Toyota Recall Crisis Analysis

This assignment requires an in-depth analysis of the 2010 Toyota recall crisis. Students must investigate the root causes of the recalls, examine their impact on Toyota's public image and brand reputation, and discuss the wider implications for supply chain management practices within the automotive industry. The analysis should draw upon academic literature and real-world examples to provide a comprehensive understanding of this significant event in corporate history.

Running Head: Supply Chain Management
Toyota Motor Corporation
Supply Chain Management

Supply Chain Management 1
Table of Contents
Introduction...................................................................................................................... 2
Analysis of Supply Chain and operating level processes.................................................3
Operating level processes............................................................................................4
Proposals and justification for change..............................................................................5
Critical success factors.................................................................................................... 6
Impact on Operation management...................................................................................8
Conclusion..................................................................................................................... 10
References.....................................................................................................................11

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Introduction
Flow of goods and services from the organization to the consumers is known as the
supply chain management. Storage of work in progress, storage of raw materials,
management of inventories, undertaking the goods from the suppliers, moulding them
into finished goods, etc. are crucial segments of the supply chain management process.
With the effective supply chain management process, every organization is able to meet
with its core targets and along with this, efficiency in the dynamic business environment
increases. This sector plays crucial role in the smooth running of the organization as it is
the vital element of the operations management of the organization. Under this report,
supply chain management of the Toyota Automobile Company will be discussed. It is a
manufacturing company engaged in automobile sector and their primary activities are
manufacturing and designing car, trucks’ engines, etc. Current supply chain
management of the Toyota Automobile Company, process related with operation level,
recommendations to enhance the efficiency of the supply chain process of the
organization as well as the success factors of supply chain management and the impact
of the supply chain management on the operations of the organization will be the major
segments of this report.
Toyota Motor Corporation is known for manufacturing cars and their engines. It is a
multinational company based in Japan with its headquarters in Toyota, Aichi, Japan.
More than 364, 000 employees are engaged in the operations of the organization.
Organization is ranked under top five innovators across the globe in their industry. In
terms of revenues, it stands on the fifth position in the worldwide automobile industry.
Their present CEO is Akio Toyoda and with his innovative strategies and techniques,
Toyota is on the peak position in terms of manufacturing cars and engines across the
globe. Toyota Motor Corporation has made various records in terms of largest
production and one of the best is that, they had produced 10 million vehicles in a year.
Their supply chain management process is quite effective enough to gain competitive
advantage. Management of the Toyota has adopted certain strategies such as serving
adequate quality, attractive and unique features in their cars.

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Supply Chain Management 4
Analysis of Supply Chain and operating level processes
Supply chain management has the capability to enhance the effectiveness of the
organization. With the adequate supply chain management, organization could attain its
desired goals and the objectives easily. It plays as the key strategic factor in the
operation management of the organization. Supply chain management Toyota Motor
Corporation is quite similar as the basic supply chain management process. With the
effect of globalisation in the business markets and the enhanced scope of outsourcing,
supply chain management and the logistics techniques plays crucial role in managing all
the operational activities of the organization (Christopher, 2016). Automobile industry
has basically two crucial segments, technology and the innovation. To gain the
competitive advantage in the contemporary market, Toyota Motor Corporation has
utilised their available resources in an effective manner as well as they have invented
the appropriate innovations time to time in relevance to gain competitive advantage.
Toyota’s supply chain management is flexible in accordance with the business
environment as well as with the changing consumer’s needs. Basic components of
supply chain management are to manage the suppliers, their distribution services and
the raw materials distributed from their end. Apart from this, it includes the methods to
process the raw materials into finished goods as well as distribution of goods to the
customers. Along with the distribution of goods to the customers, feedbacks are also
taken from them in order to ascertain the improvements required in the finished product
(Fawcett, et. al., 2011).
Toyota Motor Corporation has supplied its vehicles as per the demand of the
consumers as well as the innovations adopted by them are also linked with the just in
time techniques though which they have gained the effective position as the most
innovative automobile manufacturing company. Along with the just in time techniques,
they have also adopted the lean supply chain in order to perceive the waste in their
supply chain process for enhancing the efficiency of their organization. Toyota’s
production system basically focuses on those approaches which could provide
adequate and expected benefits in the competitive automobile industry. They primarily

