Operational & Supply Chain Case Studies: Benihana, Toyota, EV
Benihana of Tokyo Case Analysis
Key Concept:
Benihana’s success stems from a unique operational model combining entertainment, efficient use of space, a simplified menu, and controlled labor costs.
Core Strategies:
- Hibachi Cooking Style: Chefs cook in front of customers, offering entertainment and reducing back-of-house kitchen space (only 22% of space is non-dining).
- Limited Menu: Focusing on steak, chicken, and shrimp minimizes food waste and simplifies operations.
- Labor Efficiency: Requires only highly trained Japanese chefs and limited back-of-house staff, keeping labor costs to approximately 10% of sales.
- Site Selection: Focuses on high-traffic areas in urban centers to drive consistent lunch and dinner traffic.
- Beverage Sales: Increased bar/lounge space drives higher margins (up to 33% beverage sales at some locations).
- Authenticity: All décor and materials are imported from Japan, enhancing the customer experience.
Challenges:
- Franchising Issues: Loss of control, inexperienced operators, and cultural clashes led to discontinuing the franchise model.
- Expansion Limits: Growth is constrained by the need for specialized Japanese carpenters and chefs.
Future Plans:
Exploring suburban locations, new quick-service Japanese concepts, and diversification into retail food products.
Toyota Global Chip Shortage Analysis
Key Concept:
Toyota’s renowned Toyota Production System (TPS), built on Just-in-Time (JIT) and Jidoka, faced severe stress during the COVID-19 pandemic and the global semiconductor shortage.
Pre-COVID Preparation:
After the 2011 Fukushima earthquake, Toyota improved supply chain resilience by:
- Increasing buffer inventory for critical parts (including chips).
- Mapping all tiers of suppliers for better visibility.
- Diversifying suppliers geographically.
COVID-19 and Chip Shortage Impact:
- Initial plant shutdowns occurred due to demand drops.
- Recovery was disrupted by chip shortages driven by:
- Increased demand for electronics during remote work.
- Natural disasters (Texas storm, Japan plant fire) disrupting chip production.
- Toyota’s buffer inventory provided an initial advantage but was eventually depleted.
Competitor Responses:
- Tesla: Re-engineered products to reduce chip dependence and rewrote firmware for alternative chips.
- GM: Partnered with suppliers to develop new microcontroller families.
- Build-Shy Strategy: Some automakers partially built cars and parked them until chips became available.
Key Lessons:
- Lean systems work well for predictable disruptions but struggle with prolonged, global crises.
- Future supply chain strategy may need to balance JIT with “Just-in-Case” buffer inventory.
- Visibility into lower-tier suppliers is critical.
EV Battery Supply Chain Analysis
Key Concept:
EV demand is surging, but battery supply chain constraints threaten automaker production targets. Fairlane Motor Corporation needs to secure its battery supply for future EV production.
Core Supply Chain Issues:
- Raw Materials: Lithium, cobalt, and other minerals face extraction challenges, including environmental impact and geopolitical risk.
- Refining Bottlenecks: Most refining occurs in China, creating geopolitical and supply risks.
- Manufacturing Delays: Battery factories can be built in 2-3 years, but mines take 7-10 years to develop, creating a potential long-term supply gap.
- US Policy Impact: The Inflation Reduction Act provides subsidies for US-based battery production, pushing Fairlane to reconsider its Canadian plant location.
Environmental and Ethical Concerns:
- Lithium extraction consumes vast quantities of water and causes pollution.
- DR Congo Risks: Child labor and artisanal mining raise significant ESG (Environmental, Social, and Governance) concerns.
- Mexico: The nationalized lithium industry adds political risk.
Potential Strategies for Fairlane:
- Secure supply through joint ventures with refiners or miners.
- Consider direct investments in mining or refining operations.
- Explore battery recycling as a secondary supply source.
- Balance ethical sourcing requirements with cost and supply security needs.