toyota inventory management case study

When HBS professor Steven Spear recently released an abstract on problem solving at Toyota, HBS Working Knowledge staffer Sarah Jane Johnston e-mailed off some questions. Spear not only answered the questions, but also asked some of his own—and answered those as well.

Sarah Jane Johnston: Why study Toyota? With all the books and articles on Toyota, lean manufacturing, just-in-time, kanban systems, quality systems, etc. that came out in the 1980s and 90s, hasn't the topic been exhausted?

Steven Spear: Well, this has been a much-researched area. When Kent Bowen and I first did a literature search, we found nearly 3,000 articles and books had been published on some of the topics you just mentioned.

However, there was an apparent discrepancy. There had been this wide, long-standing recognition of Toyota as the premier automobile manufacturer in terms of the unmatched combination of high quality, low cost, short lead-time and flexible production. And Toyota's operating system—the Toyota Production System—had been widely credited for Toyota's sustained leadership in manufacturing performance. Furthermore, Toyota had been remarkably open in letting outsiders study its operations. The American Big Three and many other auto companies had done major benchmarking studies, and they and other companies had tried to implement their own forms of the Toyota Production System. There is the Ford Production System, the Chrysler Operating System, and General Motors went so far as to establish a joint venture with Toyota called NUMMI, approximately fifteen years ago.

However, despite Toyota's openness and the genuinely honest efforts by other companies over many years to emulate Toyota, no one had yet matched Toyota in terms of having simultaneously high-quality, low-cost, short lead-time, flexible production over time and broadly based across the system.

It was from observations such as these that Kent and I started to form the impression that despite all the attention that had already been paid to Toyota, something critical was being missed. Therefore, we approached people at Toyota to ask what they did that others might have missed.

What did they say?

To paraphrase one of our contacts, he said, "It's not that we don't want to tell you what TPS is, it's that we can't. We don't have adequate words for it. But, we can show you what TPS is."

Over about a four-year period, they showed us how work was actually done in practice in dozens of plants. Kent and I went to Toyota plants and those of suppliers here in the U.S. and in Japan and directly watched literally hundreds of people in a wide variety of roles, functional specialties, and hierarchical levels. I personally was in the field for at least 180 working days during that time and even spent one week at a non-Toyota plant doing assembly work and spent another five months as part of a Toyota team that was trying to teach TPS at a first-tier supplier in Kentucky.

What did you discover?

We concluded that Toyota has come up with a powerful, broadly applicable answer to a fundamental managerial problem. The products we consume and the services we use are typically not the result of a single person's effort. Rather, they come to us through the collective effort of many people each doing a small part of the larger whole. To a certain extent, this is because of the advantages of specialization that Adam Smith identified in pin manufacturing as long ago as 1776 in The Wealth of Nations . However, it goes beyond the economies of scale that accrue to the specialist, such as skill and equipment focus, setup minimization, etc.

The products and services characteristic of our modern economy are far too complex for any one person to understand how they work. It is cognitively overwhelming. Therefore, organizations must have some mechanism for decomposing the whole system into sub-system and component parts, each "cognitively" small or simple enough for individual people to do meaningful work. However, decomposing the complex whole into simpler parts is only part of the challenge. The decomposition must occur in concert with complimentary mechanisms that reintegrate the parts into a meaningful, harmonious whole.

This common yet nevertheless challenging problem is obviously evident when we talk about the design of complex technical devices. Automobiles have tens of thousands of mechanical and electronic parts. Software has millions and millions of lines of code. Each system can require scores if not hundreds of person-work-years to be designed. No one person can be responsible for the design of a whole system. No one is either smart enough or long-lived enough to do the design work single handedly.

Furthermore, we observe that technical systems are tested repeatedly in prototype forms before being released. Why? Because designers know that no matter how good their initial efforts, they will miss the mark on the first try. There will be something about the design of the overall system structure or architecture, the interfaces that connect components, or the individual components themselves that need redesign. In other words, to some extent the first try will be wrong, and the organization designing a complex system needs to design, test, and improve the system in a way that allows iterative congruence to an acceptable outcome.

