Just an Emergency

SHIPPING, SHIPBUILDING AND OFFSHORE NEWS

Toyota’s overproduction and inventory emergency (thanks to Jason for the tip):

Toyota is currently renting a ship in the Swedish port of Malmö: to store 2,500 unsold autos.

“It’s an emergency measure that we had to take due to storage space issues,” EUobserver reports Toyota press spokeswoman Anne Gaublomme as saying. “Our vehicle logistics center in Malmö had reached a maximum capacity as core sales in the region have decreased recently.”

EUobserver says the decision to store the cars aboard a Wallenius Wilhelmsen car carrier was made last month when Malmö port facility reached its limit of 12,000 cars.

Yikes… I guess the supply chain to Sweden is long and slow… Toyota certainly didn’t dial down production fast enough. An argument for the just in time system is that it’s supposedly more responsive to demand signals. But the system wasn’t responsive enough to a 50% drop in sales, was it? Is Toyota doing better with inventory management in Japan, being closer to the customers there? How about in Georgetown Kentucky?

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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3 Comments on "Just an Emergency"

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  1. Anonymous says:

    I’ve a friend that works for a automotive supplier, supplying leather interiors for Landrovers and some of the Mercs.

    Their forecast in Sept and Oct was for approximately 90 landrovers a month for Nov.

    That was revised on something like Oct 30th down to 5 / month for the foreseeable future.

    Their supply chain goes from Brazil, to eastern europe, I’m not sure that any organisation could cope with that degree of change in their order book in what was certainly less than 7 days notice.

  2. Mark Graban says:

    Anon — you made my point perfectly. When you change the forecast/demand within the supply chain lead time window, bad things like this happen. No company can respond quickly enough if the supply chain is that long.

    This comes back to supply chain design, not supply execution. To have a responsive supply, short and fast is key. If you have unpredictable demand, you need a short/fast supply chain.

    Is this era, who can accurately forecast demand that far into the future?? There will be more of an impetus to stop sourcing things all the way around the world. That only works well when demand is stable and predictable.

  3. Anonymous says:

    But keep in mind heijunka. Toyota doesn’t really practice pull from the customer. The level production, and have strict rules about how fast they ramp up or back off. So their whole plan is not to overreact to the market. They essentially accept this risk. Can it handle 50 percent drop in the market? Of course not.

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