Toyota Corporation Supply Chain Analysis

This assignment delves into the intricate workings of Toyota Corporation's supply chain. It meticulously examines the essential flows within the supply chain, dissects the company's production processes, and explores its sophisticated supply chain forecasting techniques. The report leverages technology, inventory management, inter-organizational collaboration, and communication as key attributes of effective supply chain management. A comprehensive discussion is provided, aiming to serve as a valuable resource for further academic exploration.

Running head: Toyota Car Manufacturer Company 1
Supply chain management
Toyota manufacturing company

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Contents
Introduction.................................................................................................................................................3
Toyota.....................................................................................................................................................3
Key flows in Supply chain...........................................................................................................................5
Information flow......................................................................................................................................6
Product flow............................................................................................................................................6
Cash Flow................................................................................................................................................8
Return flow..............................................................................................................................................9
Make Process Analysis..............................................................................................................................10
Production plan process.........................................................................................................................10
Master production scheduling (MPS)....................................................................................................11
Recommendation and justification........................................................................................................12
Supply Chain Forecasting..........................................................................................................................13
Demand Forecasting and Planning........................................................................................................13
Conclusion.................................................................................................................................................16
References.................................................................................................................................................17

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Introduction
Supply chain management is considered as the management of the flows of goods and
services. It comprises the association and storage of raw materials, inventory of work in progress
and the detail of finished goods from origin point to consumption. The importance of supply
chain management is vital in every organization because it is able to optimize the operation to
increase the efficiency and speed of the work flow. The report will focus on supply chain
management of Toyota Manufacturer Automobile Company. The key flows in supply chain of
Toyota Company will be described with complete understanding.
Toyota
Toyota Motor Corporation is the multinational automobiles manufacturer company of
Japan. The head quarter of this company is situated in Toyota, Aichi, Japan. The employees of
this company are 364,445 approximately worldwide. Akio Toyoda is the present CEO of Toyota
Company. It is the fifth largest company in all over the world in the context of revenues. As of
now, Toyota is the largest automotive manufacturer company in all over the world. It was first
automobile manufacture that produced more than 10 million vehicles per year. Toyota Car
Manufacturer Company has been using its principles to manufacture the consistent car as well as
sustainable development of society through occupies innovative and super quality products and
services.

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Figure 1: Brand Power of Toyota
Source :(Bhasin, 2016).
Toyota is used differentiation cost and low cost as generic strategies to gain a competitive
advantage in the automobile industry.
The philosophy of Toyota is people and perfection that is why it includes a set of tools that are
designed in a way to support people in the term of improving constantly (Christopher, et. al.,
2017). For instance, one piece flow is a very demanding process in Toyota Company that hastily
surfaces issues that requires fast solution.

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Key flows in Supply chain
Supply chain management can be considered as the systematic flow of goods, materials
and information regarding suppliers, buyers and consumers. It emphasizes the information flow,
cash flow, products flow and return flow. It is integral for appropriate flow of services to manage
all flows in sophisticated manner. There are various techniques related to supply chain
management which can be facilitated an organization to attain a reputable position in the same
industry (Hill &Fredendail, 2016). These techniques can be helpful to figure out the threats in
the existing market for the chosen industry so that it can be reduced without allowing them to
take huge form of issues. Toyota is multinational well known company and it applying various
techniques of supply chain management.
Figure 2: Supply chain management flow
Source: (Soosay, Fearne &Varsei, 2014).

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Information flow
Information flow is the vital aspect of the supply chain management that involves quotation
demand, purchase, change demand, product description, queries of customers about products and
the feedback of the customer about the provided services by company. In the reference of Toyota
Company, information flow is vital aspect of the supply chain technique of the Toyota Company.
The procedure of information flow initiates when Toyota declares the product of its company in
front of the customers with entire details of cost and entire information regarding products
(Jacobs & Chase, 2013). The quotation is become efficient when Toyota offers its customer a
heavy discount of buying car. The information of products of company is published on the
website of the company to show the entire ad relevant information about the product to the
customers.
Product flow
The flow of goods and products by manufacturer to customer is known as product flow. Toyota
is using various strategies to flow it s product in systematic manner. The Toyota Production
System (TPS) is an integrated socio-technical system by Toyota. It manages manufacturing and
logistics for the automobile manufacturer, involving interaction with suppliers and customers.
The main focus of Toyota is to diminish the cost of manufacture by increasing the demand of
customer. The production system of Toyota is effective. Constant flow of production is divided
into just in time production and Jidoka (automation). Just in time involves pull system and
continuous flow while Jidoka prevent and notify of abnormalities and separate the work of man
and machine appropriately.