The same set of conditions that affect groups of people engaged in collaborative product design affect groups of people engaged in the collaborative production and delivery of goods and services. As with complex technical systems, there would be cognitive overload for one person to design, test-in-use, and improve the work systems of factories, hotels, hospitals, or agencies as reflected in (a) the structure of who gets what good, service, or information from whom, (b) the coordinative connections among people so that they can express reliably what they need to do their work and learn what others need from them, and (c) the individual work activities that create intermediate products, services, and information. In essence then, the people who work in an organization that produces something are simultaneously engaged in collaborative production and delivery and are also engaged in a collaborative process of self-reflective design, "prototype testing," and improvement of their own work systems amidst changes in market needs, products, technical processes, and so forth.

It is our conclusion that Toyota has developed a set of principles, Rules-in-Use we've called them, that allow organizations to engage in this (self-reflective) design, testing, and improvement so that (nearly) everyone can contribute at or near his or her potential, and when the parts come together the whole is much, much greater than the sum of the parts.

What are these rules?

We've seen that consistently—across functional roles, products, processes (assembly, equipment maintenance and repair, materials logistics, training, system redesign, administration, etc.), and hierarchical levels (from shop floor to plant manager and above) that in TPS managed organizations the design of nearly all work activities, connections among people, and pathways of connected activities over which products, services, and information take form are specified-in-their-design, tested-with-their-every-use, and improved close in time, place, and person to the occurrence of every problem.

That sounds pretty rigorous.

It is, but consider what the Toyota people are attempting to accomplish. They are saying before you (or you all) do work, make clear what you expect to happen (by specifying the design), each time you do work, see that what you expected has actually occurred (by testing with each use), and when there is a difference between what had actually happened and what was predicted, solve problems while the information is still fresh.

That reminds me of what my high school lab science teacher required.

Exactly! This is a system designed for broad based, frequent, rapid, low-cost learning. The "Rules" imply a belief that we may not get the right solution (to work system design) on the first try, but that if we design everything we do as a bona fide experiment, we can more rapidly converge, iteratively, and at lower cost, on the right answer, and, in the process, learn a heck of lot more about the system we are operating.

You say in your article that the Toyota system involves a rigorous and methodical problem-solving approach that is made part of everyone's work and is done under the guidance of a teacher. How difficult would it be for companies to develop their own program based on the Toyota model?

Your question cuts right to a critical issue. We discussed earlier the basic problem that for complex systems, responsibility for design, testing, and improvement must be distributed broadly. We've observed that Toyota, its best suppliers, and other companies that have learned well from Toyota can confidently distribute a tremendous amount of responsibility to the people who actually do the work, from the most senior, expeirenced member of the organization to the most junior. This is accomplished because of the tremendous emphasis on teaching everyone how to be a skillful problem solver.

How do they do this?

They do this by teaching people to solve problems by solving problems. For instance, in our paper we describe a team at a Toyota supplier, Aisin. The team members, when they were first hired, were inexperienced with at best an average high school education. In the first phase of their employment, the hurdle was merely learning how to do the routine work for which they were responsible. Soon thereafter though, they learned how to immediately identify problems that occurred as they did their work. Then they learned how to do sophisticated root-cause analysis to find the underlying conditions that created the symptoms that they had experienced. Then they regularly practiced developing counter-measures—changes in work, tool, product, or process design—that would remove the underlying root causes.

Sounds impressive.

Yes, but frustrating. They complained that when they started, they were "blissful in their ignorance." But after this sustained development, they could now see problems, root down to their probable cause, design solutions, but the team members couldn't actually implement these solutions. Therefore, as a final round, the team members received training in various technical crafts—one became a licensed electrician, another a machinist, another learned some carpentry skills.

Was this unique?

Absolutely not. We saw the similar approach repeated elsewhere. At Taiheiyo, another supplier, team members made sophisticated improvements in robotic welding equipment that reduced cost, increased quality, and won recognition with an award from the Ministry of Environment. At NHK (Nippon Spring) another team conducted a series of experiments that increased quality, productivity, and efficiency in a seat production line.

What is the role of the manager in this process?

