SCH4801 Assignment 2 (COMPLETE ANSWERS) 2025 - DUE 30 June 2025

Toyota South Africa's Supply Chain Challenges: A Case Study in Disruption and Resilience Toyota South Africa is a leading automobile manufacturer in the region, with its supply chain serving as a critical part of the company's value chain by ensuring vehicles are produced to the highest quality standards based on incoming orders. This supply chain involves sourcing raw materials and top-notch quality components from global (Japan, North America, Europe and Asia) and local suppliers, assembling vehicles, storing them in warehouses, and distributing them to customers through various logistical channels. Toyota believes in close long-term supplier relationships and yearly hands out awards to suppliers that exceed the performance targets, such as Keiper for their rear seat assembly locks, TAC Manufacturing for their shift lever knobs, Tenneco for exhaust components and Samsung Electronics for the Car Mode App that connecting Samsung smartphones to Toyota radios. Moreover, Toyota focuses on eliminating waste and maintaining high efficiency by applying 'The Toyota Production System' (TPS) as its manufacturing philosophy. TPS enables Toyota South Africa to produce vehicles at a pace aligned with market demand, giving it a competitive advantage over its competitors. However, the complexity of modern supply chains makes them vulnerable to disruptions, which can severely impact operations. Component Shortage Disruption (2019) In 2019, Toyota South Africa faced a significant disruption due to a shortage of key manufacturing components. The issue arose from the company's over-reliance on a single supplier, Auto Parts South Africa (ASA), based in Durban. A large-scale strike by ASA's employees halted the production of essential parts, such as brake pedals, catalytic converters, and fuel tanks, affecting critical models like the Corolla, Fortuner, and Hilux—the latter being the company's best-seller. This resulted in the loss of approximately 6,000 vehicles, as production of 500 vehicles per day stopped, with sales of the Hilux being particularly affected. To address the shortage, Toyota reduced production capacity, temporarily laid off workers, and sought new suppliers. This process required significant resources from the purchasing department and took time, as onboarding new suppliers involved logistical challenges. Impact of Flooding on Operations (2022) In 2022, severe flooding in the KwaZulu-Natal region, particularly in Durban, further disrupted Toyota's operations. Toyota's competitors saw this as an opportunity to enhance their market share, as various Toyota customers, such as Hertz, Avis (rental companies), Toyota dealers, commercial fleet organisations and government entities might need to wait for their special orders. The Prospecton plant suffered extensive damage, with approximately 88% of the vehicles on-site destroyed and production lines SCH4801 ASSIGNMENT 2 2025 Page 8 of 15 severely impacted. Beyond the plant, the floods disrupted the movement of automotive parts and finished vehicles, as the port of Durban, a key logistical hub, experienced delays due to congestion. Toyota reported losses of about 45,000 vehicles, with many new cars rendered unusable due to flood damage. Although port operations resumed quickly, supply chain delays persisted, affecting import and export schedules. Climate change impact Climate change has a major impact on the environment, which leads to unpredictable weather patterns such as flooding. Organisations need to consider their environmental impact and find ways to reduce greenhouse gases. Environmental issues are becoming increasingly important to Toyota. Therefore, Toyota expects its suppliers to be ISO 14001 compliant. Being ISO 14001 compliant requires that suppliers adhere to specific predetermined standards to manage their impact on the environment, mainly caused by the materials they use, the production processes they deploy, and the waste, scrap, packaging, and disposal of the end product. Toyota communicates its global requirements for producing clean and safe products to its suppliers, among others, through its “Green Purchasing Guidelines”. In addition to the “Green Purchasing Guidelines”, Toyota provides suppliers with a list of substances they should avoid using in their production process. The way forward The impact of climate change and the disruptions highlighted are critical vulnerabilities in Toyota South Africa's supply chain, such as the importance of effective communication and collaboration with suppliers. According to Toyota's CEO,