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Friday, June 18, 2021

Toyota takes precautions early to cope with the shortage of electronic chips

The world’s largest car manufacturer does not have a chip shortage.

Unlike other car manufacturers, Japan’s Toyota Motor Corporation said on February 10 that it did not expect the semiconductor shortage to affect its production. In a call discussing the company’s profits, CFO Kenta Kuhn said that as part of its business continuity plans, Toyota – which manufactures more than 10 million cars annually – insured “one to four months of inventory as necessary.” To various components. With higher operating profits, the company raised its earnings forecast by more than 50% (meanwhile, the company said, the February 13 earthquake off the coast of Japan had no impact on its factories).

Meanwhile, other manufacturers are running an insufficient supply of chips; As a result, global auto production could drop by as much as 3 million cars, or 3% to 5% of the total, this year; This is a result of demand miscalculations, and deep supply chain regulatory issues; It is not expected that this scarcity will subside anytime soon.

Toyota stock contradicts its famous production philosophy. During the 1960s and 1970s, heavy Japanese companies invented the art of “manufacturing in time”; It is a strategy rooted in keeping low stocks of goods, raw materials, or stocks on hand to reduce costs and increase margins, while achieving streamlined production. As the company announced on its website, explaining the roots of Toyota’s production system, “waste can appear as surplus stock.”

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