Your question about the role of the manager gets right to the heart of the difficulty of managing this way. For many people, it requires a profound shift in mind-set in terms of how the manager envisions his or her role. For the team at Aisin to become so skilled as problem solvers, they had to be led through their training by a capable team leader and group leader. The team leader and group leader were capable of teaching these skills in a directed, learn-by-doing fashion, because they too were consistently trained in a similar fashion by their immediate senior. We found that in the best TPS-managed plants, there was a pathway of learning and teaching that cascaded from the most senior levels to the most junior. In effect, the needs of people directly touching the work determined the assistance, problem solving, and training activities of those more senior. This is a sharp contrast, in fact a near inversion, in terms of who works for whom when compared with the more traditional, centralized command and control system characterized by a downward diffusion of work orders and an upward reporting of work status.

And if you are hiring a manager to help run this system, what are the attributes of the ideal candidate?

We observed that the best managers in these TPS managed organizations, and the managers in organizations that seem to adopt the Rules-in-Use approach most rapidly are humble but also self-confident enough to be great learners and terrific teachers. Furthermore, they are willing to subscribe to a consistent set of values.

How do you mean?

Again, it is what is implied in the guideline of specifying every design, testing with every use, and improving close in time, place, and person to the occurrence of every problem. If we do this consistently, we are saying through our action that when people come to work, they are entitled to expect that they will succeed in doing something of value for another person. If they don't succeed, they are entitled to know immediately that they have not. And when they have not succeeded, they have the right to expect that they will be involved in creating a solution that makes success more likely on the next try. People who cannot subscribe to these ideas—neither in their words nor in their actions—are not likely to manage effectively in this system.

That sounds somewhat high-minded and esoteric.

I agree with you that it strikes the ear as sounding high principled but perhaps not practical. However, I'm fundamentally an empiricist, so I have to go back to what we have observed. In organizations in which managers really live by these Rules, either in the Toyota system or at sites that have successfully transformed themselves, there is a palpable, positive difference in the attitude of people that is coupled with exceptional performance along critical business measures such as quality, cost, safety, and cycle time.

Have any other research projects evolved from your findings?

We titled the results of our initial research "Decoding the DNA of the Toyota Production System." Kent and I are reasonably confident that the Rules-in-Use about which we have written are a successful decoding. Now, we are trying to "replicate the DNA" at a variety of sites. We want to know where and when these Rules create great value, and where they do, how they can be implemented most effectively.

Since we are empiricists, we are conducting experiments through our field research. We are part of a fairly ambitious effort at Alcoa to develop and deploy the Alcoa Business System, ABS. This is a fusion of Alcoa's long standing value system, which has helped make Alcoa the safest employer in the country, with the Rules in Use. That effort has been going on for a number of years, first with the enthusiastic support of Alcoa's former CEO, Paul O'Neill, now Secretary of the Treasury (not your typical retirement, eh?) and now with the backing of Alain Belda, the company's current head. There have been some really inspirational early results in places as disparate as Hernando, Mississippi and Poces de Caldas, Brazil and with processes as disparate as smelting, extrusion, die design, and finance.

We also started creating pilot sites in the health care industry. We started our work with a "learning unit" at Deaconess-Glover Hospital in Needham, not far from campus. We've got a series of case studies that captures some of the learnings from that effort. More recently, we've established pilot sites at Presbyterian and South Side Hospitals, both part of the University of Pittsburgh Medical Center. This work is part of a larger, comprehensive effort being made under the auspices of the Pittsburgh Regional Healthcare Initiative, with broad community support, with cooperation from the Centers for Disease Control, and with backing from the Robert Wood Johnson Foundation.

Also, we've been testing these ideas with our students: Kent in the first year Technology and Operations Management class for which he is course head, me in a second year elective called Running and Growing the Small Company, and both of us in an Executive Education course in which we participate called Building Competitive Advantage Through Operations.

· · · ·

Steven Spear is an Assistant Professor in the Technology and Operations Management Unit at the Harvard Business School.

Other HBS Working Knowledge stories featuring Steven J. Spear: Decoding the DNA of the Toyota Production System Why Your Organization Isn't Learning All It Should

Developing Skillful Problem Solvers: Introduction

Within TPS-managed organizations, people are trained to improve the work that they perform, they learn to do this with the guidance of a capable supplier of assistance and training, and training occurs by solving production and delivery-related problems as bona fide, hypothesis-testing experiments. Examples of this approach follow.

