MMRCDISCUSSION PAPER SERIES
No. 513The Evolution of Disaster-Response Capabilities:
The Case of Toyota
Takahiro Fujimoto
Yumi Kato
Shumpei Iwao
Graduate School of Economics,
University of Tokyo, Tokyo, Japan
Faculty of International Politics and Economics,
Nishogakusha University,Tokyo, Japan
June, 2019東京大学ものづくり経営研究センター
Manufacturing Management Research Center (MMRC)
Discussion papers are in draft form distributed for purposes of comment and discussion. Contact the author for
permission when reproducing or citing any part of this paper. Copyright is held by the author.
http://merc.e.u-tokyo.ac.jp/mmrc/dp/index.html

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THE EVOLUTION OF
DISASTER-RESPONSE CAPABILITIES:THE CASE OF TOYOTA1
Takahiro Fujimoto1,, Yumi Kato2 and Shumpei Iwao1
1

1

Graduate School of Economics, University of Tokyo, Tokyo, Japan
2
Faculty of International Politics and Economics,
Nishogakusha University, Tokyo, Japan

This discussion paper is a reprint of the content, but not the formatting, of chapter 8 "The Evolution of Disaster-Response
Capabilities: The Case of TOYOTA" in Fujimoto, T. and D. A. Heller (ed.) (2018) Industries and Disasters: Building Robust andCompetitive Supply Chains. Hauppauge, NY: Nova Science Publishers, pp. 197-238. ISBN: 978-1-53612-905-2, Based on theAgreement Between the authors and NOVA science publishers.

Corresponding Author: fujimoto@e.u-tokyo.ac.jp.

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Abstract
This Chapter takes an in-depth look at Toyota’s current disaster-response capabilities andhow they have evolved in the face of numerous natural and man-made disasters in thecompany’s supply chain in Japan over the past forty years. The chapter also contains excerpts
from interviews with three individuals who have first-hand experience managing the frontline of Toyota’s disaster responses. This chapter clearly reveals the principles that guideToyota in dealing with disasters and the company’s view that the individual skills andorganizational capabilities that are built up through normal kaizen activities and just-in-time
production are also highly effective in facilitating disaster responses.

Keywords
Kaizen capability, Evolutionary capability, Kanban, Nihonzaka tunnel fire, Kobe earthquake,
Kumamoto earthquake, Aisin Kyushu, Takeyama foundry, Judgements, decisions and actions,Operations management development division, Disaster response center, Production control
division, Expertise, Toyota last, Taiichi Ohno, Multi-skilled, Piping, Nagoya flood, Specialist
team, Recovery of the damaged plant, Toyota’s principle, Genbutsu, Leadership, Standard
procedures, Pull system, Excessive division of labor, Job rotation,
Judgments/decisions/actions, Judge, decide and act, Human networks, Manual tools, Long
bars, Anchor bolt, Routing, Plant engineering, Communities, Manual tools and techniques,
Confirmation of employees’ safety, Overspecialization, Order to leave the building, Skills,
Great Hanshin Awaji earthquake, Human-community-production priority, Tacit knowledge,
Explicit knowledge, Continuous improvements, Priority, Initial triage, Nankai trough(megathrust) earthquakes

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1. TOYOTA’S CAPABILITIES AND RESILIENCE
1.1. Introduction - Can Manufacturing Capabilities Enhance Disaster-Resilience?
This and the following chapters will analyze a Japanese firm that has repeatedly demonstrated its
great capabilities and leadership in recovering from various disasters and restoring damaged supply
chains—the Toyota Motor Corporation and its group.
Toyota is also famed for having distinctive manufacturing and supply chain capabilities,
known as the Toyota Production System (TPS), which emphasizes good flows of value added tocustomers, as well as their continuous improvement and evolution (Schonburger 1982, Monden 1983,
Ohno 1988, Womack et al. 1990, Fujimoto 1999, Shimokawa and Fujimoto 2009). We therefore
conjecture that a firm with strong manufacturing capabilities for competitiveness may also havesignificant capabilities in terms of supply chain resilience and robustness.
We will examine this hypothesis mainly through interviews with three key Toyota employees,
who actually led rescue, recovery and restoration activities for suppliers hit by disasters. Special
attention will be paid to Toyota’s Operations Management Development Division/Department(OMDD; Seisan Chousa Bu/Shitsu), which has been providing TPS continuous improvement andeducation at Toyota and its suppliers since 1970 (Fujimoto 1999)2. We interviewed former OMDD
managers (often called TPS Shusa) in charge of the recovery activities after the 1995 Kobe Great
Earthquake, 2011 Tohoku Great Earthquake, 2016 Kumamoto Earthquake, as well as otherearthquakes, fires and floods in the past few decades.
Rather than analyzing their comments from a theoretical point of view, we will present themby keeping as close as possible to what was actually said. Their stories are convincing enough for us
to come to two main conclusions, e.g., that capability building is the most important measure toenhance the anti-disaster robustness of supply chains, and that capabilities for the continuous
improvement (kaizen) of industrial sites (genba) are compatible with capabilities for quick andaccurate preparations and actions to counter major supply chain disruptions.

1.2. Toyota’s Manufacturing, Kaizen and Evolutionary Capabilities
Before discussing Toyota’s actions and capabilities in times of supply chain disasters, let us firstoutline its capabilities in terms of competitiveness.
As for the revealed competitive performance, the main stylized facts concerning the post-War
world automobile industry can be summarized as follows.
First, a group of Japanese firms and genba demonstrated significantly higher levels of
productive performance in the world auto industry during the period 1970s-2010s (Womack et al.
1990, Clark and Fujimoto 1991, Holweg and Pil 2005). Second, high-performance Japanesemanufacturers, like Toyota, improved their performance in relation to productivity and manufacturing
quality faster and more consistently than other firms prior to the 1980s. Third, these high levels of
performance and continuous improvements stemmed from overall manufacturing capabilities rather
than from individual technologies or practices, such as robots and kanban techniques. Fourth, theToyota-style system was not created at once, but it gradually and cumulatively evolved over time,
mainly between the 1940s and 1980s (Cusumano 1985, Fujimoto 1999, Shimokawa and Fujimoto2009).
2This unit for TPS kaizen and education was first set up in 1970 as Operations Management Development Department (Seisan
Chousa Shitsu) by Mr. Taiichi Ohno. Its name changed to Operations Management Development Division (Seisan Chousa Bu), andthen back to Operations Management Development Department (Seisan Chousa Shitsu) in 2011. Yet, the functions of Seisan
Chousa Shitsu and Seisan Chousa Bu are basically the same, so we will use the name OMDD for both of these two organizational
units interchangeably in this book.

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As a result, while many Japanese electronics and digital industries lost international
competitiveness after the 1990s (e.g., during the post-Cold-War period), the Japanese automobile
manufacturers still have about 30% of the global market share, and Toyota remains one of the world’s
largest automakers.
Today, the manufacturing system at Toyota is recognized as an organizational capability (e.g.,a system of organizational routines that contribute to competitive performance) in manufacturing. As
indicated by the Toyota Group’s kaizen consultants, it consists of around 400 manufacturing routines,
all of which collectively improve and maintain fast, efficient and precise flows of value added (design
information, according to this book’s interpretation) to the customers. While the details of suchcapabilities are discussed elsewhere, a brief summary of key features is presented here (Fujimoto1999). We classify the firm’s capabilities into three layers: (i) ordinary manufacturing capability, as aset of routines to maintain a “good flow” of design information to the customers; (ii) kaizen capability,
as a set of routines to continuously improve that flow; (iii) evolutionary capability, as dynamic
capability-building capability for the evolution of routines, whatever they may be, including bothdeliberate and emergent processes (Mintzberg and Waters 1985).
Toyota’s ordinary manufacturing capability includes such routines as Just-in-Time (including
kanban), jidoka (automation with human intervention), small-lot or piece-by-piece production,
standard operating procedures developed by work group leaders, multi-skilling (operators carrying out
inspections, minor maintenance, and so on), multi-process operators (takoteimochi), poka-yoke(simple physical devices for preventing defects), visualization of problems (mieruka), building-inquality, self-inspection, continual monitoring of value-adding time ratios, and so on.
The company’s kaizen capability, regarded also as an organization’s routinized ability forcontinuous learning, is based on standardized practices of finding and solving problems. Such kaizen
activities may be carried out by workers, work groups/teams and their leaders, shop engineers (kojogijutsu-in) and other plant/process/equipment engineering specialists, individually or collectively.
Such kaizen activities used to be seen as a collection of small incremental process innovations
developed within each work group. However, recent field studies of some Toyota plants (Iwao 2017)
have revealed that kaizen is actually a mixture of process (and product, if necessary) improvements ofdifferent proportions and that shop floor engineers play the role of linking pins between the work
teams and the headquarters engineers, so that kaizen activities may help cope with both small and big
process changes. Whether Toyota’s kaizen capability can deal with not only small but also large-scalechanges, including recovery from major supply chain disruptions, is an important point in the context
of the present book. We will discuss it later in this chapter.
Toyota’s evolutionary capability is what makes it truly unique, setting it apart from mostother manufacturing firms, but this feature is not easily observed in the everyday workings ofcompanies. It refers to a firm’s distinctive ability to create a set of effective (e.g., ex-post, rational)
long-term organizational routines faster and earlier than its competitors. Generally speaking, however,
the evolution of an artificial system can occur along multiple paths that include rational decision
making, leaders’ visionary initiatives, organizational actions forced by historical imperatives, as wellas pure chance, and it is impossible to identify in advance which paths will emerge. The result of such
evolutionary paths can be “expected success,” “unexpected failure,” “unexpected success,” or even“unexpected success caused by previous unexpected failure,” but the actual outcome produced cannot
be predicted. A firm’s evolutionary capability, therefore, denotes its ability to build additional
capabilities anyway, whichever the paths taken and whatever the consequences may be (Fujimoto1999). And one of the entirely unexpected events that firms and genba will inevitably experience isthe next large-scale disaster.

