Since 1980’s the Japanese car manufacturing industry has been celebrated as the most efficient car industry in the world regarding production systems and processes. However, on 16 July 2007 this efficiency of the entire Japanese automotive industry was challenged when an earthquake hit the Chuetsu region in Japan and decimated a small but critical portion of its supply chain. Riken Corp., a supplier of automobile engine components such as piston rings, was this critical sup-ply chain bit. Its failure to operate after the event caused a chain reaction of plant closures of the main eight Japanese car manufacturers and parallelised nearly 70 per cent of the world biggest auto production industry. The underlying qualitative study adopts some conceptual supply chain resilience management models available in the academic literature as theoretical lenses to analyze the Riken Corp. case. The main argument of this research paper is that while the Japanese automotive supply chain is capable of delivering an efficient and effective response to and recovery from an interruption, it, however, lacks the capability of event readiness, which is the active resilience preparation for a supply chain disruption.
Table of Contents
1. INTRODUCTION
2. OVERVIEW OF THE JAPANESE AUTO MANUFACTURING INDUSTRY
3. JAPANESE AUTOMOTIVE SUPPLY CHAIN AND THEORETICAL RESILIENCE FRAMEWORK
3.1 GENERIC JAPANESE CAR MANUFACTURING SUPPLY CHAIN
3.2 THE IMPACT OF SUPPLY CHAIN DISRUPTIONS ON JAPANESE AUTOMOTIVE INDUSTRY
3.3 THEORETICAL RESILIENCE MODEL
I. Event readiness
II. Efficient Response
III. Recovery
IV. Competitive Advantage
4. TESTING THE RESILIENCE MODEL AND IDENTIFYING POTENTIAL COMPETITIVE ADVANTAGE
I. Was the Japanese automotive industry ready enough for the earthquake event?
II. How does the Japanese automotive supply chain response to disruption events?
III. Is the Japanese automotive supply chain capable of recovering from its losses?
IV. What competitive advantage can the Japanese automotive industry gain from a more resilient supply chain?
5. CONCLUSION
Objectives and Topics
This paper examines the resilience of the Japanese automotive supply chain in the face of natural disasters, specifically using the 2007 Niigata-ken Chuetsu-Oki earthquake and its impact on Riken Corp. as a case study to identify critical vulnerabilities and necessary improvements in supply chain management.
- Analysis of the Japanese automotive lean production model and its inherent supply chain risks.
- Evaluation of supply chain resilience through the lenses of readiness, response, and recovery.
- Investigation into the critical dependency on sole-source suppliers within the Keiretsu network.
- Identification of competitive advantages gained through enhanced event readiness and strategic risk mitigation.
Excerpt from the Book
The Impact of Supply Chain Disruptions on Japanese Automotive Industry
The Riken case is a good example that depicts the severity of supply chain disruptions on the Japanese automotive industry. The Riken’s plant complex in Kashiwazaki manufactures about half of the piston rings used by the entire automobile industry in Japan. Riken has 1,741 employees who produce 31 million piston rings per month in addition to 580 million compressor rings per month. The nine satellite companies in the region are Riken’s suppliers and have another 1,400 employees (AEASSC, 2008).
The disruption event, an earthquake, resulted in significant equipment damage in all of Riken’s manufacturing plants in the affected region and caused Riken to suspend production for one week (Chozick, 2007b). Riken had also to account for a physical production loss of 7.75 million piston rings (AEASSC, 2008) and US$16.2 million extraordinary losses (Riken, 2008).
The Wall Street Journal estimated that 70 percent of Japan's entire auto production had to temporarily shut down its production (Chozick, 2007a). The total physical production declined by around 11 per cent, which represents 125,000 vehicles during the time of suspended production (Jiji Press, 2007; Kim, 2007). The daily financial loss of the whole industry accounted to US$164 million and the total financial loss approximated to US$1.6 billion in terms of lost revenue of which 70 percent accounted to the three major manufacturers - Toyota, Nissan and Honda (Kim, 2007). Consequently, this impact was perceived larger than expected on Japanese auto manufacturers and indicates the importance of resilience within Japanese automotive supply chain (Nakamoto, 2007). Table 1 summarizes the impact of the supply chain disruption, incurred at Riken Corp., on the physical good flow, financial flow and equity of the three main car manufacturers.
Summary of Chapters
1. INTRODUCTION: Outlines the research focus on supply chain resilience triggered by the 2007 Riken Corp. earthquake incident and its industry-wide impact.
2. OVERVIEW OF THE JAPANESE AUTO MANUFACTURING INDUSTRY: Explores the history and structural foundations of the industry, focusing on the Keiretsu concept, lean production, and global competitive strategy.
3. JAPANESE AUTOMOTIVE SUPPLY CHAIN AND THEORETICAL RESILIENCE FRAMEWORK: Defines the three-tier supplier structure and introduces a theoretical model for assessing supply chain resilience via readiness, response, and recovery.
4. TESTING THE RESILIENCE MODEL AND IDENTIFYING POTENTIAL COMPETITIVE ADVANTAGE: Applies the theoretical model to the Riken Corp. case to reveal a lack of readiness and proposes strategies for achieving sustainable competitive advantage through resilience.
5. CONCLUSION: Synthesizes the findings, confirming that while the industry excels at response and recovery, it requires improved event readiness to manage catastrophic risks effectively.
Keywords
Supply Chain Resilience, Japanese Automotive Industry, Riken Corp., Keiretsu, Lean Production, Just In Time, Natural Disaster, Earthquake, Event Readiness, Efficient Response, Recovery, Risk Mitigation, Competitive Advantage, Piston Rings, Supply Chain Management.
Frequently Asked Questions
What is the primary focus of this research paper?
The paper investigates the resilience of the Japanese automotive supply chain when confronted with high-impact, low-probability disruption events like the 2007 Niigata-ken Chuetsu-Oki earthquake.
What are the central themes of the study?
The core themes include the effectiveness of the Keiretsu supplier network, the vulnerabilities of lean production models, and the theoretical framework of supply chain resilience.
What is the key research question?
The research asks whether the Japanese automotive supply chain is resilient enough, specifically evaluating the balance between efficiency and the capacity for event readiness.
Which methodology is applied in this research?
The study adopts a qualitative approach, utilizing a single-case study of Riken Corp. and applying academic resilience models as theoretical lenses to analyze the event.
What does the main body of the work cover?
It provides an industry overview, maps the supply chain structure, introduces a three-pronged resilience model, and tests this model against the specific real-world data of the 2007 Riken factory disruption.
Which keywords best characterize this work?
The work is characterized by terms like supply chain resilience, Keiretsu, lean production, earthquake, and event readiness.
Why was Riken Corp. chosen as the primary case study?
Riken was selected because, despite being a small supplier of low-cost parts, its failure paralyzed nearly 70 percent of the global Japanese auto production, illustrating the fragility of lean supply chains.
What specific capability does the author argue is missing in the Japanese model?
The author argues that while the industry is excellent at responding and recovering, it lacks "event readiness," which involves proactive preparation and identification of critical bottlenecks before a disaster occurs.
How does the Keiretsu system contribute to both strength and vulnerability?
The Keiretsu system provides efficient collaboration and rapid resource sharing during a crisis, but it also creates high levels of interdependency that make the entire chain vulnerable if a single critical supplier fails.
- Quote paper
- Wladimir Wiegel (Author), 2010, Supply Chain Resilience Management: Is the Japanese Automotive Supply Chain resilient enough?, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/167383