• A quality improvement team at a Toyota supplier, Taiheiyo, conducted a series of experiments to eliminate the spatter and fumes emitted by robotic welders. The quality circle members, all line workers, conducted a series of complex experiments that resulted in a cleaner, safer work environment, equipment that operated with less cost and higher reliability, and relief for more technically-skilled maintenance and engineering specialists from basic equipment maintenance and repair.
• A work team at NHK (Nippon Spring) Toyota, were taught to conduct a series of experiments over many months to improve the process by which arm rest inserts were "cold molded." The team reduced the cost, shortened the cycle time, and improved the quality while simultaneously developing the capability to take a similar experimental approach to process improvement in the future.
• At Aisin, a team of production line workers progressed from having the skills to do only routine production work to having the skills to identify problems, investigate root causes, develop counter-measures, and reconfigure equipment as skilled electricians and machinists. This transformation occurred primarily through the mechanism of problem solving-based training.
• Another example from Aisin illustrates how improvement efforts—in this case of the entire production system by senior managers—were conducted as a bona fide hypothesis-refuting experiment.
• The Acme and Ohba examples contrast the behavior of managers deeply acculturated in Toyota with that of their less experienced colleagues. The Acme example shows the relative emphasis one TPS acculturated manager placed on problem solving as a training opportunity in comparison to his colleagues who used the problem-solving opportunity as a chance to first make process improvements. An additional example from a Toyota supplier reinforces the notion of using problem solving as a vehicle to teach.
• The data section concludes with an example given by a former employee of two companies, both of which have been recognized for their efforts to be a "lean manufacturer" but neither of which has been trained in Toyota's own methods. The approach evident at Toyota and its suppliers was not evident in this person's narrative.

Defining conditions as problematic

We concluded that within Toyota Production System-managed organizations three sets of conditions are considered problematic and prompt problem-solving efforts. These are summarized here and are discussed more fully in a separate paper titled "Pursuing the IDEAL: Conditions that Prompt Problem Solving in Toyota Production System-Managed Organizations."

Failure to meet a customer need

It was typically recognized as a problem if someone was unable to provide the good, service, or information needed by an immediate or external customer.

Failure to do work as designed

Even if someone was able to meet the need of his or her customers without fail (agreed upon mix, volume, and timing of goods and services), it was typically recognized as a problem if a person was unable to do his or her own individual work or convey requests (i.e., "Please send me this good or service that I need to do my work.") and responses (i.e., "Here is the good or service that you requested, in the quantity you requested.").

Failure to do work in an IDEAL fashion

Even if someone could meet customer needs and do his or her work as designed, it was typically recognized as a problem if that person's work was not IDEAL. IDEAL production and delivery is that which is defect-free, done on demand, in batches of one, immediate, without waste, and in an environment that is physically, emotionally, and professionally safe. The improvement activities detailed in the cases that follow, the reader will see, were motivated not so much by a failure to meet customer needs or do work as designed. Rather, they were motivated by costs that were too high (i.e., Taiheiyo robotic welding operation), batch sizes that were too great (i.e., the TSSC improvement activity evaluated by Mr. Ohba), lead-times that were too long, processes that were defect-causing (i.e., NHK cold-forming process), and by compromises to safety (i.e., Taiheiyo).

Our field research suggests that Toyota and those of its suppliers that are especially adroit at the Toyota Production System make a deliberate effort to develop the problem-solving skills of workers—even those engaged in the most routine production and delivery. We saw evidence of this in the Taiheiyo, NHK, and Aisin quality circle examples.

Forums are created in which problem solving can be learned in a learn-by-doing fashion. This point was evident in the quality circle examples. It was also evident to us in the role played by Aisin's Operations Management Consulting Division (OMCD), Toyota's OMCD unit in Japan, and Toyota's Toyota Supplier Support Center (TSSC) in North America. All of these organizations support the improvement efforts of the companies' factories and those of the companies' suppliers. In doing so, these organizations give operating managers opportunities to hone their problem-solving and teaching skills, relieved temporarily of day to day responsibility for managing, production and delivery of goods and services to external customers.

Learning occurs with the guidance of a capable teacher. This was evident in that each of the quality circles had a specific group leader who acted as coach for the quality circle's team leader. We also saw how Mr. Seto at NHK defined his role as, in part, as developing the problem-solving and teaching skills of the team leader whom he supervised.

