Toyota output down 26% in wake of protracted shortages—supply chain tech could help mitigate future scarcity

The news: Toyota suffered a significant decline in output for the second straight month revealing an industry-wide drop in production attributed to compounded supply chain shortages, per Bloomberg.

Why it’s worth watching: Toyota, the world’s largest carmaker in sales, reported that its global output dropped by more than 25% annually in October. 

• Toyota Produced 627,451 vehicles in October, down from 845,107 units during the same quarter last year.
• Toyota, which is also Japan’s leading car manufacturer, cut its production in Japan and North America by 40% and shut down factories in September. Its closures affected 27 production lines in 14 factories worldwide.
• Toyota’s global sales also fell 20% in October to 677,564 units and its shares fell as much as 3.4% yesterday following the news.

Plunging carmaker output also affected rival Japanese carmakers. 

• Nissan said global output in October fell 22% while sales declined 16%, and Honda’s production fell for the fifth straight month at 28%.

The bigger picture: Declines In output will continue to falter in the face of consumer demand.

• The automotive industry continues to be plagued by COVID-19 outbreaks in Asian manufacturing hubs.
• The protracted component and chip shortage has been projected to cost automakers up to $210 billion in lost sales.

The opportunity: Compounded supply chain woes affecting various industries is attributed to a persistent lack of data on customer demand, a problem that emerging supply chain automation startups are racing to solve.

• The application of machine learning and advanced analytics can paint a clearer picture and enable supply chains to respond to changing demand quickly.
• The market for supply chain tech is booming with various startups raising $15 billion in funding this year alone, per Protocol.
• The biggest challenges for manufacturers will be assimilating real-time data on supply as well as predicting demand in a way that's quickly scalable.