Have We Seen the Peak of Just-in-Time Inventory Management?
HBS Working KnowledgeJul 05, 2022
The Facts
On Tuesday, production at all 14 of Toyota's Japanese facilities was halted after a 24-hour system malfunction prevented the assembly plants from processing orders for automotive parts. The company is set to resume operations on Wednesday.
While Toyota ruled out a cyberattack the corporation has fallen victim to them before, including last February, when it was forced to suspend operations after supplier Kojima Industries was hit by a system error caused by a cyberattack.
The Spin
Narrative A
COVID has shown how the much-vaunted, just-in-time manufacturing system could entirely fall apart, and revealed that it may be hard for Toyota to return to the status quo it built decades ago. The business world is feeling the aftershocks of COVID and a period of geopolitical instability in Asia and Europe that could spell the end of this lean, efficient, and cost-effective model, as businesses instead become forced to invest in more resilient systems.
Narrative B
Though heightened tensions with China over the Fukushima wastewater release have demonstrated the risks of malfunction in Toyota's current system, this episode has highlighted a more fundamental problem in Japan — the country is woefully unprepared for potential cyberattacks. Japan's lax cybersecurity infrastructure poses a threat not only to businesses but international diplomacy, as it has previously caused US secrets to be leaked to China. Tokyo desperately needs to bolster its cyberinfrastructure if it wants to be a dependable world partner in trade and global security.