Problem solving occurs as bona fide experiments. We saw this evident in the experience of the quality circles who learned to organize their efforts as bona fide experiments rather than as ad hoc attempts to find a feasible, sufficient solution. The documentation prepared by the senior team at Aisin is organized precisely to capture improvement ideas as refutable hypotheses.

Broadly dispersed scientific problem solving as a dynamic capability

Problem solving, as illustrated in this paper, is a classic example of a dynamic capability highlighted in the "resource-based" view of the firm literature.

Scientific problem solving—as a broadly dispersed skill—is time consuming to develop and difficult to imitate. Emulation would require a similar investment in time, and, more importantly, in managerial resources available to teach, coach, assist, and direct. For organizations currently operating with a more traditional command and control approach, allocating such managerial resources would require more than a reallocation of time across a differing set of priorities. It would also require an adjustment of values and the processes through which those processes are expressed. Christensen would argue that existing organizations are particularly handicapped in making such adjustments.

Excerpted with permission from "Developing Skillful Problem Solvers in Toyota Production System-Managed Organizations: Learning to Problem Solve by Solving Problems," HBS Working Paper , 2001.

How One Covid Case Upended Toyota’s Just-in-Time Supply Chain

Early last month at a sprawling factory on the highway connecting Hanoi to the Vietnamese port city of Haiphong, a single worker tested positive for COVID-19. The delta variant was spreading swiftly through the Southeast Asian nation at the time, and on Aug. 4, provincial officials suspended work at the plant, run by an auto-parts manufacturer.

An ocean away, Toyota Motor Corp. Chief Purchasing Group Officer Kazunari Kumakura was watching intently. The factory is operated by a key Toyota supplier and is one of Vietnam’s biggest assemblers of wire harnesses — a basic but essential yoke for cables that holds the inner workings of an automobile together. As the infection at the facility disrupted operations, Toyota’s inventories grew thin. Since July, the Japanese automaker had been examining its suppliers in the region, which has become a Covid hotspot, on a daily basis to assess how dire things were getting.

Eventually, unable to secure a number of parts, including the wire harnesses from Vietnam and chips from Malaysia, Toyota succumbed. The world’s No. 1 automaker shocked the market by announcing it would slash its output of cars in September by 40% compared to previous production plans. 

“The big thing was whether operations could continue in Southeast Asia,” Kumakura said in a late afternoon address to reporters on Aug. 19. But lockdowns, growing Covid clusters and government-imposed restrictions on production made it clear that auto suppliers, particularly in Malaysia and Vietnam, wouldn’t be able to continue operations, he said. It “tangled up our parts” and “happened rapidly.”

Toyota is now faced with the challenge of securing substitute parts and recovering lost output in time to meet an inventory-depleting level of global demand for cars. But more broadly, the snarls that finally toppled one of the world’s best-maintained supply chains have sparked deeper questions about whether the auto industry’s strategies to prioritize efficiency and maintain minimal inventory will endure in the post-pandemic world.

Carmakers globally have lost revenue because shortages have slammed output. India’s largest automaker by deliveries, Maruti Suzuki India Ltd., said volume would likely drop to about 40% of normal this month and Tata Motors Ltd. on Wednesday blamed “the recent lockdowns in east Asia” for worsening the supply situation. China’s Nio Inc. has struggled with partners in Malaysia. Also in Japan, Suzuki Motor Corp. will cut vehicle production by 20% in September while in Europe, Renault SA plans to halt assembly plants in Spain for as long as 61 days before the end of the year.

External Shocks

The car sector is accustomed to much thinner profit margins than those enjoyed by big technology companies, even after decades of trying to drive down costs, said Howard Yu, a professor of management at the Switzerland-based Institute for Management Development. Automakers strive to be lean, reducing redundancies and working out of regional hubs because it’s more efficient, he said. “But to be resilient, you need a bit of redundancy. The delta outbreak is exposing that this system is really vulnerable to external shocks.”

Over the past decade, Japanese automakers have invested heavily in Southeast Asia, looking to the region as a source of cheap labor and to supplement their China operations amid trade tensions with the U.S. Thailand is a major production hub for Toyota, Mitsubishi Motors Corp., Honda Motor Co. and Nissan Motor Co. Those automakers make up about half Thailand’s vehicle production capacity and source a number of parts from neighboring countries. Toyota alone works with suppliers that have more than 400 plants located in Malaysia and Vietnam, data compiled by Bloomberg show.

