1. Discuss one of the missing core beliefs of Toyota JIT (Just-in-time) philosophy and any one of the three major elements of JIT not mentioned in the article?

2. Discuss the differences between the traditional and JIT assembly lines

The automotive parts supply chain in North America is changing like never before as domestic auto makers attempt to source more parts overseas and the foreign transplants seek more parts within the region. Meanwhile, suppliers many of them in distress remain crucial to the success of new vehicles being launched. This is the fifth installment of a Ward's 6-part series stemming from interviews with the purchasing departments of Nissan, Ford, Honda, GM, Toyota and Chrysler.

Special Report

Supply Lines: Purchasing Chiefs Speak Out

Chris Nielsen, the new vice president-purchasing, vehicle parts and materials for Toyota Motor Engineering & Mfg. North America Inc., keeps his office near Cincinnati in Erlanger, KY, but in recent years his home away from home has been in San Antonio.

As Toyota geared up for the launch earlier this year of the second-generation Tundra pickup at its new plant in the heart of the Texas truck market, Nielsen oversaw the clustering of 21 parts producers on the San Antonio campus. He helped lay out the supplier park and position each facility for the maximum benefit of the overall enterprise.

Toyotas Chris Nielsen is confident North American supply base can be globally competitive.

Every day, a logistical ballet plays out as parts are transported from on-campus suppliers to the truck assembly plant. Nielsen had to make sure this delivery process would go smoothly to the minute.

For all the onsite suppliers, we didnt just locate them off in a corner of the property, Nielsen tellsWard's. Some of them are on the north side of the plant, and some are on the south side, as close as possible to where the parts will go to the (truck assembly) line.

He had to factor in a maddening array of potential disruptions that would break the flow.

We had to avoid problems of conveyance because you could have traffic jams, says Nielsen, who in December became the first American to lead North American purchasing for Toyota, replacing Osamu Simon Nagata, who has returned to Japan. We spent a lot of time optimizing those locations."

One solution was to place four of the suppliers in the park even closer than the rest: under the same roof as the Tundra assembly plant.

Those four suppliers are:

Hero Logistics LLP, a minority-business joint venture between Valiente International Ventures and Toyota Tsusho America.

Hero Assemblers LLP, another JV between Ventures and TAI, for assembly of wheels.

Vutex Inc., a Texas assembly services company that is a minority-business JV between Operation Technologies Corp. and Vuteq, a producer of interior trim.

Avanzar Interior Technologies Ltd., a JV between Johnson Controls Inc. and SAT Auto Technologies Ltd., for front and rear seats, headliners and door panels.

Avanzar set up shop inside the plant, and seats are completed a mere 30 ft. (9 m) from the point on the Tundra assembly line where they are installed.

The seat has to be physically close (to the assembly line) because it is expensive to move, even if its a short distance, Nielsen says.

In addition, the seats must be produced and delivered in sequence based on lead times measured in minutes from the time the truck exits the paint shop.

Count this as another example of Toyota raising the bar for manufacturing efficiency.

The arrangement redefines just-in-time delivery, which has been used widely since the 1980s to produce seats at nearby facilities for quick delivery by truck, eliminating the need for warehousing. This is a most extreme case of JIT production, Nielsen says. Its a model we felt was necessary and also achievable due to the location of the plant in Texas, far from our existing supply base. We felt this model was one that could work for us in this case.

He admits the model would not necessarily work for all Toyota plants in North America, but he knows those other facilities might gain from the experience. We want to take what weve learned in Texas and benefit from it, Nielsen says.

A big bonus was avoiding the expense of constructing a separate plant in San Antonio to build the seats, although he declines to quantify the cost savings achieved.

Toyota has some 300 suppliers working on the new Tundra program, including four additional companies in Texas beyond the 21 at the production campus, says Dana Hargitt, executive program manager-product development at the Toyota Technical Center in Ann Arbor, MI.

Hargitt credits several suppliers for their contributions to the Tundra, including Magna International Inc. (mirrors), Valeo SA (flat-blade windshield wipers), Key Plastics (tailgate handle), AVM Inc. (liftgate dampers), Asahi Glass Co. Ltd. (rear windows in B- and C-cabs) and Delphi Corp. (wiring harnesses).

Toyotas Dana Hargitt discusses seats, assembled by Avanzar joint venture within Tundra plant.

Steel frames for the Tundra are dual sourced from Mexicos Metalsa S. de R.L. for the San Antonio plant and from Dana Corp. for truck production in Princeton, IN, which began in January.

The Tundras domestic content (from the U.S. and Canada) stands at 75%.

As Toyota opens new North American vehicle assembly plants, Nielsen says the local supply of components is becoming more important, regardless of the troubles of many parts producers.

The key is for the North American supply base to take on the charge of being competitive, producing in North America on a global basis, he says. Im bullish on production in North America and bullish and optimistic on our ability to have a competitive supply base. Its not an easy task there are a lot of challenges to overcome.

There have been hiccups in the Tundra launch. For instance, a camshaft flaw in a limited number of 5.7L V-8s installed in early versions of the truck caused the component to crack and fail.

Hargitt says the blame rests with a Tier 2 supplier, and that there were only 20 failures.

Weve been processing the issue within the plant, he says. I think it was caught in February.

Toyota Purchasing By The Numbers

$29 billion spent on OEM parts for North American operations in 2006.

500 suppliers, including 300 working on the new Tundra program.

More than $1 billion spent with minority suppliers in 2006, more than 7.5% of the annual buy.

In addition, Toyota has struggled with the sales mix so far. With high fuel prices, for instance, the auto maker expected to sell plenty of V-6 models. Instead, the two V-8s comprise more than 80% of sales. Plus, the two largest cabs are selling best, consuming 90% of deliveries.

Were selling a lot less of the low-cost B cabs, but (buyers) cant get enough of the big engines and the large cabs. I know, with gas prices, it doesnt make a lot of sense, Hargitt says. The sales guys are saying theyre having a difficult time getting the right truck for the right buyer, so theyre mixing and matching and swapping trucks all over the nation.

Up against established Detroit pickups, Toyotas Tundra arrives priced slightly higher, partially because certain trim packages may have more content than was necessary, Hargitt says. Dual-zone climate control, for example, is standard on all Tundras, even the basic work trucks.

Does Toyota need to de-content the pickup to get the prices down?

The sales group is watching it very closely to make sure its not inhibiting the ability for the dealers to sell these things, Hargitt says. If we see its a problem, then obviously wed take a look at what we can do to equalize the playing field (with competitors) a little bit more.

He notes during program development, Toyota was unable to benchmark the all-new Chevy Silverado because it would launch about the same time as the Tundra.

We respect the fact that (GM has) been at this a lot longer than we have, and they certainly understand the market as well, Hargitt says.