1997 Aisin fire
Encyclopedia
The 1997 Aisin fire was a fire
which shut down one of the production facilities of the Toyota-subsidiary
Aisin Seiki Co.
on February 1, 1997, a Saturday. The event was notable as the factory was the main supplier of a motor part for Toyota cars. Due to the just in time stock keeping philosophy of the Toyota Production System (TPS)
, Toyota's car factories reportedly only kept four-hour stocks of the part .
However the event also provided an example of successful business relationships between Toyota and its suppliers, allowing the company to quickly manufacture replacement parts and limit the halt in production of its cars, so minimizing the losses from this event.
. The cause of the fire was reportedly unknown . The factory produced brake fluid
proportioning valves (P-valves) which help prevent skidding by controlling the pressure on rear brakes, and are used in the braking system of all Toyota vehicles.
99% of Toyota's P-valves were made at this plant, with Nisshin Kogyo Co. producing the remaining 1% . The production of P-valves was complicated, and required specialised tools. Furthermore, different varieties of P-valves were in production.
With the factory out of production, it was estimated that Toyota would have to halt car production for weeks. The economic impact of this would have been huge for Toyota, the local economy and for Japan. It was estimated that each day Toyota production was halted would lead to a 0.1% decrease in Japan's industrial output.
The first usable valves were delivered to Toyota on the Wednesday (February 5) following the fire, allowing production of cars to resume. While observers initially predicted that Toyota would have to halt production for weeks, the incident ultimately set Toyota's production back only five days.
The efficiency with which production was re-established also showed the value of the Japanese keiretsu
system, where businesses have "interlocking" relationships with each other. The loyalty shown by Toyota's suppliers to the company showed it the value of long-term business relationships: the suppliers reportedly did not ask what they would be paid for rushing out the valves; Aisin and Toyota later re-imbursed them for the work, including the valves, overtime and re-tooling of their machine, as well as providing a $100 million bonus to the suppliers involved.
Fire
Fire is the rapid oxidation of a material in the chemical process of combustion, releasing heat, light, and various reaction products. Slower oxidative processes like rusting or digestion are not included by this definition....
which shut down one of the production facilities of the Toyota-subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
Aisin Seiki Co.
Aisin Seiki Co.
, also known as Aisin , is a Japanese corporation which develops and produces components and systems for the automotive industry. Aisin is a Fortune Global 500 company, ranked 347 on the 2007 rankings....
on February 1, 1997, a Saturday. The event was notable as the factory was the main supplier of a motor part for Toyota cars. Due to the just in time stock keeping philosophy of the Toyota Production System (TPS)
Toyota Production System
The Toyota Production System is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers...
, Toyota's car factories reportedly only kept four-hour stocks of the part .
However the event also provided an example of successful business relationships between Toyota and its suppliers, allowing the company to quickly manufacture replacement parts and limit the halt in production of its cars, so minimizing the losses from this event.
The fire
The fire started before dawn on February 1, 1997 at Aisin Seiki Co.'s Factory No. 1 in Kariya, JapanJapan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. The cause of the fire was reportedly unknown . The factory produced brake fluid
Brake fluid
Brake fluid is a type of hydraulic fluid used in hydraulic brake and hydraulic clutch applications in automobiles, motorcycles, light trucks, and some bicycles. It is used to transfer force into pressure...
proportioning valves (P-valves) which help prevent skidding by controlling the pressure on rear brakes, and are used in the braking system of all Toyota vehicles.
99% of Toyota's P-valves were made at this plant, with Nisshin Kogyo Co. producing the remaining 1% . The production of P-valves was complicated, and required specialised tools. Furthermore, different varieties of P-valves were in production.
With the factory out of production, it was estimated that Toyota would have to halt car production for weeks. The economic impact of this would have been huge for Toyota, the local economy and for Japan. It was estimated that each day Toyota production was halted would lead to a 0.1% decrease in Japan's industrial output.
Recovery
Aisin, along with Toyota, set up a crisis room to deal with the problem of manufacturing new P-valves. Toyota managed to get many of its suppliers to bring in additional engineers, and work overtime shifts, to help build machines to produce P-valves, as well as increase production of the components. Some of Toyota's suppliers, and their subcontractors, were persuaded to give priority to the production of P-valves. Even a sewing machine manufacturer was persuaded to help provide valves for Toyota.The first usable valves were delivered to Toyota on the Wednesday (February 5) following the fire, allowing production of cars to resume. While observers initially predicted that Toyota would have to halt production for weeks, the incident ultimately set Toyota's production back only five days.
Lessons from the fire
The fire and the subsequent production crisis held many lessons for Toyota. It showed them that their implementation of the Just In Time production system worked, and that they had "the right balance of efficiency and risk". Toyota also learned to reduce the number of variations in its parts to make production easier as well as to reduce risk. Toyota's suppliers also had the benefit of increasing efficiency in their production as well as learning the lessons of building redundancy into their production methods.The efficiency with which production was re-established also showed the value of the Japanese keiretsu
Keiretsu
A is a set of companies with interlocking business relationships and shareholdings. It is a type of business group. The keiretsu has maintained dominance over the Japanese economy for the greater half of the twentieth century....
system, where businesses have "interlocking" relationships with each other. The loyalty shown by Toyota's suppliers to the company showed it the value of long-term business relationships: the suppliers reportedly did not ask what they would be paid for rushing out the valves; Aisin and Toyota later re-imbursed them for the work, including the valves, overtime and re-tooling of their machine, as well as providing a $100 million bonus to the suppliers involved.