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Figure 3: Toyota Production system
Source: (Stadtler, 2015).
It has been evaluated that Toyota is leading company in the manufacturing world of car
industry. It is willing to compensate suppliers for raising raw material costs.
Figure 4: Toyota leads the pack

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Source: (Stadtler, 2015).
The production flow of Toyota is systematic and its employee has to follow them step to step for
effective manufacturing. The production flow of Toyota is mentioned below:
 punching
 roll mining
 assembling
 swaging
 testing
 Packing.
Figure 5: production flow of Toyota
Source: (Lucky & Takim, 2015).

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Cash Flow
Toyota is able to manage its cash flow wisely and efficiently. The cash flow statement gives
information about the cash payment and cash receipt of during an accounting period. Toyota is
able to gather the amount of products from their clients and able to pay back to their customers.
The normal expectation of Toyota is 3% to 4% price reduction per year after launching new
model. Customers pay the cost of product to the manufacturer of the product and on the basis of
bill statement; customers check the product in efficient manner so that they get right car in best
quality. The main focus of Toyota Corporation is providing best quality car to its customer as
per their affordability. That is why it distinguishes the category of car with high quality so that its
customer remains happy with products as well as price.
Return flow
Return flow does not include any value for clients and revenue for the company. Toyota is using
inbound as well as outbound logistic technique for handling its return flows. Inbound logistics of
Toyota Company encompasses two operations; the first operation is the part of transports from
local suppliers to the local plants. The second is considered as the separate operation in which
company establish a relationship with certain manufacturers of third party logistic providers to
deliver logistic services (Piotrowski & Guyette, 2010). Outbound logistic is also considered as
the product distribution. Toyota is very trustworthy company and in case of any return products
due to lack of perfection, it repairs the product for making satisfied its customers.

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Make Process Analysis
Production plan process
The production plan process is vital component for Toyota Company because it determines the
product, planning, sourcing and design of the product as per trend of the world (Matsuo, 2015).
The process of Toyota Company is mentioned below:
 product, planning and design
 plant design for flexibility
 package design for logistics
 purchasing
 annual sales and operational planning
It has been analyzed that 80% cost are fixed at manufacturing stage. The Toyota production
system is enhancing the efficiency of production through the elimination of waste. It is based on
two concepts such as Jidoka and Just in time. Jidoka is also known as automation in which
prompt action is being taken to correct mistakes at any stage in the production process (Stadtler,
2015). The machinery in Toyota production system is able to detect an issue and prevent so that
any essential adjustment can be made. The “andon” display board is able to present the
information to others and operators can constant working on other machines. It is the way which
is helpful to preventing the issues from happening again while maintaining quality and
productivity (Stadtler, 2015). On the other hand Just in time means making only what is
required, when it is required, at every step of production. The main focus of Toyota Company is
to deliver the new stock at right time in the right quantity so that no interruption can arise in the
process of production. There is system available in Toyota Company that is Kanban system

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which is central to the just in time process and provides a real time method to restock parts to the
line side (Schaltegger & Burritt, 2014).
Figure 6: Toyota Production system
Source: (Lucky & Takim, 2015).
Master production scheduling (MPS)
Master production scheduling is a planning process made by company to organize the staff,
handling the inventory and managing the cost and production of the company in an appropriate
manner. A typical Toyota assembly plant is highly integrated. The process of Toyota assembly
plant presents how a vehicle flows through a Toyota plant. The production schedule of Toyota is
created once a month from the sales order and forecast. The first step of making the production
schedule is to utilize the sales order to build the particular records for each vehicle and assign a
reference number for that vehicle. It is an integral step because it is important that each vehicle
should be assigned to a production slot (Swink, Melnyk, Cooper & Hartley, 2014). The Vehicle
Identification Number (VIN) can be used to identify a unique vehicle.

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Figure 7: Master scheduling system
Source: (Swink, Melnyk, Cooper & Hartley, 2014).
Recommendation and justification
It has been recommended to the Toyota company to apply various strategy of supply
chain management as it has been analyzed that Toyota has faced various issues and complaints
from the customer due to lack of quality in its products. It is important for the company to keep
focus on quality. The task should be divided to employees within a company as per tier working
capability; it will be helpful to enhance the productivity in efficient manner.

