The Fire at Kariya

Abstract

On Saturday the first of February 1997, fire broke out at one of the plants of Aisin Seiki, a supplier to Toyota in Aichi Prefecture, Japan, whose works are centred on the city of Kariya. The plant made proportioning valves, known in the trade as P-valves: small brake parts, cheap, unglamorous, and used in every vehicle Toyota made. Aisin, which the management scholars Toshihiro Nishiguchi and Alexandre Beaudet describe as one of Toyota's most trusted suppliers, was the sole source. Toyota ran on just-in-time production, which means it held almost no inventory. When the fire stopped the line at Aisin, Nishiguchi and Beaudet report, only two or three days' worth of P-valves was on hand. The machines that made them were destroyed. In the textbook account of supply-chain risk, this is the scenario every lecture warns about: a single source, no buffer, a part in everything, gone overnight. The expected result is weeks of lost production across the whole group.