Lending plants to get OEMs back on track after the Japanese earthquake

A report published by the Congressional Research Service (“The Motor Vehicle Supply Chain: Effects of the Japanese Earthquake and Tsunami” by Bill Canis, May 23, 2011) describes an example in which Denso, a Tier 1 supplier to Toyota, decided to suspend production of automotive air conditioners at one of its plants. Denso lent the plant to a smaller Toyota supplier, Fujikura Rubber, whose plant was severely damaged, thus starving Toyota of much needed parts. How should supplier plants be structured to enable such capacity sharing? Given that these are independent companies, how does Toyota manage to enable sharing of the individual company and supply chain wide benefits from such schemes? Given the vulnerability caused by the concentration of production by small suppliers, how should the larger OEMs protect their supply chains while fostering the innovation offered by such suppliers ?

About aviyer2010

This entry was posted in Collaboration, Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , . Bookmark the permalink.

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