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focuses on those resources which are critically importance for the improving the
efficiency of the organizational supply chain method. They adopted a Keiretsu structure
under which only dependent suppliers were given contracts for supplying the raw
materials required to manufacture the vehicles. Apart from the crucial elements, all
other activities were outsourced in order to perform their functionalities in an appropriate
manner. This was done to enhance the efficiency of the supply chain network of Toyota
as well as to gain appropriate competitive advantage (Lambert & Schwieterman, 2012).
Toyota’s supply chain management is innovative, creative and customized in order to
fulfil the customer’s demands as well as to attain the goals and the objectives of the
organization. Basic elements that are involved in their supply chain network are quality,
cost, innovation and efficiency. With the help of these basic elements, organization will
be able to enhance its customer’s value as well as it will also help them to enhance the
demand of their cars. This will boost up the opportunities for the corporation to expand
their business in the global markets very easily. Along with these elements, the lean
manufacturing principles adopted by the Toyota Corporation helped them to enhance
the quality of their vehicles at reasonable cost. This is because lean principles are the
sources through which wastes could be eliminated easily and ultimately it saves cost of
the production (Monczka, et. al., 2015).
Operating level processes
Toyota’s operating level activities are also concerned with the vehicle’s quality and the
service quality offered to the customers after sale takes place. Providing after sale
service is very crucial element in electronic goods industry, automobile industry, etc. It
enhances the brand value of the organization in the dynamic business environment as
well as it also helps the organization to gain adequate competitive advantage in the
global automobile market (Prajogo, et. al., 2012). Primary activities of the Toyota Motor
Corporation are allocation of the available resources of the organization in an adequate
manner amongst the departments of the organization. These are performed with the
purpose of attainment of the desired goals and the objectives and all the strategies are
developed after reviewing the market environment, customer trends as well as after
conducting the competitive analysis. Apart from this, organization is able to accomplish

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its goals and the objectives through quality management program. Toyota’s quality
management process is quite effective as well as efficient enough to beat its
competitors’ strategies (Tseng, 2014).
In order to enhance the demand of Toyota’s vehicles in the global market, their
management team has improved the efficiency of their operational activities in
accordance with eliminating the wastes from the production of vehicles. Apart from
these processes, Toyota Corporation’s operating level processes also includes the
customer satisfaction through taking feedbacks from them. Operating level processes
also includes some activities which influences the supply chain management to
integrate the buyers and the supplier’s decision making process. It helps the
organization to maintain the smooth flow of materials between the suppliers,
organization and the customers. With the help of these activities, efficiency of the
organization increases as well as the chances to attain the desired goals and the
objectives also increases (Wisner, Tan & Leong, 2014).

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Proposals and justification for change
Supply chain management is the process of managing all the activities within the
workplace related with the inflow of raw materials and the outflow of the finished
products to the customers. Toyota Motor Corporation’s supply chain is quite effective as
well as efficient enough through which organization has attained the huge goodwill in
the automobile industry across the globe. Thus, there are no such big amendments are
required in order to improve the supply chain management of Toyota’s Motor
Corporation (Bhasin, 2016). Following are some recommendations which could be
adopted by the Toyota in their global supply chain network as this will enhance the
efficiency of the organization in the global market:
 Automatic Ordering: This process is linked with the ERP system which is a part
of automation system of the organization. Under this, manufacturing department
does not need to manage records of the inventories. This type of ordering system
will automatically place the order to the suppliers as per the requirements set up
in the system. Programming of this system will be done in the manner which will
place the order for the required raw materials and the supporting parts and
machineries for manufacturing the vehicles. This will reduce the burden over the
employees of the organization and it will let them to concentrate on various other
crucial tasks in terms of inventing advanced features for their vehicles
(Christopher, et. al., 2017).
 Standardize: It is the centre stage of any process and it is quite crucial in terms
of attainment of goals and the objectives through supply chain management
process. It has the capability to enhance the efficiency of the organization as well
as it is capable enough to save time and the cost of the production. Apart from
this, it will improve the accuracy level of the employees’ decision in terms of
accomplishment of the tasks (Hill & Hill, 2017).
 Transparency: Certain things which cannot be controlled within the workplace
needs to be accepted as the part of the operations such as waste generation,
mistakes from the employees, employers, etc. All these should be shared within

