The "Brittleness" of Global Lean
The 2011 Tohoku earthquake and tsunami remains a watershed moment for this debate.
In a classic Harvard Business Review analysis, Steven Forth highlighted how Japan’s renowned lean production systems were remarkably brittle. Efficiency had come at the cost of redundancy, leaving giants like Toyota and Sony vulnerable to single-point-of-failure suppliers.
This wasn't just an anecdotal observation. Harvard Business School Professor Willy Shih noted that the disaster was a wake-up call for manufacturers who had built global strategies solely on low-cost, Just-in-Time (JIT) models without accounting for geographic concentration risks.
Whilst this work focussed on physical, natural world risks, we have discovered that geo-political risks can be as rapid and have as great an impact on supply chains.
Evolution: From JIT to "Resilient Lean"
Following the destruction of the earthquake and tsunami industry didn't abandon Lean systems; it evolved them.
Toyota, the pioneers of the Toyota Production System, famously pivoted by building the RESCUE (REinforce Supply Chain Under Emergency) database. This system tracks over 650,000 supplier sites to ensure visibility down to Tier 4, allowing them to stock strategic inventory for critical components long before a crisis hits.
Recent academic research from the University of Cambridge reinforces this, showing that supply chains often act as a conduit for economic disruption if they lack "circuit breakers."
How Toyota Production System survived when under pressure
During the early part of the Covid pandemic while most manufacturers were forced to halt production, Toyota remained largely unscathed for the first year due to a long-term shift in strategy following the 2011 Fukushima earthquake and tsunami.
Toyota's lean system resilience was built on three main pillars:
- Strategic Stockpiling ("Just-in-Case"): After the 2011 disaster, Toyota realized that semiconductors have extremely long lead times (up to several months). They revised their "Business Continuity Plan" (BCP) to require suppliers to maintain a "safety buffer" of two to six months' worth of chips, effectively breaking their famous "Just-in-Time" rule for this specific component.
- Deep Supply Chain Visibility: Toyota developed the "Rescue" (or R) database, which mapped their entire supply chain across all tiers—not just direct (Tier 1) suppliers. This gave them visibility into roughly 6,800 parts and 400,000 components, allowing them to identify exactly which chips were at risk long before they ran out.
- In-House Semiconductor Expertise: Toyota has a deep internal understanding of chip design dating back to the 1980s. By designing their own microcontrollers (MCUs) for decades (e.g., for the Prius), they were better equipped to communicate technical needs to chipmakers and identify risks than competitors who outsourced all electronic design.
Comparison Toyota v Other Auto Manufacturers
| Feature | Toyota Strategy | Most Other Auto Manufacturers |
|---|---|---|
| Inventory | Stockpiled 2–6 months of chips | Strictly adhered to "Just-in-Time" (minimal stock) |
| Response to 2020 Slump | Maintained orders based on long-term BCP | Cancelled orders, losing their place in the queue |
| Visibility | Monitored up to Tier 3 and Tier 4 suppliers | Often only had visibility into Tier 1 suppliers |
The Levantar Perspective
At Levantar, we believe a modern Lean system must be synonymous with resilience. We help UK businesses move toward:
- Deep-Tier Visibility: Knowing your "suppliers' suppliers" to prevent hidden bottlenecks.
- Strategic Buffering: Moving from deep inventory to smart inventory for high-risk parts.
- Agile Networks: Shifting from rigid hierarchies to networked, responsive teams.
Efficiency is vital, but resilience is what ensures you’re still standing when the next "Black Swan" event arrives.
Select Bibliography
- Forth, S. (2011). Beyond the Devastating and Saddening Human Costs, the Earthquake in Japan Is Another Reminder of the Complexity of the World’s Supply Chains. Harvard Business Review.
- Shih, W. C. (2011). Japan Disaster Shakes Up Supply-Chain Strategies. Harvard Business School News.
- Carvalho, V. M., et al. (2021). Supply Chain Disruptions: Evidence from the Great East Japan Earthquake. University of Cambridge Research.
- Toyota Motor Corporation. Five Years on: Toyota's Efforts to Build a Disaster Resilient Future. Toyota Global Newsroom.