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Supply Chain Forecasting
Demand Forecasting and Planning
The main focus of supply chain management at Toyota is on the demand planning and demand
forecasting. Technology and innovation is an integral component in the techniques of supply
chain management of Toyota Company.
Figure 8: demand of Toyota car by region
Source: (Bhasin, 2016).
Every step of the company of fulfilling the demand of customer is done with efficient manner
and every car has some specific name which helps manager to maintain all the related data to the
incoming and outgoing products. The demand forecasting data is facilitated to resolve the issues
for improving the condition of market place, public condition and system improbability.

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Figure 9: supply chain management in Toyota Company
Source: (Soosay, Fearne &Varsei, 2014).
The targeted customers of Toyota corporations retail customers, suppliers, rental companies,
government entities and commercial fleet. Toyota hands out the prizes yearly to suppliers that
enhance the profit if the company in an appropriate manner along with it maintains its relations
with suppliers. The range of suppliers of Toyota is wide that involve Tesla motors, which signed
a $100 million agreement with Toyota to supply the power train for RAV4EVs. The Detroit plan
of Toyota, the Camry model has suppliers like Good ridge fluid transfer system, Magnaflow,
Autometre, goodyear, optima batteries and IPT performance transmission. Since modern cars
have built-I infotainment system, Microchip Technology is considered as the supplier for not
only Toyota corporation but also for other manufacturers involving general motors. It is the
expectation of the Toyota Company to remain one of the most popular manufacturers of car in all
over the world.

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It has been recommended to the company to provide the innovative products to its customer by
inspecting each and every component of model. It has been analyzed that Toyota was highlighted
in three separates but related recalls of automobiles by Toyota Company happened in 2010.
Toyota should use polices of CPFR: Collaborative, Planning, forecasting, Replenishment. It is
effective strategy and by applying this strategy, company can get their targets within time frame.

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Conclusion
It has been concluded that Toyota is the biggest car manufacturing company of Japan. The role
of supply chain management in its company is vital because it provides the entire information
about the movement and storage of raw materials, inventory of work in progress and the detail of
finished goods from origin point to consumption. Customer power, long term orientation,
leveraging technology, inventory stock, inter-organizational collaboration and communication
across organization are key attributes of supply chain management. The report has covered the
key flows in supply chain, make process analysis and supply chain forecasting of Toyota
Corporation. The discussion has been made in appropriate manner which can be helpful for
further study.

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References
Bhasin, H, (2016). Marketing mix of Toyota – Toyota Marketing mix. Retrieved on 15th
September 2017 from: https://www.marketing91.com/marketing-mix-toyota/.
Christopher, M., Christopher, M., Holweg, M., & Holweg, M. (2017). Supply chain 2.0
revisited: a framework for managing volatility-induced risk in the supply
chain. International Journal of Physical Distribution & Logistics Management, 47(1),
2-17.
Hill, E. &Fredendail, L.D. (2016). Basics of Supply Chain Management, CRC Press.
Jacobs, R. & Chase, R. (2013). Operations and supply chain management, McGraw-Hill Higher
Education.
Lucky, B, O & Takim, S. (2015). Manufacturing defects in the automobile industry, a case study
of the remote causes and effects of Toyota‟s transmission malfunctions in cars,
International Journal of Engineering and Applied Sciences, ISSN: 2394-3661, Volume-2,
Issue-8, August 2015.
Matsuo, H. (2015). Implications of the Tohoku earthquake for Toyota׳ s coordination
mechanism: Supply chain disruption of automotive semiconductors. International
Journal of Production Economics, 161, 217-227.
Piotrowski, C., & Guyette, R. (2010). Toyota Recall Crisis: Public Attitudes on Leadership and
Ethics, Organization Development Journal, 28(2), 89-97.

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Schaltegger, S., & Burritt, R. (2014). Measuring and managing sustainability performance of
supply chains: Review and sustainability supply chain management
framework. Supply Chain Management: An International Journal, 19(3), 232-241.
Simchi-Levi, D., Schmidt, W., & Wei, Y. (2014). From superstorms to factory fires:
Managing unpredictable supply chain disruptions. Harvard Business Review, 92(1-2),
96-101.
Soosay, C., Fearne, A., &Varsei, M. (2014). Extending sustainable practices beyond
organizations to supply chains. In Linking Local and Global Sustainability (pp. 71-90).
Springer Netherlands.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28), Springer Berlin Heidelberg.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management
and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Swink, M., Melnyk, S.A., Cooper, M.B. & Hartley, J.L. (2014). Managing operations across the
supply chain (pp. 248-249), New York, NY: McGraw-Hill/Irwin.
Victor L. H. & John, R. D,. (2011). Toyota in crisis: Denial and mismanagement, Journal of
Business Strategy, 32(5), 4-13.

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