5
Toyota has often been described by the media and researchers as a company that seldom
makes big mistakes, thanks to visionary leaders, deliberate planning and capability building that turnout to be mostly successful. In a sense, it is indeed true that the firm’s distinctive competence resides
in its ability to find and solve many small problems to continuously improve its competitiveness.
Nonetheless, like many other companies, Toyota has also made mistakes and suffered failuresin the past. What is remarkable, though, is the fact that, after almost every failure, it has managed torecover by mustering additional capability building, not only to solve past problems but also toenhance its overall competitiveness. This is indeed a manifestation of its evolutionary capability
building.
We can analyze Toyota’s resilience and preparedness vis-à-vis major disasters through theabove framework of kaizen capability and evolutionary capability. That is, if this company has
distinctive strengths not only in continuously improving its manufacturing competitiveness (e.g.,kaizen capability) but also in enhancing its capabilities after unexpected disasters (e.g., evolutionary
capability), we may infer that these two aspects share some common traits in terms of values,
mentalities, practices and organizational cultures behind them. We will investigate the above
hypothesis later in this and the next chapter by using our interview records.

1.3. A Brief History of Toyota Facing Major Disasters
Keeping in mind Toyota’s evolutionary capability, or organizational ability to learn from pastdisasters in preparation for the future, let us now move on to a brief history of how Toyota has faced
and coped with some major natural and man-made disasters causing disruptions to its supply chain.
We will first focus only on certain epoch-making ones.
Toyota’s parts supply disruptions can be classified according to whether the site of thedisaster was a supply route or a supplier’s production site, whether only one or many sites weredamaged, and so on. Yet, in most cases, the suspension of Toyota’s assembly lines lasted for just a
few days.

1.3.1. 1979 Nihonzaka Tunnel FireThe first major catastrophe that seriously affected Toyota’s supply chain was a man-made disaster
rather than a natural one, e.g., the fire that occurred inside the (outbound) Nihonzaka Tunnel along theTokyo–Nagoya Expressway on July 11, 1979. The tunnel was closed to traffic for about one week.
Complete restoration of the tunnel was finished 60 days later, on September 9. Since Toyota’s
assembly plants (not including consignment production plants) were concentrated around Toyota Cityat that time, the supply of parts from 65 companies east of the tunnel was severed, causing the
temporary shutdown of the Motomachi and Takaoka Plants. However, the latter resumed regular
operations on the evening of July 12. Resumption was relatively rapid because the suppliers’
production lines were not damaged.
1.3.2. 1995 Great Hanshin Awaji Earthquake (Kobe Earthquake)
The Great Hanshin Awaji Earthquake on the morning of January 17, 1995, was a large-scale local
earthquake (moment magnitude scale: 7.3) almost directly underneath the city of Kobe, in Hyogo
Prefecture. Although a tsunami did not occur, over 600,000 houses collapsed or suffered damage,over 7,000 were burned down, and the death toll was over 6,000. The economic damage to homes,
factories and infrastructures reached about 10 trillion yen (roughly 100 billion USD).
A relatively small number of the damaged plants belonged to Toyota’s parts supply chain,located mostly in the central part of Japan (Aichi Prefecture), but some were indeed affected. The

6earthquake caused suspension of operations at Sumitomo Electric Industries’ Itami Works (brakeparts) and Fujitsu Ten’s Kobe Plant (car audio), as well as at their suppliers’ plants located near thecity of Kobe. Because of this, 29 Toyota assembly plants and their consignment production
companies stopped operations on January 19 (Thursday) and 20 (Friday). However, normal operations
were resumed on the following Monday, January 23. The Ikeda (Osaka) assembly plant of Daihatsu, aToyota Group automobile manufacturer, was also affected, but supply chain damage was not severe
and it restarted operations the following day, January 18.
By working together with the affected suppliers, Toyota’s recovery assistance teams
significantly contributed to the above quick restoration, which will be described later in this chapter.
The strategy of dispatching recovery assistance teams to damaged plants was also adopted insubsequent major disasters.

1.3.3. 1997 Aisin Seiki Fire and Recovery in Alternative Sites
On February 1, 1997, a fire broke out at the Kariya No. 1 Plant of Aisin Seiki, one of Toyota group’s
major automotive parts suppliers, causing the destruction of its brake parts production line. Since
Toyota depended on this plant for the supply of 80%–90% of its brake components, such as
proportioning valves, operations at 22 of Toyota’s 30 domestic assembly lines were suspended forthree days. Normal operations were resumed on February 7 with reduced production volumes. Longterm suspension of production at the Kariya plant was unavoidable, since the production line wasentirely burned down, and restoration was completed only at the end of April. However, many small
manufacturing firms, with suitable machining capacities and located in the same region, voluntarily
responded to the Aisin crisis by offering substitutive production of a fraction of the necessary parts,
one after the other. Their contribution led to full resumption of parts supply and assembly plant
operations within a week—much sooner than expected (see Nishiguchi and Beaudet 1998, reprinted
as Chapter 5 of this book).
1.3.4. 2007 Chuetsu Offshore Earthquake
Two major earthquakes occurred in Niigata Prefecture along the coast of the Sea of Japan: theChuetsu Earthquake in 2004 (magnitude scale 6.8) and the Chuetsu Offshore Earthquake in 2007
(magnitude scale 6.8). The Chuetsu Offshore Earthquake, on July 16, 2007, caused production
stoppages at all of Toyota Group’s domestic assembly plants for three days from the evening of July
19. Indeed, all of Japan’s automobile manufacturers (12 companies) depended on the supply of pistonrings (approx. 50% domestic share) and other parts from Riken’s Kashiwazaki Plant in Niigata
Prefecture. Toyota dispatched about 500 of its workers (out of 650 people in total, including support
from other companies) to the disaster site to assist in resuming production at Riken’s plant (seeChapter 4 of this book). Production was restarted at Kashiwazaki on Monday, July 23, and Toyota
resumed normal operations on the same day. All other domestic car assembly plants were once again
operational by July 25.
1.3.5. 2011 Great East Japan Earthquake
On March 11, 2011, one of the largest earthquakes in the world’s modern history (magnitude scale
9.0) hit the North-Eastern part of Japan (Tohoku district). A tsunami wiped out communities andindustrial facilities across over 500 km2 of coastal areas and the accident at Fukushima’s No.1
Nuclear Power Plant caused a wide evacuation area to become inaccessible. These events were
described in Chapter 1.

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Toyota was building and expanding its assembly plants in the Tohoku district, ironically forthe purpose of dispersing its supply chains geographically, thus protecting itself from major
earthquakes that seemed imminent in the central part of Japan, where most of its plants and suppliers
operated. Toyota’s own plants in Tohoku were inland and consequently avoided major destruction,
but about 600 first-tier and lower-tier suppliers belonging to Toyota’s supplier networks were locatedin the affected area.
Toyota’s rescue and recovery teams reached or contacted many of the affected firms andplants relatively quickly. Yet, the problem was that, since the damaged area was unprecedentedly
wide this time, it proved extremely difficult to identify all of them, particularly the smaller, low-tiersuppliers. Even a month after the earthquake, a Toyota manager responsible for this task stated: “Weknow that over 500 of our suppliers were affected by the earthquake, but we still don’t know exactly
how many.” The number was in fact about 600, as mentioned above. Two months later, the company
had already narrowed down the number of the suppliers needing recovery assistance to less than ten,but the problem of invisibility of lower-tier suppliers was still unsolved.
In reaction to this, Toyota created a comprehensive supply chain database for the first time,collecting basic data about almost all the over 10,000 factories and firms in its supply chains,
including their names, locations, products, customers and normal transportation routes.

