How Toyota thrives when the chips are down

Beijing – Toyota Motor Corp. may have pioneered the just-in-time manufacturing strategy, but its decision to stockpile the chips that have become key components in cars goes back a decade to the Fukushima disaster. After the catastrophe severed Toyota's supply chains on March 11, 2011, the world's biggest automaker realized the lead-time for semiconductors was far too long to cope with devastating shocks such as natural disasters. The automaker came up with a business continuity plan (BCP) that required suppliers to stockpile anywhere from two to six months' worth of chips, depending on the time it takes from order to delivery, four sources said. That's why Toyota has so far been largely unscathed by a global shortage of semiconductors following a surge in demand for electrical goods under novel coronavirus lockdowns that has forced many rival automakers to suspend production, the sources said. "Toyota was, as far as we can tell, the only automaker properly equipped to deal with chip shortages," said a person familiar with Harman International, which specializes in car audio systems, displays and driver assistance technology.