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Samuel Obara

Sammy Obara: Insource when you can, outsource when you need capacity or competency

By Samuel Obara, - Last updated: mardi, novembre 12, 2013 - Save & Share - Leave a comment

Core competencies and problem solving capabilities as Jeff and Steve
mentioned seem to be good indications that there are multiple reasons why
Toyota would insource or outsource.

I frequently had to do insourcing/outsourcing/nationalization of parts and
components. That included feasibility studies on components ranging from
wire harness to stamped/machined parts to roofing, etc, etc.. In some
cases, the studies would point out that Toyota would need to hire more
people rather than using the existing capacity. In other cases we learned
the floor layout wouldn’t allow adequate placing of the oven needed to cure
the glue for the roof trimming. There were also issues where the set of
machines needed to insource an inexpensive component couldn’t justify the

My impression was that Toyota wanted to insource whatever they could, if
feasible (well, maybe not tires or glasses, etc). But they had foundry,
die casting, plastic injection, and some other specialty processes that at
firsts would seem to make sense to be done outside. Those were all
processes in different buildings within the same campus. Wire harness for
the Land Cruiser was being done outside for years until there was some
available capacity in house and Toyota brought the entire wire harness
assembly to a cell right next to the assembly line. They even had to buy
mini presses to assemble connectors to the wire ends, not to mention train
existing assemblers and QC inspectors. I happened to do that training.

So I am not so sure about the statement that only body and engine would not
be outsourced. For over 30 years Toyota in Brazil used Mercedes Benz
engines almost until the shutdown of the Bandeirantes model.

This is a deep question and I’m sure my perspective is just a fraction of
the many more considerations a company must have in ranking each of their
value chain processes.


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