1.3.6. 2016 Kumamoto Earthquake
Kumamoto Prefecture is located on the island of Kyushu, in the Western part of Japan, which is
known for its relatively few earthquakes. On April 14 and 16, 2016, two large dislocation earthquakes(moment magnitude scale: 6.2 and 7.3), as well as several strong pre-shocks and after-shocks,
occurred in Kumamoto. The death toll of 50 was mainly due to the collapse of buildings and nearly
200,000 people were evacuated from their homes. Damage was rather severe but limited to certain
areas, unlike in the 2011 Great East Japan Earthquake.
One of the assembly plants of the production consignment subsidiary Toyota Kyushu was
located in neighboring Fukuoka Prefecture, but it was luckily intact. However, Aisin, one of Toyota’s
major suppliers, had a plant (Aisin Kyushu) in the affected area, and the latter facility was heavily
damaged. So Aisin had no choice but to borrow some space in the plants of its suppliers andcustomers to start temporary substitutive production of door parts, seats and other. Equipment anddies were quickly moved out of the damaged buildings, while half of Aisin Kyushu’s 700 employees
were also dispatched to the locations of substitutive production. The local communities wereconcerned that the plant may eventually be closed down, but Aisin Kyushu’s president, Mr. Takahashi,stated that it would be restored right there and production would soon resume. With help from Aisin
and other related companies, the situation was almost back to normal in October.
Another Toyota Group supplier affected by this earthquake was the Takeyama foundry. Less
than 30 minutes after the first big shock, Mr. Hirano, vice president and plant manager of Takeyama,
sent the following e-mail to Toyota: “I have never experienced such a big earthquake in my life. I’m
alive, but we need to repair our plant to restart production.”
Mr. Hirano organized and directed the recovery team and, by using Toyota-style kaizen
capabilities and the critical path method, the plant was reopened in the afternoon of April 15, about 17
hours after the first shock. However, a second, bigger shock hit Takeyama on April 16 and severely
destroyed the plant equipment. Mr. Hirano sent a second e-mail to Toyota, asking for help. The
following day, Toyota’s recovery assistance team of 17 engineers and technicians arrived at
Takeyama and a new joint recovery team was set up. Their recovery works were conducted in an8overlapped way, from the roof to the electrical system to the mechanical system and so on. By April
28, the Takeyama plant had regained its regular production levels.
Toyota Group’s initial actions to help their damaged suppliers, like Takeyama, were much
faster than, for example, in the case of the 2011 Earthquake, partly because the number of affectedsuppliers was smaller and partly because Toyota already had the aforementioned comprehensive
supplier database, which made its supply chains much more visible than in 2011.

2. INTERVIEWS WITH TOYOTA’S MANAGERS IN CHARGE OF SUPPLY CHAINRECOVERY
2.1. Some Cases of Rescue and Recovery
In order to shed light on the typical judgements, decisions and actions of Toyota’s leaders in charge ofsupply chain recovery, on October 28, 2016 in Toyota City, we performed a three-hour interview with
Mr. A, a former manager (TPS Shusa) of Toyota’s Operations Management Development Division.
After retirement from Toyota, Mr. A was still active as a TPS consultant to other firms and factories.
We will present three stories, one from 1991 and two from 1995, in which Mr. A helped Toyota’s
suppliers C, S and F recover from disasters. At the time of the disasters, Mr. A was in the position ofproviding TPS kaizen consultations to suppliers such as these in normal times. The record below,
taken from the 3-hour-long interview, closely follows the order in which topics were addressed during
the meeting. We think that the orderly nature of these narratives can be ascribed partly to Mr. A’s
excellent memory and partly to the fact that there seems to exist a standard way of thinking and acting
when facing problems like these at Toyota, whether they are daily kaizen activities or unexpectedsupply chain disruptions.

2.1.1. 1991 Nagoya Flood - Supplier C (Mr. A)
In September 1991, heavy rains hit the city of Nagoya and the plant of Supplier C, a manufacturer ofsprings, was flooded. Mr. A led the recovery activities.
“On September 19, after finishing my work at a Toyota plant, I heard that all of Toyota’s
assembly lines would stop that night. So I went to the Disaster Response Center of Production Control
Division and they said that the night shift that day and the day shift the following morning would besuspended due to a flood at Supplier C’s plant, which was located next to a river.
I wondered if electrician had already been sent to C’s site, because I knew from pastexperience that electric items get damaged and back-up motors and other electrical equipment areneeded in times of flooding. I had experience working at an old Toyota plant that had been built in
1936. When there were heavy rains, sometimes water would leak from the ceiling onto our equipment
and create big problems.
But the staff there did not know this and asked me why. So I told them ‘If flooding happens,send in electricians.’ Mr. U of the Production Control Division heard this and said ‘Then you should
go there now.’ So I went to Supplier C that evening.
By the time I reached C’s plant in Nagoya at around 6:30pm, the water had receded but notcompletely. At peak time it had actually come up to above the knee. I looked at the topography andunderstood that this was the only plant that had been damaged in the flooding. I asked C’s president,
who was already there, ‘Please, tell me how many motors (of the production equipment) were
submerged.’ But no one from company C could answer, and someone said ‘Maybe less than 20.’

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So I said, ‘OK, we will need 15 people to cope with 20 motors. How many electricians do
you have here at C now? I will ask Toyota to immediately send the rest.’ They said ‘None of them
have arrived yet, but we think we can handle this, so we don’t need to bother you by making you send
your rescue team.’ I replied, ‘No, this is a problem not only for your company but for the entire
automobile industry.’ Indeed, this plant supplied various other automakers, although Toyota’s share
was the largest. This plant made springs used in vehicles and, if production was not quickly restored,
many automakers would also have to shut down their assembly lines. So I went ahead and asked
Toyota to quickly dispatch 15 people who knew about electrical equipment.
Then I asked them to take me to the plant. It was completely dark and only flashlights could
be used but I determined, upon first inspection, that at least 70 or maybe 100 motors were submergedand 30-40 or more control panels had been damaged by the water. So I called Toyota again and said,‘Sorry, I said 15 people, but now I have seen the genba and found that we need at least 100
electricians. So, please, send 85 more.’
But somehow there was a misunderstanding and one Toyota plant alone sent 85 people. In
total, 185 people soon arrived from Toyota. Sending back 85 workers is awkward, so the whole teamof 185 began working on recovering this plant’s production. In fact, it turned out that there were 300
motors that had been under water.
After Toyota’s team came, we set up the assistance center in a corner of the plant andorganized some units under it, each of which was in charge of a Toyota plant that received springs
from this plant. The head of Supplier C’s maintenance department had arrived at the plant by then, so
I asked him to take charge of the assistance center, explained the organizational design, and urged him
to work with us and talk to us whenever problems occurred. We also made sure that people leaving
the site would hand their tasks over to others and that those who finished their jobs would move on to
help others.
Each member of Toyota’s assistance team had different types of expertise. For example, someof the machines in C’s plant were made in Germany and the circuit board drawings for their control
panels contained markings that were seldom used in Japan, including at Toyota. But we can usuallyfind people with the appropriate skills through discussion and communication among team members.
In this case, I happened to know that such a man had come to help, so I explained, ‘There is a man
here called X from Toyota’s plant Y. Find him and tell him to come here, and then ask him about
these German drawings. He will know everything about them.’ In this way, we can tell who knows
what from our many conversations within and across the teams.
Toyota’s Production Control Division had to decide whether to reopen its assembly lines
from the night shift of Friday September 20 (the day after then flooding). That decision would, ofcourse, affect all of Toyota’s suppliers. News came that they had decided not to reopen, so the target
was to make Supplier C’s production lines and Toyota’s assembly lines reopen by Monday September
23, as we had no operations on Saturday and Sunday anyway.
During such disaster recovery activities, Toyota’ principle is to go to the damaged locations
first, but to fix the production lines for Toyota last. So we fix other customers’ lines first. If the lines
for Toyota are about to be recovered earlier than others, then we work on the other lines to help themreopen first, and then come back to our lines. This principle has remained unchanged for a long time,since the big flood caused by the 1959 Isewan Typhoon. We heard about such episodes over and overagain from our seniors in the OMDD, originally headed by Mr. Taiichi Ohno, the creator of TPS. So it
is our unchanging principle to fix the suppliers’ Toyota-dedicated production lines last.
At Supplier C, we fixed the lines dedicated to other automakers, the mixed production lines,
and then the lines dedicated to Toyota. If it looked like recovery of the Toyota lines would finish first,

10
we would go and help with work on the other lines to ensure that Toyota’s line would be the last to
recover. After the reopening of C’s production lines on Saturday and Sunday, production wentsmoothly and no shortages occurred at Toyota’s assembly plants when they reopened on Monday.
Lines of other automakers were also able to run at regular production levels on Monday, September
23.
Since we were at C’s plant anyway, we did some kaizen activities to improve their up-time
ratios, which in turn reduced overtime and increased throughput.”

