Toyota Motor North America Inc. has undertaken a program aimed at slashing its service parts logistics costs and delivery times, Chief Executive Toshiaki (Tag) Taguchi reveals at the Chicago auto show.

The “Monarch” project now underway, Mr. Taguchi says, will use high-speed Web-based networks to cut the current days' supply of parts inventory in half, trim the average days of backorders by 30% and lower transportation costs 25% over the next three years.

Toyota currently controls 85 acres of warehouse space around the U.S. containing some 19 million auto parts. Every day, $6.6 million worth of parts are shipped to Toyota and Lexus dealers.

“Through better forecasting, inventory deployment and improved procedures, we will decrease costs and provide better value and service to our customers,” Mr. Taguchi says.

To the auto industry, the Internet “promises much greater efficiency than ever before,” he adds.

“Unfortunately, it also tends to reduce everything to commodities where price appears to be the only difference. That's why automakers must use it to increase product value and lower costs faster than our customers can lower our prices.”