How Toyota's core values strengthen its organizational strategy.
Lead time is the delay between ordering a part and receiving it. Traditionally, that can include the time to procure raw materials, produce the part, and then deliver it. After the earthquake, the company became deeply involved in the restoration of production at the Renesas semiconductor fab in Naka, Japan, the critical supplier of automotive microcontrollers that was taken offline.
The range of inventory carried can vary considerably. The company maintains 13 weeks of steel coil inventory in Georgetown because it uses a custom alloy that is made in batches. “Many people have the mistaken impression that TPS is against having inventory; that’s not right,” Nielsen said. During the winter months, the company increases the amount of parts inventory on hand by one shift’s worth to reflect the inevitability of ice storms or winter weather that will affect logistics networks.
“For suppliers to really invest in their people, in their facilities, in their technology development, they have to know that they’re going to have the business tomorrow,” Nielsen said. “So one of the things that we really emphasize is stability in the supply base. The benefit of competition is long term. A lot of it is around technology and design.”Trust and supplier support are core principles of TPS.
“If you are going to run a really tight just-in-time system, you have to have the expertise as well as the trusting relationship to go into a supplier and help out when there is a problem,” Bonini said. “If a supplier gets in real trouble, we’ve got people that can jump in, with the technical skills to really help solve the problem. We don’t walk in and call for an audit of their recovery plans; we roll up our sleeves and help problem-solve as part of a collaborative effort.
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