2.1.2. 1995 Great Hanshin Awaji Earthquake - Supplier S (Mr. A)
On the early morning of January 17, 1995, a huge earthquake almost entirely destroyed Kobe andother nearby cities. That day, Mr. A happened to be visiting a location near Kobe and he unexpectedly
became the leader of the advance team helping the recovery of the affected suppliers. He stayed in thearea for four days, mostly to carry out diagnosis for the main team reporting to Toyota and initialactions for two suppliers, S and F. Supplier S was a large, independent supplier of various
components and its damaged plant mainly produced automobile brake parts and sinter metal parts. Mr.
A stayed at Supplier S until January 18.
“On January 17, 1995, my original plan was to visit Daihatsu, a Toyota Group automakerlocated in Osaka, and then go to Kobe to visit supplier F. So I went from Toyota City to Osaka on
January 16 and met up with the head of Daihatsu’s Operations Management Development Division(OMDD) in Osaka the evening before the earthquake. The Great Hanshin Awaji Earthquake hit Kobe
and other cities at 5:45 am on January 17. My hotel was intact, so we went to Daihatsu’s Ikeda plant,
which is close to Kobe, at around 10:00 am and found that the plant had been severely damaged by
the earthquake. Public and ordinary telephones were almost unusable and there were not many cell
phones at that time, but we discovered that the dedicated line between Daihatsu and Toyota was stillopen.
I called Toyota’s Disaster Response Center in Production Control Division to check in. The
head of the Production Control Division, Mr. U, picked up the phone and asked me, ‘Where are you
now?’ I explained that I had come to visit Daihatsu and there had been a big earthquake. Then Mr. U
said, ‘I’m glad you’re there. We have been having a hard time getting information from Osaka andKobe. Since Toyota’s help team is already on its way to Daihatsu, why don’t you go and see thesituation at companies and suppliers near Daihatsu?’
I asked Daihatsu for a car and a driver and at around 2:00-3:00 pm went to check on nearby
companies and suppliers. Some were clearly going to be able to recover without too much difficulty,
but I found that Supplier S’s plant was severely damaged.
I met a senior managing director of Supplier S and asked him to show me the plant. He said
that the only components that S was supplying to Toyota from that area were brake parts. They were
initially reluctant to show me all three brake-parts plants, but I insisted and they agreed. Most of the
production equipment had either been shifted off its base or had fallen over. It was going to be a big
recovery job, so I said, ‘Now I will call Toyota and ask them to dispatch a recovery assistance team toyou, OK?’ I also knew that we could ask Daihatsu to use its dormitory as Toyota team’s sleeping
quarters, so I told the people from S that they did not need to worry about finding accommodation forus.
Based on my observation of the damaged plants, I told them, ‘It will take three days to movethe machine tools back to the production lines and fix them, but we will be able to start trial
production then and I believe the product quality will be OK.’ The managing director was surprised,‘Three days? No way. It usually takes three months to build this type of production line. Even if

11Toyota can dispatch enough outstanding people to help us, it will take three weeks. Absolutely noless.’ So I said, ‘OK, OK, we’ll manage. Don’t worry.’ But I asked him to give the buses transporting
Toyota’s recovery assistance teams free access to the plant and to write a collective entry permission
form for all the names on the list sent to S in advance, to speed up the recovery activities. If they did
this, I assured them that it would take a maximum of three or four days to start production trials. It
turned out that, with Toyota’s help, they managed it in less than three days. This is Toyota’s speed ofmaking changes at normal times as well.
I then went back to Daihatsu at around 5:00 pm and reported to Toyota’s head office thatsome suppliers were okay but Supplier S needed help. I requested that the recovery assistance team bedispatched to S. I informed Toyota of my estimates regarding the number of people to be sent andtheir expertise, as well as the necessary tools, materials, types and sizes of pipes, and so on. Since S’s
plant buildings could not be accessed by heavy equipment and did not have beams, which meant that
we could not use chain blocks to lift heavy equipment, I also asked them to bring hydraulic jacks and2-meter long bars from Toyota. I can usually give such instructions without taking notes, because
experience has taught me to memorize these features.
Since S is an independent supplier, other automakers also came to offer their help. Apparently
they were told that a special team from Toyota had arrived, a team that trains daily to be ready for
emergency recovery efforts. In fact, the team that had come was made up of regular people from a
mixture of different plants and divisions. Such people had had their skills honed by dealing quickly
and effectively with the unexpected situations that occur in plants every day.
People from other companies tend to say, ‘I’m a pipe fitter or electrician, or I’m here to moveheavy equipment.’ At Toyota, we are multi-skilled during recovery efforts too. Even when something
does not fall within a person’s specialization, the person will do the job if he is able to do so. For
example, a piping specialist will take the screws off a control panel without waiting for an electrician.
In this way we all cooperate in getting the job done.
Toyota’s team members will discuss the night before, in this case at the Daihatsu dormitory
where the recovery team was staying, how to proceed the next day, such as who does what and whereat the site being recovered. Then, upon arrival at the plant in the morning, everyone knows where to
go and can immediately start recovery activities simultaneously. In this way, there is no need to standaround and decide things after reaching the plant. Other firms’ teams tend to decide to do their work
sequentially, like piping first and electrical work next. So, while the piping work is going on, the otherteam members have to remain idle.
Nevertheless, our principle is consistently the same: ‘recovery of the production lines for
Toyota should be the last activity that we complete.’ So, if other firms’ recovery teams come in, westay away from their lines but, if we are about to finish our recovery work ahead of them, we help
them finish first.”

2.1.3. 1995 Great Hanshin Awaji Earthquake - Supplier F (Mr. A)
On Wednesday, January 18, Mr. A was told by Toyota’s head office to go to another large
manufacturer of car audio components, Supplier F. The plant was severely damaged and operations
ended up having to be stopped for four days. Mr. A stayed at Supplier F until January 20. He
concentrated mainly on verification of employees’ safety, provision of food, water, relief supplies andaccommodation, as well as preparation for the arrival of Toyota’s recovery team.
“The day after the earthquake, January 18, my plan was to go to Supplier S with Toyota’s
recovery assistance team and work with them. But I was instructed by Toyota’s head office to go to
Supplier F instead, a manufacturer of car audio equipment near Kobe’s most damaged area. Not very

