Logistics and Supply Chain Management of Toyota Motors

The essay assesses the logistics and supply chain management of Toyota Motors Corporation, the possessions of automotive products contrived by Toyota and key zones of transportation of the products of Toyota are studied. E, F, C, & D incoterm groups will be used for providing recommendations. Numerous parameters like transit reliability, technical capability, geo-coverage, and transportation costs will be used for the carrier selection to provide suitable reason of selected modes.

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Toyota Motors
Logistics and Supply Chain Management
11/18/2018

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 1
Table of Contents
Introduction...................................................................................................................2
Overview of Toyota Motors Corporation...................................................................2
Incoterm Selection Consideration.............................................................................3
Carrier Selection Criteria...........................................................................................4
Geographic Coverage...........................................................................................5
Average Transit Time............................................................................................5
Carrier’s Financial Stability and Charges..............................................................6
Carrier Relationship Management............................................................................6
Conclusion....................................................................................................................8
References...................................................................................................................9

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 2
Introduction
The essay aims at assessing the logistics and supply chain management of Toyota
Motors Corporation, the possessions of automotive products contrived by Toyota
and key zones of transportation of the products of Toyota are studied. E, F, C, & D
incoterm groups will be used for providing recommendations. Numerous parameters
like transit reliability, technical capability, geo-coverage, and transportation costs will
be used for the carrier selection to provide suitable reason of selected modes.
Moreover, transportation performance will be assessed in light of numerous
programmed relationship management to deliver elucidations from diverse
viewpoints.
Overview of Toyota Motors Corporation
Toyota Motor Corporation generally called as Toyota, is a multinational automotive
manufacturer of Japan with headquarter in Toyota, Aichi, Japan. In 2017, the
corporate structure of Toyota is comprised of 364,445 personnel globally and, as of
September 2018, was the world’s sixth-largest business enterprise in terms of
revenue (Reuters, 2018). The Automotive segment of the company comprises the
manufacturing, assembly, designing and dealing with commercial vehicles, minivans,
and passenger vehicles, like trucks and some related accessories and parts. The
subsidiaries of the company comprise Daihatsu Motor Co. Ltd., which creates and
vends compact cars and mini-vehicles, and Hino Motors, Ltd that creates and vend
commercial vehicles, like buses and trucks (Toyota, 2018). Toyota is also into the
business of automotive parts manufacturing, accessories, and components for its
own vehicles and for sale to others. Toyota Motor Corporation is the world leader of
the automobile industry ahead of Hyundai, Volkswagen, and General Motors
(Toyota, 2018). In regards to the market capitalization company is the biggest
company in Japan. Japan and U.S are the biggest marketplaces for the vehicles of
Toyota. The strategy of the company has been to concentrate on the lean frame in
manufacturing and JIT inventory (Toyota, 2018).

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 3
Incoterm Selection Consideration
According to the academicians, transportation competence of manufacturing
concerns is certainly connected with the new products market expansions of the
concerns. Moreover, the significance of demand anticipating and management of
inventory depends on the capability of the distribution system of the business (Chan
& Zhang, 2011). Toyota distributes and transports around 96 million accessories and
parts of automobile yearly. It has renovated its 35-year-old network of delivery and
distribution with the help of distribution database software and computer modeling
with an initial concentration on its Lexus section and then others (Toyota, 2016). The
logistical and distribution requirement of the manufacturer, offering heavy products
and accessories needs to be divided into numerous segments. For the purpose of
distribution, four channels are created by the Toyota Motors for large and high-end
automobiles, under which Toyopet is categorized for medium size vehicles and Netz
Toyota for the automotive accessories used in compact cars. Toyota and Toyopet
divisions of the company possess the capability of transporting over 56 million parts
of automobile and big vehicles from factor to the dealer (Dyler, 2018). On the other
side, Netz Toyota ships are accomplished of dispensing around 65 million parts of
vehicle, accessories, and compacts.
The Toyota Company operates its business in all the six continents. It follows the
policy of DOT, which means delivery at terminal for the developing markets like
Asian and South American markets. Hence, Toyota takes the logistics responsibility
and the involved risk in the fright very seriously in the developing market as it
recognizes the prominence of building brand consistency. Furthermore, the services
of transportation logistics in the urban markets include undertaking accountability
about the delay in delivery and interval time. Therefore, for the established markets
of Toyota like European and North American markets company comply with the DOT
policy as it expects that by reducing the risk of transportation it can enlarge the
market share in North America and Europe through efficient service delivery (Toyota,
2018).
Economies and markets that possess less or no customs duties need that the
outbound logistical operations must be conducted in a way that complements the
exports of these types of products as the exporter relatively have a drawback in

