The world’s biggest car company had a rough quarter, and its supply-chain problems aren’t going away any time soon. That’s a warning for other large manufacturers — and their stakeholders.
All of this sounds like run-of-the-mill manufacturer issues these days given global supply chain hiccups and high fuel prices. However, because it’s coming from Toyota, it’s worth paying attention: The gargantuan and conservative automaker has a tightly knit network of suppliers coupled with an inventory-management system that has, so far, served it well. Its global production operations are some of the most nimble and finely tuned.
Despite all the chaos and confusing economic indicators, Toyota was able to see as far out as possible on supply and demand. That stands in contrast to what most of its auto peers did — they were leveraging the shortages to boost margins and taking unavailable parts out of vehicles altogether. More importantly, they weren’t planning for the future. That means what Toyota says now is a harbinger of more manufacturing and supply issues to come.
This isn’t just a case of the world’s biggest car company being nice; suppliers under stress risk cracks in Toyota’s production line that will be hard to fix. It’s not easy to find a replacement for one missing component, or one defaulting manufacturer, and every problem results in a lag.
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