12much information had come in from that supplier, but it seemed that some major problems had arisen
there. So, together with another member of OMDD, who had arrived with the recovery assistanceteam from Toyota, we left for Supplier F using two vehicles lent to us by Daihatsu, along with two
drivers.
It took a long time to get there, since many roads were impassable. We arrived at 7:30 pm andwith the power outage it was completely dark. It was now a day and a half after the earthquake. When
we arrived, there were only two people in the plant, a security guard and a general affairs manager.
They said that the surrounding area had been so damaged that only about ten out of the plant’s 2400
employees had been able to make it to the site at that point, including Supplier F’s president.
After looking around the plant, I concluded that the situation was serious and Toyota would
need to dispatch a recovery assistance team. The first issue that I had to consider was finding food andaccommodation for the incoming team. There were no suitable sleeping areas inside the plant, but I
found a corner of F’s head office that could be used for that purpose.
Electricity came only to the head office, not to the plant, and the water supply was entirely
stopped. Almost all of the production equipment had fallen over. Solder had flown out of the pots andcompletely solidified. I reported to Toyota’s head office that this was not a situation in which SupplierF could immediately restart operations. So Toyota decided to stop operations at all of its vehicle
assembly lines from the night shift of January 19. I also told the head office to send food and sleeping
bags and explained that the food was not just for our team but also for F’s employees helping in therecovery.
We needed close communication between Toyota’s Disaster Response Center and Supplier
F’s center, but the telephone lines were down. So I also asked for a few wireless phones, which werevery big back in 1995 and could be used only by continuously charging their batteries.
This was a completely different situation from the 1991 Nagoya Flooding (Supplier C). The
areas around the plant were virtually destroyed and many of its employees had to take care of theirfamilies first. Disruption of the transportation network prevented those living in distant places fromcoming to the plant. There was virtually no information about who and exactly how many of theplant’s employees were okay. As a first measure to collect this information, a notebook was put up at
the gate to gather data on who had made it to the plant.
Companies generally have quick-response teams, emergency procedures, and written rules
about confirming that employees and their families are safe, checking who comes to the security gate,
designating the head of the disaster response team and so on, but such plans seldom work as expected
when an actual disaster happens. In this case, Supplier F’s designated head of the response team was
not present and no one was confirming the employees’ safety. Even those who managed to come tothe plant were deeply concerned about their families and neighbors, which sometimes prevents themfrom making accurate decisions and taking quick action. In chaotic post-disaster situations, such as
this one, it is often best if the recovery assistance teams coming in from the outside work together
with the people at the site to be useful.
So I suggested that F’s workers who managed to reach the plant use whatever means they
could, including spending all day if necessary, to try and make phone calls, to check on the conditionof other workers and their families. The areas surrounding the plant were severely damaged, so I
proposed chartering busses for those who were farther away who could come but had trouble getting
to the plant due to impassable roads. This worked and little by little the number of employees who
could make it to the plant increased.
Moreover, we had to make sure that there would be enough food for the employees arriving at
the plant, as the food supply situation in the surrounding areas was not good. Relief provisions were13
coming in from all over Japan, but they seemed to remain piled up in schoolyards, while theprefecture and city bureaucrats were apparently discussing how to distribute them equally among theresidents. To me this was a waste of time. I wanted to simply allow whoever came to take as much as
they need, while quickly and frequently replenishing our stocks.
Therefore, I contacted Toyota’s head office and told them to send as many provisions as
possible. But it would have taken Toyota’s trucks 20 hours to travel the 300 km to Supplier F due totraffic jams. So I wondered if we could use Toyota’s helicopters to bring in the supplies in regular 50minute trips. We eventually found a place nearby that could be used as a temporary helipad, so stock
replenishment started to run smoothly. We made it clear that water and relief provisions should be
distributed not only to the employees of F but also to people in the neighboring communities. People
from F were initially trying to distribute the provisions equally, but I suggested allowing everyone totake as much as they wanted, since the helicopters were delivering fresh supplies.
As for drinking water, the tanks of potable water at the head office were starting to run low,
so I asked Toyota’s Disaster Response Center to dispatch 10 water tank trucks. When they arrived at
F, I made sure that they would remain in the Kobe area for a while and keep providing water to the
nearby communities as well as to F by hauling water from a place in Kobe where they could fill up.
Regarding water for flushing toilets, fortunately the sewage system was working. We happened tofind out that an underground tunnel in the plant had been filled with water from the canal during theearthquake, so we asked the employees to take buckets of that water and use it for flushing.
Here follow some comments by Mr. H, former Senior Technical Executive of Toyota, OMDDManager and a senior of Mr. A, regarding the latter’s contribution during the 1995 Kobe Earthquake.
“The lesson we learned from the two huge earthquakes, the 1995 Great Hanshin Awaji
Earthquake and the 2011 Great East Japan Earthquake, is that, at all costs, we have to let the people
who can make judgments go immediately to the affected genba. By observing the genba directly, they
can assess whether the damaged process is approachable, the safety of the employees, human andphysical damage to the surrounding communities, as well as damage to equipment, buildings andinfrastructures, including electricity, water and gas systems. In the aftermath of the 1995 Earthquake,
Mr. A did this job very well. For example, he told us that heavy machines could not be used at the
genba, so we would have to bring one hundred 2-meter long bars and hydraulic jacks to move things,
and this advice helped us a lot.”

2.1.4. 1995 Great Hanshin Awaji Earthquake - Suppliers O and S(Mr. H)When Mr. A completed his job with the advance team and left Kobe, Mr. H (introduced above) andMr. Asakura came from Toyota to Kobe and started to lead Toyota’s recovery assistance operations
for the damaged suppliers in the Kobe area. Below are his interview notes concerning Supplier O,
which is Supplier F’s metal parts subcontractor. He also refers to the operation to retrieve dies at
Supplier S.
“I entered Kobe’s disaster area early in the morning of January 19, 1995. It took us 20 hours
to get there by car from Toyota’s headquarters. We saw heaps of rubble and people crying, whichreminded us that, in cases of major disasters such as this one, we must take care of local communities,
including workers, before focusing on production recovery. If we hadn’t gone to the actual place
where the disaster happened and seen the devastation for ourselves, it might have been easy to justthink about restoring production and ignore the surrounding community.
When the earthquake hit Supplier S, for example, the plant was in operation and its managing
director, who lived nearby, immediately came and issued an order that all employees should go home

14
at once, although his house had been completely destroyed. We need someone who can make such
critical decisions. Looking after the communities is mainly the work of the public sector, but, when
one of our recovery assistance teams reaches the gates of a damaged plant, our first priority is to help
the local people, who have lost their homes and have no food or shelter.
Supplier S had about 1,500 dies for sintering in its automated warehouse, which had halfcollapsed in the earthquake. Without them, its sintering production line would have to stop for half ayear, so we discussed how to retrieve them. People at S said it would be crazy to walk into such adamaged building and Toyota’s executives also urged us to stop, as it was too dangerous. But I
decided to go ahead anyway, proceeding with great caution and leading the operation in person frominside the building. However, when I approached the warehouse with Toyota’s team, I saw that S’s
managing director, Mr. Fu, was already inside, leading the die retrieval operation. So I told our
specialist team (from San-Ei Kogyo Co., Ltd.) to stand by and move in quickly to rescue them if an
accident looked imminent.
In the end, the dies were retrieved safely in one day but we had a hard time identifying which
die was which, since serial numbers are engraved on the initial dies but not on replacement dies. We
worked all day and into the night to solve the puzzle and reproduce the original series of 1,500 dies
ready for use.
Later, when we arrived at Supplier O, our second-tier supplier and a subcontractor of SupplierF, its president was standing in front of the gate and did not let us in, probably fearing that we mighttake away their stamping dies for substitutive production. I asked him if the employees were safe, andhe said he did not know. So I said, ‘Why are you standing here without confirming your employees’safety?’ I told my team to carry in all the provisions that we had brought for them and said to him,
‘Give these to your employees. We won’t take away your dies. We came to recover your productionlines here.’ The president then understood our intentions and with tears in his eyes politely let us in.
We always have to give top priority to the recovery of the damaged plant, as opposed to hasty
substitutive production. When Toyota’s recovery team arrives at a damaged site of a small company,
its people, this president for instance, might be afraid that we have come to take away their dies. One
of my bosses told me that the dies still had to be moved to another location near Toyota’s plants, sothat Toyota would not have to stop its production lines, but I insisted that the dies belonged neither to
us nor to F and that we would fix them here.
The earthquake had created a large crack on the floor of O’s plant, so I asked that a concrete
mixer truck be dispatched from Aichi Prefecture where Toyota’s head office is located. We filled in
the crack, but then aftershocks came and it opened up again. It is important to work hard to keep on
taking care of such problems.
Supplier O’s dies were stored in an automated warehouse, which is quite wise in normal times,
but when a disaster happens automatic stackers often get broken. So the workers have to remove thedies manually, one after the other, by climbing up to the top and moving them down. Working frombelow is too dangerous because anything can fall from the broken racks at any time.”

2.2. Toyota’s Principles and Way of Thinking
This section lists Toyota’s principles, practices and ways of thinking at times of disasters, based oninterviews with Mr. H, former Senior Technical Executive of Toyota and OMDD Manager, whoalready provided some comments above, and Mr. N, former head of OMDD at Toyota. Theinterviews took place on October 28, 2016, at Toyota’s Headquarters in Toyota City.

15
2.2.1. Capability and Leadership The capabilities needed for recovering from disasters are the same as the capabilities forproblem solving and kaizen (continuous improvements). (Mr. H)
 Companies need to develop human resources who can make the right judgments based on
genba (real place) and genbutsu (real things) and take on strong leadership roles regardless ofthe harshness of the situations that they face. Such leaders can be trained through daily
problem solving or kaizen in manufacturing genba. (Mr. H)
 Having manuals and standard procedures for recovering from disasters is important, but they
have to be as simple as possible. How can you read a detailed manual at a disaster site? (Mr.
H)
2.2.2. Toyota’s Principles about Priorities
 We have experienced many serious disasters in the past, learned from them and discussed
how to respond to them in the form of a Business Continuity Plan (BCP). What is unchanged,
however, is our order of priority: first, human life; second, recovery of the communities; andthird, recovery of production. (Mr. N)
 As BCP awareness prevailed in Toyota, our principles about what to prioritize—human life,
community and then production—also became prevalent in our company. In other words, we
provide rescue and help to the communities around the damaged plants. What is important is
to have a sharp sense of priority. (Mr. H)
 When a supplier’s plant is damaged by a disaster, Toyota gives top priority to the recovery ofthe damaged plant itself. If this is too difficult, priority is given to an alternative plant of thesame supplier. If this also proves too difficult, finally we might consider switching to othersuppliers as a last resort. (Mr. H)
 The mindset that production recovery or supply recovery should be given the highest priority
did exist to a degree at Toyota’s headquarters in the past, but now consensus on this order ofpriority—human-community-production—is well established at Toyota. (Mr. N)
2.2.3. Flows, Not Buffers
 When Toyota stops its production lines after a disaster, the mass media criticize this as aweakness of Toyota’s buffer-less system. Then, when we achieve a quick recovery, they
praise us saying the Toyota Way is great. Even if we had plenty of buffer inventories, muchof it might become destroyed in a disaster. If we shorten lead times through the Toyota
Production System, we can quickly reopen our lines and resume production even if all the
product inventories were somehow destroyed. The key is simplifying the flow andestablishing a pull system so that we can tell which item to produce first when supply chainsare disrupted. (Mr. H)
 No matter how much inventory you have, a disaster can destroy all of it in an instant. In order
to be able to quickly replenish inventory, is important to develop capabilities for small lot
production at suppliers. We need capabilities for quick recovery of disrupted lines and formaking production lead times shorter. (Mr. H)
 Supply chain management will become increasingly important. Even when we have two firsttier suppliers of a certain part, there may be only one second-tier supplier. A supplier database
was created after the 2011 Tohoku Earthquake but then we discovered, after the 2016

