Category: Japan

(p. A1) TOKYO— Toyota Motor Corp. is stockpiling up to four months of some parts. Volkswagen AG is building six factories so it can get its own batteries. And, in shades of Henry Ford, Tesla Inc. is trying to lock up access to raw materials.

The hyperefficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them.

“The just-in-time model is designed for supply-chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co.’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.”

. . .

(p. A10) One day in 1950, Toyota executive Taiichi Ohno visited an American supermarket and marveled how the shelves were restocked as they were emptied, as Jeffrey Liker recounts in his book “The Toyota Way.” Shoppers were kept happy even though the supermarket had only small storerooms. It was the polar opposite of the car industry where warehouses were kept full of sheet metal and tires to ensure the assembly line never shut down.

Supermarkets had little choice, since they couldn’t stockpile bananas for months. Still, Mr. Ohno reasoned, their practices eliminated waste and cut costs. Toyota would only pay for what it needed to produce cars for a day. That meant they could make do with smaller factories and warehouses.

. . .

The tide began to turn with the global financial crisis. At least 50 auto suppliers went bankrupt, catching car makers by surprise. When suppliers like Visteon Corp. , a maker of air conditioners, radios and other components, declared bankruptcy, it led to fears that car factories relying on Visteon would also be unable to operate.

A different shock prompted a rethinking of just in time at the company where it started. The 2011 earthquake in northern Japan hit Toyota suppliers including chip maker Renesas Electronics Corp.

. . .

For certain components, Toyota asked its suppliers to stockpile parts, the antithesis of just in time. The on-hand inventory held by Toyota’s largest supplier, Denso Corp., rose to around 50 days’ worth of supply in the year ended March 2020, up from 38 days in 2011, according to its financial filings. Denso declined to comment on inventory figures but said it has started keeping emergency stores of parts, especially semiconductors.

Toyota’s efforts have helped it weather this year’s shortages of semiconductors better than many of its rivals, although it wasn’t perfect.

For the full story, see:

Sean McLain. “Auto Makers Hit Brakes On Just-in-Time Manufacturing.” The Wall Street Journal (Thursday, May 04, 2021): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date May 3, 2021, and has the title “Auto Makers Retreat From 50 Years of ‘Just in Time’ Manufacturing.”)

The most recent edition of the classic book on Toyota’s success, mentioned above, is:

Liker, Jeffrey. The Toyota Way, 14 Management Principles from the World’s Greatest Manufacturer. 2nd ed. New York: McGraw-Hill Education, 2021.

A cliché usually credited to Emerson says that ‘if you build a better mousetrap, the world will beat a path to your door.’ Many, including Peter Thiel in his co-authored Zero to One, argue that the inventor of the better mousetrap needs some marketing to let the world know that her mousetrap is better. I think Thiel is mainly right, but the story quoted below suggests that sometimes the cliché may be true.

(p. A12) The bright-white sticks drop one by one into the whir and clatter of a weatherworn piece of machinery, where they are stamped with the most celebrated name in chalk: Hagoromo.

. . .

Of the thick grayish mass that emerges, four ingredients are known: calcium carbonate, clay, glue and oyster shells. The other three are a secret. In a video posted to YouTube about the chalk, an American fan offers a guess as to one of them: angel tears.

Hagoromo chalk is a cult favorite of elite academics, artists and others around the world who praise it for its silky feel, vibrant colors, scant dust and nearly unbreakable quality. Mathematicians in particular are prone to waxing poetic about it, and buying it in bulk. The YouTube video, produced by Great Big Story, has been viewed more than 18 million times.

Despite its renown, Hagoromo is still produced on a relatively small scale, using custom-made equipment, much of it run by two laborers who are identical twins — a throwback in a high-tech era where interactive displays are replacing chalkboards.

. . .

In 2014, Takayasu Watanabe, the grandson of the company’s founder, announced that Hagoromo would halt production, partly because of the industry’s declining fortunes and partly because of his own ill health.  . . .

As Mr. Watanabe was preparing to shut it down, he received a visit from Shin Hyeong-seok, who had been importing the chalk to South Korea for nearly 10 years. Mr. Shin sold the chalk through the company he started, Sejong Mall, named after King Sejong the Great, who in the 15th century created Hangeul, the Korean writing system.

Mr. Shin had discovered the chalk years before in Japan while investigating the workings of cram schools.   . . .

“I went into the teachers’ lounge and remember being mesmerized by the fluorescent-colored chalks,” he said. “And when I started writing with one, I could not put it down.”

On his trip to see Mr. Watanabe, Mr. Shin presented what he called a “crazy idea.” He, a teacher and importer with no manufacturing experience, would take over production of the chalk in South Korea. Mr. Watanabe laughed.

But Mr. Shin kept pressing. “My pitch to him was that there are many things in the world that will disappear one day, but the best-quality item should be the last to do so,” Mr. Shin said.

. . .

Takako Iwata, the second of Mr. Watanabe’s three daughters, who served as interpreter for Mr. Shin and her father, . . . said she wasn’t exactly sure how Hagoromo had become so beloved outside Japan. “I guess people who came to Japan just kept on bringing the chalk back to their home countries,” she said. “When my father was still running the company, he did not know about this huge following.”

That changed a bit, though, in his company’s final months, when he received a flood of orders, including from American professors who hoped to buy supplies large enough to last 10 years or more.

David Eisenbud, the director of the Mathematical Sciences Research Institute at the University of California, Berkeley, said he had bought enough to last the rest of his life.

Dr. Eisenbud is a key figure in the chalk’s popularization in the United States. He was first introduced to it years ago during a visit to the University of Tokyo. “Everything about the chalk was exquisite,” he said. “I thought, ‘Chalk is chalk,’ but I was wrong.”

He later persuaded an acquaintance to import the chalk into the United States. (Mr. Shin now sells it to American buyers through Amazon.)

Yujiro Kawamata, a Japanese mathematician who introduced Hagoromo to Dr. Eisenbud, marveled at the turn of events.

“I happened to tell Eisenbud about the chalk, which was just a tool that was a part of my everyday life, and now the whole world knows about it,” Dr. Kawamata said.

For the full story, see:

Hikari Hida and Jean Chung. “How a Beloved Chalk Bridged a Bitter Divide to Survive.” The New York Times (Wednesday, November 18, 2020): A12.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 17, 2020, and has the title “A Ride on the Assembly Line With the World’s Most Famous Chalk.”)

PayPal entrepreneur Peter Thiel’s co-authored book mentioned above is:

Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.