Fearing that a couple dozen of its U.S. suppliers could shut down production, Toyota has established a "war room" to monitor suppliers and has begun to warehouse assembly components. While the move marks a departure from the automaker's "just in time" production philosophy, a mantra that associates stockpiling with inefficiency and waste, a bankruptcy by one of the Detroit 3 could knock-out a key supplier crippling the Japanese automaker's North American factories. It is a widespread problem, as more than half of Toyota's 500 U.S. parts suppliers are also under contract to supply parts to General Motors.
The "war room" is located in Erlanger, Kentucky, at a major Toyota assembly complex. Reviews are conducted by senior executives each week to monitor the supply chain. It's the Tier 2 and Tier 3 suppliers that has the automaker most worried, as the small companies are less visible on the radar yet their closure could be just as catastrophic. To help stave off supply interruptions, Toyota has sent people to its troubled suppliers to assist their performance and help them cut costs so they will remain afloat.
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