16



Kumamoto Earthquake, that we had only one supplier of certain metal parts. We need to
improve this system. (Mr. H)
We need to understand our supply chains more accurately and shorten them. Also, if we canhalve our fixed costs for equipment, we can have two lines in separate locations without any
cost penalties. (Mr. H).

2.2.4. Human Resource Development
 Excessive division of labor can turn into a source of weakness, because skills become
dispersed and specialized employees tend to do only what fits within their narrow skill set.
We need to develop human resources who can act on what is really happening at actual sites(genba-genbutsu). We should continue active job rotation of our people, involving the
Operations Management Development Division (OMDD; Seisan Chousa Bu) as well. Mr.
Koda, who did an excellent job in the aftermath of the 2011 Earthquake (see Chapter 9), hadgone through two years of training at OMDD. (Mr. H)
 What is important in BCM/BCP is human resources development. We need people who canprovide quick and accurate judgments/decisions/actions in times of disaster and we can train
them through daily problem solving. Kaizen is a series of small but frequent problem-solving
activities and those who can do this consistently will develop the ability to instantly react tobig changes, like disasters. Doing overhauls of production equipment by ourselves instead ofoutsourcing it to specialists is a good example of such training. (Mr. H)
 After the 1995 Kobe Earthquake, we documented our experience. Yet, what proved useful insubsequent disasters were not the documents themselves but those who had participated in the
documentation process—people who could judge, decide and act quickly without seeing any
documents. We certainly need rules and standards and organizations, but what is mostimportant is having capable people at the core of the process. (Mr. H)
2.2.5. Human Networks
 We usually send an advance team first and then a main recovery team, but the interval
between the two is becoming shorter, because Toyota now has a clearer picture of who isgood at what. We have a list of potential team members with special skills in production
technologies, maintenance and so on. So, for instance, we can easily identify the people in acertain plant who can use long bars for moving heavy equipment. Our company’s mindset has
become such that, if the recovery team asks that a specific person be dispatched to a damaged
site, almost no manager above that person will say no. Actually, after the Kumamoto
earthquake, one of our managers was reluctant to dispatch a key person on his line and said,‘Without Mr. T our line would stop,’ so I replied, ‘Don’t worry, your assembly line will stop
anyway if you don’t send Mr. T!’ We are still fighting against the “my line first” mentality.
(Mr. N) Once our skilled team members reach a damaged site, they get back to us saying, ‘Send Mr. X
from Plant A’ and, when X arrives, he says, ‘If we can get Mr. Y, then we can fix thismachine together.’ This network of people who know from memory who can do what works
very well. Formal organization charts do not. (Mr. H)
 There is a firm called San-Ei Kogyo Co., Ltd in Aichi Prefecture, to which Toyota has been
subcontracting tasks like moving, installing, maintaining and dismantling its heavy
production equipment, especially cutting and stamping machines and lines. This has been

17
going on for so many years, almost since the beginning of our company. San-Ei’s tasks
require the use heavy machines, which are indispensable in recovery missions, and we would
not have been able to provide recovery assistance in past disasters without their help. So it
would be useful to take stock of their skills in terms of who can do what and of our
production equipment shops that handle heavy equipment. Additionally, we need tostrengthen our training in the use of traditional manual tools, such as jacks, chain blocks, longbars and rollers, because heavy machines cannot always be used in damaged plants. (Mr. H)

2.2.6. Physical Robustness
 Some say that we should use anchor bolts to fix the production equipment to the floor as ananti-earthquake measure, but others say that this hampers flexible line layout changes. We
need to discuss the issue further. We used to do anchor bolt placing, and the Naka plant ofRenesas started to do it again after the 2011 Earthquake. We think that we do indeed needanchor bolts, even though they must be pulled out every time equipment is moved. Our
production equipment has become smaller and lighter, and we call this ‘simple-slim’. These
compact machines are easier to anchor because they have greater rigidity (e.g., stiffness). We
are also doing seismic strengthening of our buildings. In the case of Renesas’s Naka Plant, theequipment fell down but the building withstood the impact of the disaster. (Mr. H.)
2.2.7. Recovery or Substitution
 About 600 suppliers and plants in the Tohoku district were affected by the 2011 Great East
Japan Earthquake, but we could dispatch our recovery teams to only about 200 of them. In
many cases, both the buildings and the equipment were almost intact and we did not need to
go to those sites. On the contrary, some other plants had tragically been washed away by thetsunami, so all we could do was find other plants for substitutive production. (Mr. N) Our stance is to move in quickly to help our suppliers. Our task is either to recover thedamaged plants and equipment or to switch to substitutive production in other plants of thesame supplier. But even when we opt for substitutive production, we always try to achieveboth recovery and substitution simultaneously and start receiving shipments from the plantthat reopened first. When both plants are ready, we buy parts from both for a certain period.
(Mr. N).
2.2.8. Concentration and Dependence – The Case of the Kumamoto Earthquake Before the 2016 Kumamoto Earthquake, we did not know that there was such a highconcentration of parts suppliers in that particular area. We were then informed that, as part ofits BCP, one of our major first-tier suppliers, supplier A, had decided to disperse its plants
and suppliers, since they were concentrated in the central part of Japan, which is a region thatis said to be prone to major earthquakes. They chose Kumamoto Prefecture in Western Japan,
which was known as less earthquake-prone, although there is a big volcano there. Deeming ita safe location, Supplier A moved all its production lines for some parts to Kumamoto, as
opposed to splitting them between two areas. Unfortunately, it was this very place that got hit
by the 2016 Earthquake. The damaged lines were rather simple lines for assembling doorclosing mechanisms, so substitutive lines were set up at a nearby warehouse while thedamaged plant buildings underwent restoration. (Mr. N).

18
2.2.9. Supply Chain Database After the 2011 Earthquake, Toyota established a comprehensive supplier database, so now we
can do mapping of the affected suppliers much faster at times of big disasters. When acatastrophe occurs, the people in Toyota’s Purchasing Division and OMDD will get together,share information about the damage that has occurred and predict recovery lead times for theaffected suppliers and parts. All the necessary information can be easily visualized (mieruka),
such as the location of each supplier, what it produces, the damage that it suffered, as well as
its recoverability and production substitutability. (Mr. N).
 When Toyota teams reach second-, third-, and lower-tier suppliers after a disaster, they often
say, ‘Why have you come here? We have no business transactions with you.’ First-tiersuppliers sometimes do not tell their second-tier suppliers where their parts eventually end up.
So, we have to explain that their products are actually used in Toyota models before we ask
them to let us into their plant. This initial rejection is a very good lesson for those people withthe arrogant assumption that they can do anything if they say that they are from Toyota. (Mr.
N)
2.2.10. Truck Routing Instructions
 Major earthquakes destroy both factories and roads. So, when the recovered or substitutive
plants restart parts production and shipments, we have to provide instructions on which trafficroutes to choose. After the 2016 Kumamoto Earthquake, we used our portal, P-LISS, toidentify which roads were cut off and which were undamaged. We were thus able to give thesuppliers routing instructions by means of colored maps displayed on their vehicles’
navigation monitors, indicating open routes in green, disrupted routes in orange and uncertain
routes in yellow. In the past, we were not able to give suppliers real-time routing informationin emergency situations, but now transportation of parts supplies has become much morereliable thanks to this improved system. (Mr. N)
2.2.11. Parts Inventory Checking at Suppliers When the 2016 Kumamoto Earthquake hit, our system was not collecting suppliers’ inventory
information. Toyota monitors the level of in-transit inventories between a first-tier supplierand its plants through the JIT kanban system, but we knew nothing about the affectedsuppliers’ own inventory levels. We had to physically go to all the genba in the damaged
region to gather this information, so we needed a large team, including people from thePurchasing Division, Operations Management Development Department (OMDD), andspecialists borrowed from our plants. No matter the situation, what is important is to gather
real-time, accurate information on the conditions of both suppliers and roads. After the 2011
Earthquake, for example, our purchasing people were able to contact some of our suppliers byphone using their established communication channels. However, it is natural for suppliers togenerally be reluctant to give bad news. The contact at the supplier might have said ‘I think
we will be OK’, and our purchasing staff would have reported to our managers that the
supplier in question was going to recover pretty quickly. But when we actually got to thegenba, there were cases where the plant had been completely destroyed. How can we makeaccurate judgments on important matters without seeing the genba? Now, our purchasing
people always go to visit our suppliers’ sites when a disaster strikes. (Mr. N)