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the team in order to generate positive outcomes for the organization. Sharing of
this information within the employees of the organization will help the
management to gain better and unique ideas to minimize the effect of these
factors. Thus, with the implementation of this system in the Toyota’s operation, it
will enhance the organizational performance as well as productivity (Jacobs &
Chase, 2013).

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Critical success factors
Key success factors are the elements which are primarily responsible for the
achievement of the organization in the business environment. In terms of Toyota Motor
Corporation, their innovation and adaptation of advanced techniques to manufacture
cars, advanced research and development segment, supply chain management,
motivating techniques for employees, etc. are lot of key factors which are truly
responsible for making the Toyota, a largest global manufacturers of vehicles (Lucky &
Takim, 2015).
 Production and Manufacturing Facilities: Manufacturing plants of Toyota
are situated in the most parts of globe. In terms of production, Toyota favours
for lean manufacturing principles and the just in time (JIT) production which
are the biggest success factors for Toyota Motor Corporation. Toyota has
developed their significance in the global market through assembling,
manufacturing and distributing the automobiles (Matsuo, 2015).
 Research & Development: This department is responsible for enhancing the
brand value of the organization as well as this is the only department
responsible for fulfilment of the customers’ needs. Customers’ trends,
requirements, etc. changes with the time and R&D department has the key
responsibility of adopting advanced techniques to improve the quality,
durability, value for money paid by customers, reliability, etc. They have also
invented environment friendly cars which have huge market demands. Thus,
R&D department has also played and playing a big role in attainment of the
effective position in the global automobile industry (Piotrowski & Guyette,
2010).
 Innovation: Toyota has adopted various techniques in order to fit unique and
advanced features in their vehicles. This is done to fulfil the customer’s
requirements as well as to gain competitive advantage in the global
automobile market. Toyota has initiated a campaign IMV (Innovative
International Multi-purpose vehicle) plan for improving the supply processes of

Supply Chain Management 10
multipurpose trucks and pick up. With the help of innovation, organization is
trying to fulfil the demand of their customers in more than 142 countries. With
regards to IMV, they produced gasoline engines in Indonesia, supply of
automobiles in Philippines, manual transmissions in India, and diesel engines
in Thailand. Apart from these innovations, they have also adopted various
innovative techniques with regards to enhance their vehicles’ efficiency as well
as to enhance the demand of their vehicles in the global market (Schaltegger
& Burritt, 2014).
 Risks: Risks is involved in every aspect of business environment and in order
ascertain all risks factors and to overcome from risks factors, risk dealing
elements needs to be considered adequately. Toyota Motor Corporation has
faced various risks factors such as threat of competitors’ strategies, threat of
new entrants in the industry, etc. But management of the Toyota deals with
every risk factor in an effective and appropriate manner. They accepted the
risks which were crucial to accept and without accepting there were no
outcomes, they ignored the irrelevant risk factors such as strike done by one
of the production team’s worker, as well as they transferred the risks when
they were unable to take burden of the huge losses (Simchi-Levi, Schmidt &
Wei, 2014). Management of risks also plays vital role in enhancing the
efficiency of the organization. Thus, management of risks also gets included in
the key success factors of the organization.
 Cost Drivers: Cost drivers are the factors which affect the sale price of the
finished goods. These are the value of certain raw materials and other
supporting machineries required for manufacturing the finished goods. In order
to overcome from this type of situation, organization has adopted the strategy
of producing large more number of vehicles in comparison with the budgeted
production (Soosay, Fearne & Varsei, 2014).