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 4
terms of goods outward transportation. Moreover, storing, filling, interpreting
operations valuation discloses that damages are mainly occurring at the initial stage
of exporting thus a reputed company must take the accountability regarding its
outbound distribution (Jianping & Shuai, 2012). Toyota needs to comply DAP
(delivered at the place) services in the nations with low income such as Mexico,
South Africa, India, Cuba, because customers and dealers in these areas could not
tolerate the high logistics cost burden, which results in the decline in the company’s
market share in the specified areas.
Further, for Toyota's African market, it must concentrate on reducing the dealer's risk
because the market is emerging due to customers with low-income. Toyota
Company must continue with the policy of DAP i.e. delivery at place at Scandinavian
locations as the customers and dealers in these locations can pay for the
automobiles. Whereas in the markets that are highly developed like France and the
United Kingdom along with Canada Toyota needs to follow the DAT i.e. delivery at
the terminal because of the issues of accessibility and high competition.
Carrier Selection Criteria
Toyota Motors understands the future volume for the deals signed up. Consequently,
the determining factor for the carrier selection of Toyota rests on the contract issue
volume and facility that is to be offered.
Geographic Coverage
The selected mode of the carrier needs to be referred based on the overall
geographic area, the distance between factory and point of delivery that is
mentioned in the entered contract. For instance, if the spot of delivery is within the
nation, the best mode is road carriage (Kye, Lee & Lee, 2013).
The key concern is the carrier cost that is incurred by selecting a specific mode. The
business sometimes selects some carriage mode that is expensive which results in
extra cost.
Toyota Motors can minimize its expenses on logistics by selecting inexpensive
carriage selection regarding cross-boundary transportation. Waterways
transportation selection over merchandise transfer through airlines is a superior

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 5
choice. Furthermore, maintaining and developing cost of the roads are low.
Accessories can be transported by using airways because they are of smaller widths
and the air freights can suitably be distributed as per their cost of overhead. Yet,
regarding the large parts of the vehicles, the use of sea transportation through huge
carriers of freight is suggested, however, this type of transportation is supposed to
deliver products at a slower rate in comparison to different transportation modes.
Average Transit Time
The definite whole length of the transit time and the consistency at that time is a
significant consideration. The time duration that is needed for the transition support
in taking a decision regarding the carriage mode (Martens, Golub & Robinson,
2012).
The carrier option i.e. Marine transportation selected by the Toyota Corporation in
order to save the cost takes longer time and the carriage mode that incur lesser time
like transferring parts of the automobile by airways or through trucks are costly
(Toyota, 2018). Therefore, in the Latin America and African market Toyota must
make use of railways as the transportation mode because the road infrastructure of
these areas is very poor that results in high charges over freight. However, for the
Asia and Oceania markets, Toyota must make use of marine transportation because
it is the finest way for delivery and distribution of the products.
Carrier’s Financial Stability and Charges
The freight charges vary for diverse businesses of the carrier, but it is the duty of the
company to verify its financial stability and compare the charges then select
(Zacharewicz, Deschamps & Francois, 2011). Concern related to higher freight
charges is that the businesses that are not financially stable get to indulge in unfair
practices in order to release the charges. Therefore, the company should verify the
financial stability of the carrier company for its carrier services.
Toyota Corporation can manage its carrier operations by choosing marine
transportation for the geographical areas that are separated by huge water bodies
whereas for the transportation within the country railways transportation is the

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 6
suggested transportation mode for the logistics service system. These modes have
been selected for the Toyota Corporation to minimize the time taken for delivery.
Carrier Relationship Management
Managing an operative carrier relationship is very essential for keeping the balance
between carrier service and the contract is taken into account. The diverse kinds of
carrier relationship management (CRM) are as follows:
 Joint Venture CRM
 Arm’s length CRM
 Vertical integrations CRM
 Type I partnership CRM
 Type II partnership CRM
 Type III partnership CRM
Toyota Motor Corporation complies with the Arm’s length system of relationship
management. This sort of relationship is generally adopted by those businesses that
possess their independent opinion in all type of party transaction. Being an
independent company in the market Toyota Motors make use of this type of
relationship system (Stathopoulos, Valeri & Marcucci, 2012). Toyota's control
division manages to have a more serious method for maintaining the inland network
of logistics such that the product delivery can be done precisely and timely.
According to the vice-president of Toyota, i.e. Steve Brown, the company always try
to comply with the same logistics procedure at all the locations in the whole world
(Ludwig, 2013). Under this sector, there is very small inventory involved of Toyota
and thus it likes to work in small lot delivery, generally following a flexible and large
network of trucking for timely delivery.
Toyota Motors prefer to have a smooth flow of the product delivery therefore, it
believes in the network of trucking for the deliveries inland, whereas for foreign
deliveries it adopts waterways and trains. The service of the inbound carrier is highly
coordinated. The codes and routes of the vehicle are secure and planned. Toyota
Motor has its operations across the world and no matter how hard it attempts
following a similar carrier relationship is though not conceivable. Several branches of
the company like to make use of Arm’s length relationship management but some

