Photo/Illutration A Toyota Group factory in Inabe, Mie Prefecture (Asahi Shimbun file photo)

The recent widespread shutdown at Toyota group’s assembly plants exposed a vulnerability in its hallmark “lean” production system, which minimizes inventory.

It took 10 days for Toyota’s domestic production to resume full capacity after an accidental explosion on Oct. 16 at a plant of Chuo Spring Co., one of its suppliers, in Aichi Prefecture.

At one point, 13 assembly lines across eight plants stopped operations completely. That’s roughly half of the company’s 28 assembly lines across 14 plants in Japan.

Tens of thousands of vehicles are estimated to have been affected by the production outage.

Toyota has previously had production disrupted by accidents at suppliers’ facilities.

In 2016, the automaker shut down all of its domestic assembly lines for six days following an explosion at an Aichi Steel Corp plant. A cyberattack on Kojima Industries Corp. in 2022 again halted operations at all of Toyota's assembly plants in Japan for a whole day.

Even though such accidents were predictable, Toyota allowed the latest incident to halt production longer than in previous accidents.

The primary cause of the prolonged outage was Toyota’s heavy reliance on Chuo Spring for coil springs, components that are essential for vehicle suspension systems.

Most cars need coil springs that are tailored to their specific model.

“They come in different designs and materials depending on the car’s make, virtually no two models share the same coil springs,” said an industry insider.

Most manufacturers develop coil springs specifically designed for each model under a confidential agreement signed with their client automakers.

“They can’t be sourced from elsewhere when the regular supply chain is disrupted,” said the insider.

Three manufacturers dominate more than 90 percent of the domestic coil springs market, with NHK Spring Co. leading the industry with a 45 percent share, followed by Chuo Spring at 35 percent and Mitsubishi Steel Mfg. Co. at 18 percent, according to a 2019 report by research firm MarkLines Co.

“There were hardly any alternative suppliers,” said a Toyota executive of the recent shortage of coil springs.

One of key principles that gives Toyota its competitive edge is a “just-in-time” production policy, where parts are only produced when they are needed, which helps to reduce inventory costs and improve efficiency.

This spares the automaker from the need to stockpile some 30,000 parts that make up a typical car, but means that they don’t have backup supplies on hand if their supply chain is disrupted.

Although Toyota typically partners with multiple parts manufacturers to deal with such potential disruptions, the latest accident hit one of their irreplaceable suppliers.

Another factor behind the recent production outage is the increasing pressure Toyota has put on their suppliers to ramp up production.

“Parts manufacturers are strained to run their plants at full capacity,” said Seiji Sugiura, a senior analyst at Tokai Tokyo Research Institute Co., to meet the auto giant’s record 10.1 million global vehicle sales target for the fiscal year ending in March 2024.

In response to the latest operational disruption, Toyota asked its suppliers to inspect their manufacturing facilities for any potential issues.

The automaker also pledged steps to prevent future plant shutdowns, but the effectiveness of these measures remains to be seen.

(This article was written by Chihaya Inagaki and Eisuke Eguchi.)

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