s the deal?
“Overall, I believe that the supply chain is still pretty vulnerable as a result of the numerous issues we’ve faced — whether they be cyberattacks, natural disasters, or anything else you want to call them. When it comes to work-in-process inventory or finished goods, I would argue that many suppliers aren’t in peak operating condition; “Young shared his thoughts. “As a result, the first minor setback is on the verge of causing us significant problems.”
Toyota, which maintains one of the automotive industry’s most sophisticated worldwide supply and logistics networks, has had the lowest inventory levels in the United States for the majority of the past year, with only rival Japanese brand Subaru having fewer days’ supply at dealerships. Bob Carter, chief of sales for Toyota Motor North America for more than 30 years, recently remarked that he “had no clue our system could even assess days’ supply in tenths” of a day until last year.