That concentrated approach worked, until it didn’t. Midway through this year, Southeast Asia began to grapple with one of the world’s deadliest virus resurgences. Governments declared lockdowns and restricted business activities, at times halting entire plant operations upon the discovery of just a handful of confirmed cases.

Vietnam is Japan’s biggest source of wire harnesses. Several Japanese parts makers operate plants in the country. The Hai Duong factory that shut in early August belongs to Sumitomo Electric Industries Ltd., which declined to comment on individual site operations. Another major wire-harness maker and Toyota supplier in the region, Furukawa Electric Co., has been forced to limit operations due to Covid restrictions, according to a company spokesperson.

An Infineon Technologies employee displays a 300mm silicon wafer. Photo: Bloomberg.

Similarly, Malaysia has emerged in recent years as a major center for end-stage chip packaging — the smallest and least-profitable component of the semiconductor manufacturing process. Rising Covid cases have forced key auto suppliers STMicroelectronics NV and Infineon Technologies AG to close facilities, worsening a shortage of chips that’s been hammering automakers for months. Bloomberg’s supply chain analysis data show Toyota sources from both of those companies.

Striking a Balance

For now, automotive suppliers in the nations are showing signs of getting on a path to recovery. Most staff at Sumitomo Electric’s Hai Duong wire-harness plant returned to work by around the second week of August, according to the province’s official television station. As of last week, Malaysia’s chipmakers were essentially back to normal levels of operation and Toyota has said it expects to begin to recover lost production in October.

The question remaining is whether this supply chain disruption will spark a long-term shift at Toyota and other manufacturers’ operations. 

If the delta outbreak in Southeast Asia proves to be relatively short-lived, it may not make much sense to uproot supply chains, Bloomberg Intelligence analyst Tatsuo Yoshida said. Greater economies of scale are possible with single sourcing and diversifying supply chains requires significant time and money. Hubs have formed in Southeast Asia for a reason — labor-intensive processes can be performed cheaply there, he said.

At the same time, if Toyota’s relatively strong performance amid the pandemic and supply chain mess thus far says anything, it’s that the automaker is willing to take action after breakdowns. The company’s methods of maintaining high visibility into its supply chain and strategy of keeping stock of riskier parts like semiconductors are legacies of 2011, when an earthquake and tsunami knocked its suppliers’ plants offline, disrupting Toyota’s operations for a full half year. 

Kumakura acknowledged last month that because production of certain widely used parts is concentrated in Southeast Asia, a disturbance in the region has the potential to ripple across a much wider geography. In the future, Toyota “will look at how to allocate production and diversify risks so as to not concentrate on one specific area,” he said. “We’ll reflect and draw on this knowledge to further strengthen ourselves.”

In the end, it comes down to striking a balance between efficiency and resilience, said Yu, the management professor. Certain parts don’t seem critical until they “blow up production systems” because there are limited suppliers concentrated in a particular region. In a good quarter, dipping into profit to invest in rainy-day resilience is “what long-term perspective is about,” he said. “And this isn’t just a story of Toyota.”

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CDK cyberattack shuts down auto dealerships across the U.S. Here's what to know.

By Megan Cerullo

Edited By Aimee Picchi

Updated on: June 21, 2024 / 5:15 PM EDT / CBS News

CDK Global, a company that provides auto dealerships across the U.S. with software for managing sales and other services, was shut down for a third straight day Friday after cyberattacks crippled the platform. 

The outage is disrupting roughly 15,000 car sellers that depend on CDK's dealer management software to run their businesses, including vehicle sales. Some dealership employees have resorted to pen and paper to handle transactions, but said most deals had ground to a halt. CDK has not indicated when its systems will be back up and running, but suggested the outage could last several days. 

"We are actively investigating a cyber incident," a CDK spokesperson told CBS News. "Out of an abundance of caution and concern for our customers, we have shut down most of our systems and are working diligently to get everything up and running as quickly as possible." 

