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Japan auto parts maker revamps supply chain to fight chip crunch

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As a microchip shortage sends shock waves through the global car industry, one of Japan’s main auto parts makers says it wants to swerve the risk of becoming a production “bottleneck” by revamping the way it manages its supply chains.

The head of automatic transmission producer Jatco told Nikkei Asia in an interview that the company is pushing to make sure it always has enough chips and other key components by placing bigger orders and signing contracts with suppliers earlier than usual.

The move comes as some in the auto industry have begun to shift away from the “just-in-time” methods, which have dominated production for decades and aim to minimize inventory and increase efficiency, as fallout from the coronavirus pandemic upends traditional ways of doing business.

Jatco supplies companies including Nissan and the Japanese car giant’s alliance partners Mitsubishi Motors and France’s Renault. Suzuki Motor is also among its customers.

With the global economy clicking back into gear faster than many expected as countries lift COVID restrictions, demand for semiconductors has outstripped supply, especially after appetite for electronic goods such as laptops and household appliances surged during the pandemic. The shortage has forced many carmakers to slash production.

 

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