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Impact on Operation management
Toyota’s strategies and techniques are unique from its competitors and this turned into
the key success factor to attain positive response from the customers worldwide. They
have integrated the local as well as global market together in order to attain their
desired goals and the objectives (Stadtler, 2015). Following are some of the positive
impacts of supply chain management of Toyota on its operation management:
 Designing: With the help of effective and advanced supply chain management,
Toyota has enhanced its productivity level with the unique designs and features.
Proper supply of raw materials and the supporting parts to the organization
enhanced their efficiency in order to develop the attractive and reliable designs
for customers. Apart from delivering unique and attractive designs, organization
has also adopted the strategy of providing appropriate and adequate strategies
to provide responsive after sale services (Swink, et. al., 2014).
 Quality Management: Organization has managed to develop their production
system effective and efficient enough in order to produce realistic and reliable
vehicles. All the suppliers of the organization are selected on the basis of the
quality of materials delivered by them. This is because quality of supporting
parts, machineries plays vital role in enhancing the quality of the finished goods
(Victor & John, 2011).
 Process: Supply chain management influences the Toyota’s operation
management to adopt lean principles and six sigma principles for enhancing the
quality of their vehicles. Along with this benefit, adaptations of these principles
are capable enough to gain adequate competitive advantage in the global market
through reducing cost of the production from its competitors. Apart from this, it
also helps the organization to save their wastages costs which plays the crucial
role in increasing the cost of the production. Absence of wastes will lead to the
increase in the prices as well as the reduction in the demand (Balocco, Perego &
Perotti, 2010).

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 Location: As Toyota Motor Corporation has various manufacturing plants across
the globe and they all specialised in manufacturing the vehicles as per the
requirements of the customers. For instance, as per the requirements of the US
audience, Toyota has designed their vehicles on that basis and accordingly for
other countries. Apart from this, organization has also taken adequate advantage
of their locations in order to enhance the demand of their vehicles in the
international market (Gil, et. al., 2010).
 Management of Human Resources: Human resources are crucial segment for
every organization in order to attain its goals and the objectives. This department
comes under operations department of the organization. Apart from this, it is very
crucial to understand the capabilities of the employees and the allocation of the
tasks amongst the employees of the organization is another crucial segment in
order to attain the desired goals and the objectives. Allocation of the tasks is
crucial activity and duties should be assigned to the employees as per their skills
and talents. This helps the organization to attain its desired goals and the
objectives.
 Supply Chain Management: In terms of operation management, Toyota uses
lean manufacturing principles in order to enhance the efficiency of the
organization. Company has been able to use Just in Time production and Just in
Time Inventory management system which influences the organization to attain
their targets as well as it is also beneficial in terms of controlling the cost of the
production for providing the vehicles on reasonable prices.
 Efficiency: Toyota’s operation management has reached to the mark of largest
global manufacturer of automobiles. Apart from this, organization has also
attained effective position in the global automobile market through their unique
and advanced techniques. Toyota Motor Corporation is being counted in the top
five innovators in the automobile industry and along with this, they have also
attained the success in terms of manufacturing of electronic vehicles and their
demand is rising rapidly (Leonard, 2012).

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Conclusion
From the aforesaid discussion, it can be concluded that Toyota Motor Corporation is the
biggest automobile manufacturer in Japan and they are included in the largest global
automobile manufacturer. Supply chain management plays crucial role in terms of
enhancing the productivity level of the organization in the global market. Under this
report, supply chain management’s role and their importance was discussed and for the
same, current supply chain management of the organization was covered. Along with
this, operating level processes and the proposals for justifications were also covered
under this report for determining the changes required for improving the supply chain
management of the Toyota Motor Corporation in the international market. Apart from
this, critical success factors of the Toyota in the international market was also covered
under the report and the impact on the operation management of Toyota Corporation
was also covered under this report for determining the effectiveness and efficiency of
the supply chain management.

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