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2.2.12. Members of the Advance Team The advance teams sent to disrupted suppliers should include staff from OMDD, as well as
Purchasing, Telecommunications (IT), and Plant Engineering (PE). We, the operations people,
can assess the production situation on the spot, but we do not know much about buildings.
The PE people can provide diagnosis and rapid recovery of buildings and they can assess,
together with the supplier, whether the plant buildings can be used as they are or whether theyrequire repairs. Additionally, they can gather the necessary materials and resources for quick
restoration. The telecommunications specialists are also very helpful in this regard. Based on
our experience during the 2011 Great East Japan Earthquake, we now make sure that theadvance team sent to a damaged supplier includes people not only from Operations andPurchasing but also from Telecommunications and Plant Engineering. There are now nosupermen like Mr. H. who can cover everything, including assessing the state of buildings. So
we have to do it as a team. Too much division of labor has produced a situation where there
no longer are any such people. (Mr. N)
2.2.13. If a Disaster Hits Toyota Directly We have accumulated a great deal of experience and knowledge about helping suppliers
recover from disasters, but we have yet to deal with a major disaster hitting the heart of
Toyota’s production and supply chains in and around Toyota City. We do not have direct
experience with such a case. (Mr. H)
 If this happens in the future, we will have to recover our own plants while helping damaged
suppliers at the same time. (Mr. N)
 In such a case, we will receive support from the recovery teams of our group companies in
Kyushu (Western Japan), Tohoku (North-Eastern Japan) and other areas. It will be achallenge to coordinate such a recovery effort, but we have established an organization tohandle such a situation and are training for it. (Mr. H)
2.2.14. Preparations for Future Disasters
 We have to make sure that our anti-disaster or disaster-mitigation preparations are making
progress. We still have much to do. We have to teach our operators how to stop the machines
in case of big earthquakes. Vertical piping stretching down from the ceiling of plants is stillcommon, but in the 1995 Earthquake this caused many problems, since it easily comes loose
and swings. We have to make the piping safer. Also, are the evacuation routes open? Are any
cabinets, lockers or vending machines blocking the way? If the electricity is cut off and theemergency lights do not work, the plants are in complete darkness, so evacuation routes
should be marked with fluorescent paint. (Mr. H)
 In wide-area disasters, like the 1995 and 2011 earthquakes, public rescue teams must focus
not on the damaged production lines but on the affected communities first. So, companies
must take into account the possibility that heavy machinery may not be able to reach thedamaged sites. That is why we need to be familiar with manual tools and techniques, such as
jacks, chain blocks, long bars and rollers for moving heavy equipment. We need training andlicenses to be able to work with such things. (Mr. H)
 Confirmation of employees’ safety still takes too long. Digital systems may not always workin times of crisis. Basic methods are simple and fast. Sometimes they are the most reliable too.
For example, you can train people to pay attention to who is immediately before and after

20







them when escaping from a building. Once people get outside, they can check to make surethe person before and after them also made it out. (Mr. H)
It is also very important to make preparations to avoid fires during earthquakes. Where is theload center located? Who is in charge of periodical functional checks on the emergency
shutoff of the gas system? Rather than outsourcing this task, the employees should know how
to do it themselves. Overspecialization is the enemy of careless explosions and fires. Are
workers well prepared for effective emergency fire-fighting? I was impressed to see that in
American plants all the fire extinguishers are stored by the entrance. When I went home to
Japan, I saw a fire extinguisher on the floor near some painting equipment. I said to theworker, “C’mon, who’s going to be able to come over here to get the fire extinguisher in the
middle of a blazing fire?” (Mr. H)
Who issues the order to leave the building when a disaster hits a plant? Who confirms that theemployees got home safely? There is probably a manual detailing who is in charge, but theperson may not be there at that time. If a disaster occurs during the night shift, a group leader
on the shop floor must clearly be given the authority to issue the order to go home. (Mr. H).
Are you well prepared for quick recovery of equipment and lines? Can you recover the dies?
Do all the dies bear a serial number? Using automated warehouses, especially for storing
heavy dies, is not recommended. Are equipment and devices that are difficult to recover ifsubmerged, such as chip mounters and liquid chemical pumps, located high up, for instanceon the second floor? The issues are different from plant to plant, but simulations andpreparations should be carried out well in advance of actual disasters, because what is notrecognized as a problem in normal times often becomes the cause of major problems in theaftermath of disasters. (Mr. H)

2.2.15. Different Measures in Different Situations
 Technologies and businesses are advancing and every disaster is different from the previous
one. So, we have to be flexible in choosing the best methods to help the affected suppliers.
For example, supplying PET bottles of drinking water by helicopter may be faster thandispatching water tank trucks these days. Convenience stores have extensive networks inJapan now, so their bento (packed lunches) may be more convenient than setting up
emergency cooking centers. We have cell phones and the Internet as well. But these advanced
technologies and systems may not always work, so we also need to possess skills in
traditional manual techniques. (Mr. H)
 While the 1995 Kobe and 2011 Tohoku Earthquakes were wide-area disasters, causing
destruction of numerous buildings and roads, the damage from the 2016 Kumamoto
Earthquake was highly concentrated in certain areas. When we arrived at one supplier to givethem recovery assistance, the convenience store next to the building was already open. Afterthe 2011 Tohoku Earthquake, we found no food in shops in entire districts. So, the situation
was completely different. Plenty of provisions were sent from our group companies all overJapan, including Tohoku, but there were not enough places where to store them. So we
decided to concentrate storage at one site near Toyota’s headquarters in Aichi Prefecture andanother site near Toyota Kyushu and supply the evacuation centers in Kumamoto withfrequent small batches of only what was really needed. (Mr. H)

21
2.2.16. Implications Regarding Knowledge, Learning and Problem Solving
The above are the main points that emerged from our interviews with Mr. A, Mr. H and Mr. N. They
all have experience in leading recovery activities after major disasters, either on the spot, e.g., at thefacilities of damaged suppliers, or from the head office, as managers or as heads of Toyota’s
Operation Management Development Division/Department (Seisan Chousa Bu/Shitsu), which is incharge of TPS kaizen (improvement) and education not only in Toyota and its group companies but
also for its main suppliers in normal times.
We will not summarize the content of the above interviews, but rather offer some commentson the knowledge structure behind them.
First, the stories about actual disaster recovery experiences, recounted in the first part mostly
by Mr. A, are remarkably consistent with the description of practices and principles adopted at Toyota(or, at least, at the OMDD), provided by Mr. H and Mr. N, despite the fact that they refer to separate
places and different times. This indicates that the principles and practices are not just talked about but
also implemented in the actual settings of genba.
Second, it should be noted that the cases illustrated in the first part are about the 1991 Nagoya
Flooding and the 1995 Great Hanshin Awaji Earthquake, which implies significant continuity andconsistency in Toyota’s anti-disaster principles and practices between the 1990s and the 2010s.
Although their disaster-response capabilities seem to have been constantly enhanced throughcumulative organizational learning, their core values, such as the human-community-production
priority rule and the emphasis on genba-based judgment-decision-action, have remained unchanged
for a long time.
Third, the fact that, in their interviews, the three former OMDD leaders provided such a large
amount of oral information regarding this topic (note here that this chapter presents a compressedsummary of what was said that day) indicates that the anti-disaster knowledge at Toyota—or at leastat the OMDD—has been fully internalized and shared among key members in charge of supply chain
robustness/resilience. In other words, the application of the Nonaka/Takeuchi model of knowledge
creation (Nonaka and Takeuchi 1995) and of the SECI cycle (Socialization, Externalization,
Combination and Internalization) appears to have worked extremely well, particularly in terms ofinternalization (explicit to tacit knowledge) and socialization (tacit to tacit knowledge), which resultsin sharing both explicit knowledge (e.g., standard procedures and rules) and tacit knowledge (e.g.,
judgment capabilities) among the members of the organization.
Fourth, the fact that the leaders of the OMDD in charge of TPS-style continuous
improvements (kaizen) have been taking leading roles in post-disaster supply chain recovery is
consistent with Toyota’s belief that those who can make smaller but more frequent problem-solving
activities at genba can accumulate the skills and knowledge needed to deal with large-scale but
infrequent problems, or major supply chain disruptions caused by big disasters (Hiiragi 2013). In thecontext of innovation management theories, the above belief and evidence regarding continuity
between small- and large-scale problem solving may be an intriguing counterargument against thewell-known proposition that those who implement effective incremental innovations (involving
smaller and frequent problem-solving cycles) are not good at developing radical innovations (focusing
on bigger and infrequent problems). Radical innovations and large-scale restoration are clearly
different, but they both entail problem-solving cycles in H. Simon’s sense (Simon 1969, Clark andFujimoto 1991).