CDK, which said it had restored some services on Wednesday, told CBS MoneyWatch on Thursday afternoon that its systems were again offline after it suffered another cyberattack. 

"Late in the evening of June 19, we experienced an additional cyber incident and proactively shut down most of our systems," a CDK spokesperson said. "In partnership with third-party experts, we are assessing the impact and providing regular updates to our customers. We remain vigilant in our efforts to reinstate our services and get our dealers back to business as usual as quickly as possible."

Calls to a CDK customer support hotline produced a continuous busy signal. But the company's automated recording said the outage could affect dealerships for days, according to  PC Mag . The message told callers, "At this time, we do not have an estimated time frame for resolution and therefore our dealers' systems will not be available likely for several days," the publication reported.

The message also warned callers that "bad actors" posing as CDK support staff were trying to obtain customers' credentials in what are known as phishing attacks, according to The Associated Press . 

The number of cyberattacks has been on the rise in the last year, with more than 3,200 data breaches in 2023, a 78% jump from the prior year, according to a new study from data firm  SOAX . Those breaches impacted more than 65 million victims last year, it added.

What is CDK? 

CDK's dealer management system, or DMS, lets car vendors operate their business, including handling payroll, inventory, customer relations and office operations. The technology also enables dealers to line car buyers line up with financing and insurance.

On its website, it also touts its cybersecurity capabilities. "CDK Cybersecurity Solutions provide a three-tiered cybersecurity strategy to prevent, protect and respond to cyberattacks so you can defend your dealership," it says. 

Brookfield Business Partners, a Toronto-based private equity firm, acquired the company in 2022 in a  deal  valued at more than $8 billion.

When did the cyberattack begin?

The cyberattack on CDK Global began Tuesday evening, Bleeping Computer , a cybersecurity news site, reported Wednesday, taking the 15,000 car dealerships it serves offline.  

As mentioned above, CDK said it suffered another cyberattack on Wednesday evening. It is not currently known who, or what group, is behind the cyberattacks. 

Mike Stanton, CEO of the National Automobile Dealers Association, said in a statement on Friday that "dealers are very committed to protecting their customer information and are actively seeking information from CDK to determine the nature and scope of the cyber incident so they can respond appropriately."

How are dealerships responding?

Some dealerships appeared to get creative to continue doing business during the outage. Dealership employees posted about the outage on  Reddit  Wednesday, sharing that they were relying on spreadsheets and sticky notes to sell customers small parts and make repairs, but that they weren't making any large transactions. 

One employee asked other dealership employees, "How many of you are standing around because your whole shop runs on CDK?" under the heading "CDK down," with users in Wisconsin and Colorado confirming their dealership transaction systems were offline. 

—The Associated Press contributed to this report.

• Cybersecurity and Infrastructure Security Agency
• Cyberattack

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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• Information /Russian-Federation--Moscow-Oblast--Elektrostal#info
• Demography /Russian-Federation--Moscow-Oblast--Elektrostal#demo
• Geography /Russian-Federation--Moscow-Oblast--Elektrostal#geo
• Distance /Russian-Federation--Moscow-Oblast--Elektrostal#dist1
• Map /Russian-Federation--Moscow-Oblast--Elektrostal#map
• Nearby cities and villages /Russian-Federation--Moscow-Oblast--Elektrostal#dist2
• Weather /Russian-Federation--Moscow-Oblast--Elektrostal#weather
• Sunrise and sunset /Russian-Federation--Moscow-Oblast--Elektrostal#sun
• Hotel /Russian-Federation--Moscow-Oblast--Elektrostal#hotel
• Nearby /Russian-Federation--Moscow-Oblast--Elektrostal#around
• Page /Russian-Federation--Moscow-Oblast--Elektrostal#page
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• Moscow Oblast
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• Elektrostal

State Housing Inspectorate of the Moscow Region

Phone 8 (496) 575-02-20 8 (496) 575-02-20

Phone 8 (496) 511-20-80 8 (496) 511-20-80

Public administration near State Housing Inspectorate of the Moscow Region

• Programs and Projects
• Work with us
• Diversity, Equity, and Inclusion at NTI
• Annual Reports and Financials

Machine-Building Plant (Elemash)

• Location Elektrostal, Moscow Oblast
• Type Nuclear-Weaponization
• Facility Status Operational

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