Michigan, Aug 8: Toyota Motor Corp said it has developed a way to produce a car within just five days of receiving a custom order. That is a startling development in an industry that has long kept customers waiting 30 to 60 days for custom orders. It also is likely to give Toyota a significant competitive advantage in an age when online consumers can expect overnight deliveries of new custom-ordered computers.As the Japanese auto maker's rivals hurry to catch up with what amounts to a new industry target, the implication for consumers is much greater ability to order a vehicle with exactly the colour, trim and options they want. Faced with a long delay, most US customers settle for whatever a dealer has on hand.
Currently, 75 per cent to 85 per cent of cars and light trucks are purchased out of dealer inventories, estimates Bruce Belzowski, a senior research associate at the University of Michigan.
"A lot of auto makers have been talking about doing a 10-day car, or 15 or 20 days," said John Hoffecker,an auto-industry expert with the A.T. Kearney consulting unit of EDS Corp. "But Toyota's going to deliver a five-day car in September. This will be a shock to the industry."
Real Tanguay, a vice-president of Toyota's manufacturing unit in Cambridge, Ontario, described what he called "Toyota's next-generation just-in-time logistics system," which makes the short order-to-manufacture time possible, at an auto-industry conference in this northern Michigan resort town. Right afterward, Thomas J Davis, General Motors Corp's vice-president and group executive in charge of trucks, declared it "a phenomenal presentation." He said GM currently can assemble a custom vehicle with in 17 to 18 days of receiving the order.
Auto makers have all been trying to shorten this lead time, seeing it as a crucial competitive element in the computer age. GM's Cadillac division has installed a system of centralized inventories of popular models from which dealers can obtain delivery within a day or two, but these aren't truecustom models. DaimlerChrysler Corp claims that its average of 10 to 12 days for building custom-ordered vehicles currently is the best in the industry.
At the heart of Toyota's new system, Tanguay said, is sophisticated computer software that allows planners to create a "virtual production line" 15 days in advance of actual production. The system then calculates exactly how many of which parts will be needed at what time at each point on the production line to assemble the expected mix of cars. These calculations become provisional orders-by hour and minute-to the plant's 300 suppliers.
Depending on where an order is made and where a vehicle is built, shipping the finished car or truck to the customer can take seven to 10 days, industry experts say. Delivery would still take that long for Toyota. While impressed with Toyota's new logistical plan, industry experts and rivals were sceptical on a couple of points. Toyota could run into scheduling problems if the marketing operations generate toomany last-minute custom orders, one expert suggested.
--The Wall Street Journal
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