22
Disrupted Area
Affected 1st-TierSuppliers (Head
Office, Top
Management)
Affected LowerTier Suppliers(Head Office, Top
Management)
Disrupted Firm(s)/Plant(s)Surrounding
Communities
High Priority

Disrupted Firm(s)/Plant(s)Surrounding
Communities
High Priority
Recovery
Assistance Centerat theDamaged Site

Recovery Assistance Team

Non-Disrupted Area
Top Management at
ToyotaRelated Related
Divisions atRelated
theRelatedDivision Headquarters
Division
Division(Personnel,
A* General Affairs,
B* Purchasing,
C* etc.)Production Control
Division
Unified Information
Sharing

Related Car
Assembly
Subcontractors
Related Parts
Suppliers

Recovery AssistanceCenterat Toyota

Toyota's Car
Assembly Lines

Temporary Organization for Recovery Assistance: Communication & coordination between Recovery
Assistance Team and Recovery Assistance Centerat Toyota: Assist: Emergency provisions distribution and support: Communication & coordination among stakeholders: Request & advise: Dispatch

Toyota's Component
Production Lines

Related Plant
Engineering Firms
Toyota's Plant
Engineering** Including Preventive
Maintenance Teams

Source: Created by the authors based on discussion with Mr. A.
Figure 1. Disaster Recovery Organization at Toyota.
Figure 1 is a summary of Toyota’s disaster recovery system in the case of 1995 Hanshin Awaji Great
Earthquake, illustrated by Mr. A whom we interviewed in this chapter. Its basic structure isunchanged since then. In times of disaster recovery, Toyota uses this temporary organizational
structure to support the timely recovery of a disrupted site(s). A central issue is keeping information
accurate and up-to-date by the careful sharing of information between personnel at the disruptedsite(s) and those assisting the recovery operation at Toyota. In this way, Toyota is able to advise andquickly dispatch resources that meet the on-site needs.

CONCLUSION
This chapter described and analyzed Toyota’s efforts and ways of thinking concerning supply chain
robustness and resilience. To conclude, let us discuss some implications of our findings in relation toa few key topics addressed in the present book.

Rapid Recovery of Supply Chains
As shown in this chapter, Toyota has experienced various types of supply chain crises, but its
assembly line stoppages have so far been limited to one or a few days, regardless of whether the
disruptions happened at supply points (e.g., production lines) or along supply routes (e.g., a tunnel
accident), whether the disasters involved a single site (e.g., fire at a plant) or many sites (e.g., Tohoku
Earthquake), whether the damage was minor or severe, whether dependence on the affected suppliers
was heavy or not, whether the visibility of the damaged suppliers was high or not, whether the
strategy chosen was recovery on the spot or production at substitutive locations, whether there wereabundant buffer inventories or not, and so on. This means that Toyota’s recovery teams flexibly chosedifferent measures in different situations, although their key principles and values remained
unchanged, as explained above. Hence, the initial on-the-spot judgments by the advance teams are23vital, and this is why Toyota’s managers in charge of disaster response emphasize the importance ofdeveloping leaders who can ensure quick and right judgment/decision/action in any situation.

Recovery on the Spot
This chapter also indicted that, among the various approaches to speeding up supply chain recovery,
Toyota gives top priority to rapid on-the-spot recovery of the damaged equipment and lines, as well as
continuous capability building for it. Note that rapid supply chain recovery and rapid production line
recovery are not always the same. There are other methods for enhancing supply chain robustness,such as obtaining parts from back-up production lines (including overseas plants) that produce
identical parts, using other existing lines for substitutive production after having transferred the design
information to them (e.g., virtual dualization), moving the whole production line to a safer place, etc..
The choice will depend upon Toyota’s initial triage of the affected suppliers—which might require nohelp as their genba are intact, or might have suffered damage but have good chances of fast recovery,or are completely destroyed with no hope of quick recovery, so that substitution is inevitable. If
Toyota deems it likely that the damaged production lines will be recovered fast enough, its principle
is to help the affected supplier achieve this, even when substitutive production is also considered andpreparations are being made for it. This principle of “recovery on the spot first” seems to influence thesuppliers’ motivation and trust vis-à-vis their customer companies, which, in turn, affects supply
chain competitiveness in normal times. In other words, if Toyota and other customer firms wererecognized as quick switchers to substitutive production in the aftermath of disasters, their suppliers’
trust would decrease, leading to reduced investments in physical and human resources specific to that
supply chain.

Recovery through Substitutive Production
Although top priority is given to recovery on the spot, Toyota considers the possibility of substitutive
production and prepares for it whenever there is a chance that the damaged line may not be recovered
fast enough. It is worth underlining that, when a disaster strikes, the goal is to reopen the whole
supply chain as early as possible and recovery of a damaged production line is just one of various
means to achieve it.
However, Toyota seems to be keenly aware that it has to take care of the communities
surrounding the suppliers’ plants and that these communities usually rely on the supplier’s stable
employment practice, particularly when they are located outside big cities. Thus, even when Toyota
chooses substitutive production, it always tries to opt for another plant or location of the same
supplier, so that the workers from the damaged plant have greater chances of working at thesubstitutive production sites.
Hence, Toyota’s choices in times of disaster are strongly influenced by its consideration oftrust and motivations on the part of its suppliers and surrounding communities in times of normalcompetition.

Buffers or Capabilities
Our interview notes confirmed that Toyota’s managers at the OMDD, who are in charge of bothsupply chain competitiveness (e.g., TPS) and robustness/resilience (e.g., recovery assistance), neverrefer to the necessity of adding buffer inventories. Of course, inventories are not ignored, as having
appropriate levels is essential for TPS, but they are considered only after all efforts have been made toachieve rapid supply chain recovery.

24
For example, recognizing that it was the only manufacturer of a certain critical component,
one of Toyota’s suppliers damaged by the Kumamoto Earthquake decided to increase its inventories
in preparation for future disasters, but it did so only after concentrating all efforts on resuming its
parts supply as soon as possible. It is obvious that this supplier’s appropriate level of inventories is
directly influenced by its estimated recovery lead times in case of future disasters. Thus, the principleof “capability first, buffers next” is applied in this case as well.
When Toyota’s assembly lines stop after a disaster, the media tend to immediately point out
the limits of Toyota’s famous Just-in-Time system, but this has not altered Toyota’s focus on building
quick recovery capabilities.

Continuous Improvements of Robustness and Resilience
Our analysis and interviews also revealed that Toyota is trying to continuously build capabilities foranti-disaster robustness and resilience by learning from past disasters and retaining routines that have
proven effective. It may be concluded that the company possesses evolutionary capabilities not only
for competitiveness but also for robustness (Fujimoto 1999).
As for suppliers’ visibility, in the aftermath of the 2011 Tohoku Earthquake, Toyota learned
that, despite its strong capabilities, quick supply chain recovery cannot be achieved unless certain
small and lower-tier supplier of critical parts or processes are promptly identified. This is the issue ofsuppliers’ invisibility and, as discussed elsewhere in this volume, Toyota has recently implemented alarge database that includes not only its first-tier suppliers but also most lower-tier suppliers. It is thus
possible to instantly locate which company supplies which parts to which customers through whichroutes— a fact that represents a significant evolution of Toyota’s anti-disaster capabilities in the2010s.
Overall, our investigation about Toyota’s counter-disaster activities, practices and principles,
illustrated in this chapter, seems to be generally consistent with the capability-building framework ofsupply chain competitiveness and robustness put forward in this book.
As mentioned in the interviews, one situation that Toyota has not yet experienced is a majordisaster such as the so-called “Nankai Trough (Megathrust) Earthquakes” striking Aichi Prefecture
and Toyota City directly. Scientists estimate that the probability of this happening in the next 30 years
is 70% and the magnitude of the event might be as big as that of the 2011 Great East Japan
Earthquake. Toyota’s next challenge will be to further build capabilities in preparation for thisoccurrence, alleviate the ensuing damage as much as possible and achieve the recovery of its own
plants as well as of its suppliers’ genba in a reasonably short time.

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