How Toyota supply chain management led the way for modern supply chains

As we have begun to enjoy life outside of lockdown once more, the latest covid-based form of disruption is the global supply chain crisis. Will the tried and tested Toyota supply chain management method be sufficient to manage things going forward? We look at the impact of the disruption and what can be learned from it for the future.

When things ground to a halt during the pandemic, demand dropped as many businesses closed or reduced their offerings, with consumer activity also slowing significantly. Now, that demand has returned, suppliers are struggling to keep up and are still recovering from the periods of disruption. Add on factors like the lack of delivery drivers in the UK after Brexit, backlogs at shipping ports and China’s power shortage, it’s a cocktail full of logistical nightmares.

What’s the impact of the 2021 supply chain disruption?

It’s likely that there will be a shortage of consumer goods across different industries with the holiday season approaching where there will be an increased demand for certain products. Meat and fresh foods, crisps, pet food, wine, beer and carbonated drinks are likely to be in shorter supply in the UK, alongside the availability of Christmas trees.

Knowing that there will be shortages might result in panic buying, similar to what happened at the beginning of the pandemic. This is particularly prevalent as the Christmas period can be an emotionally charged time, with consumers wanting to ensure they don’t disappoint their families by having the right ingredients for Christmas dinner and gifts for their stockings.

Of course, this isn’t the first-time supply chains have faced disruption. Disaster events such as the 2011 earthquake and tsunami in Japan had a devastating effect on the country and is known as the strongest earthquake recorded in history. While Toyota’s first priority was to provide disaster relief and help where they could, in the months to come they reassessed their entire supply chain and started again to rebuild the 78% of production that they’d lost.

The Toyota supply chain model

Known as ‘lean manufacturing’, Toyota developed their Toyota Production System in the 1940s, which quickly gained global influence as other companies adopted this methodology. There are two core concepts to this system. One of which is ‘jidoka’, a form of intelligent automation where equipment is programmed to come to a halt when an issue arises to stop faulty products from being produced. The second concept is known as ‘Just-in-Time’. This is where each step within the manufacturing process only produces what’s needed for the next one.

The overall philosophy behind it is to eliminate waste during manufacturing and aim to work in the most efficient way possible, building on continuous improvement over the years.

The impact of disaster on Toyota

This methodology has since been revised and improved upon after the events of 2011. With their supply chain entirely cut off, the company worked alongside suppliers in Japan to produce a comprehensive database of supply chain information to support the Japanese manufacturing industry. They also implemented a strategy which would split the procurement of their supplies from three different sources, with the main one supplying 60% of materials. This meant that should one part of their supply chain fall, they would have two back up options already in place.

Learnings for the future

The modern Toyota supply chain management method is a well well-known and researched model which has been used by many companies over the years. One of the key learnings from it is the ability to be adaptable under unplanned for circumstances. With the current level of global disruption supply chains are facing, even the best plans might go awry but being able to analyse and learn from it to put contingency plans in place is one way which companies can follow in Toyota’s example. Or looking to the short term, by evaluating what’s possible and how it can be achieved.