Hello -
Here is another POV from February 1st, 2010 :
Seshadri: Toyota Recall Tests the Company’s Legendary Supply Chain Process
Quote:
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In our book on Toyota, we identified five principles that drive supply chain design at Toyota: the choice of volume, variety, variability, velocity and the use of learning, or V4L for short. In addition, we devote a chapter that outlines Toyota’s crisis management process.
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In the early 2000s Toyota launched a significant drive to cut costs. It reported that substantial savings accrued when it reduced the variety of components. With reduced variety, a defect in a single component affects many assemblies and products. Did Toyota cut costs too much, leaving its supply chain out of tune on the V4Ls? How much responsibility was vested in suppliers, and did they have the capabilities? Should Toyota have developed a second supplier for such a key high-volume part?
Judging by its profits prior to 2007, Toyota had grown immensely profitable. In a similar situation in the mid-1990s, Toyota chiefs became wary of excessive profitability. They invested in the Prius project instead of resting on the laurels of having broken through to the larger car segment in the U.S. market. Did Toyota miss the early signs in 2007 of systemic imbalance? Are they outliers from which CEOs can learn about their system? Do windfall profits signal increase in risk and revenue without concurrent increase in necessary supply chain redesign expenses?
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This fits with the idea of "industrial monoculture", where one bad design across a majority of your products can bring you to your knees.
CarloSW2