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 7
branches are there who like to choose any different kind of relationships. The
selection of the carrier relationship is dependent on the economic background of the
country, geographical factors, and resource availability (Rezapour, 2011).
After the analysis, it could be recommended that Toyota Motors needs to adopt any
other system of carrier relationship management that reduces the excessive costs
related to logistical operations. By complying with the new system, a business may
get a better outcome or can enhance the carrier relationship. In order to keep this
carrier relationship, organization should meet its obligation and the information it
offers to its carriers. The information related to products is very essential for the
carriers at the type of bid procedure; henceforth, the organization should offer the
carrier all the significant required information. In place of employing diverse carriers
for diverse deliveries, the business should offer the opportunity to the courier
company to offer services by becoming the partner carrier within the company. This
will result in minimizing the chances of any kind of loss and fraud. Another
advantage of this will be the reduced cost of operations. Besides this, the company
must organize annual meetings in order to review the performance as well as issues
experienced by the carriers and provide a solution for them.
Conclusion
Assessment of the distribution policies and logistical operations of Toyota Motor
concludes that the organization, being a self-determining body, follows the Arm’s
length as the carrier relationship system. The Toyota Company comply with this type
of management for all its worldwide branches. The ways of enhancing the carriers’
services of the Toyota and the transportation modes has been discussed in the
report. The goods carriers need a lot of information about the products for precise
delivery. Toyota Company uses different patterns of logistical service at different
locations and even though it had thrived in offering great end and environmentally
friendly goods to its customers. However, it needs to adopt different changes in its
international carrier policies. The responsibility parameters need to be altered
regarding accessibility factor and economic variables. In addition, the facility of
distribution is strong in some markets such as Canada, India, and the US, while the

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 8
Central Africa Middle East market, is underdeveloped in comparison to the industry
benchmarks.
References
Chan, F. T., & Zhang, T. (2011). The impact of Collaborative Transportation
Management on supply chain performance: A simulation approach. Expert
Systems with Applications, 38(3), 2319-2329.
Dyler. (2018). The 10 Years When Toyota Produced the Toyopet. Retrieved from
https://dyler.com/posts/78/the-10-years-when-toyota-produced-the-toyopet
Jianping, Z. H. O. U., & Shuai, D. A. I. (2012). Urban and metropolitan freight
transportation: a quick review of existing models. Journal of Transportation
Systems Engineering and Information Technology, 12(4), 106-114.
Kye, D., Lee, J., & Lee, K. D. (2013). The perceived impact of packaging logistics on
the efficiency of freight transportation (EOT). International Journal of Physical
Distribution & Logistics Management, 43(8), 707-720.
Ludwig, C. (2013). Toyota’s total supply chain vision. Retrieved from
https://automotivelogistics.media/interview/total-supply-chain-vision
Martens, K., Golub, A., & Robinson, G. (2012). Integrated production and intermodal
transportation planning in large-scale production–distribution-networks.
Transportation Research Part E: Logistics and Transportation Review, 60, 62-
78.
Reuters. (2018). Toyota Motor Corp (TM). Retrieved from
https://www.reuters.com/finance/stocks/companyProfile/TM
Rezapour, S. (2011). Logistics Operations and Management: Concepts and Models
1st ed. Netherlands: Elsevier.
Stathopoulos, A., Valeri, E., & Marcucci, E. (2012). Stakeholder reactions to urban
freight policy innovation. Journal of Transport Geography, 22, 34-45.

LOGISTICS AND SUPPLY CHAIN MANAGEMENT 9
Toyota. (2016). Toyota operations. Retrieved from
https://www.toyota.com/usa/operations/docs/OperationsMap_2016_DigitalV10
1.pdf
Toyota. (2018). Basic overview of the INCOTERMS® rules. Retrieved from
https://www.toyota-gib.com/eng/logistics/incoterms.html
Toyota. (2018). Company Profile. Retrieved from
https://www.toyota-global.com/company/profile/
Toyota. (2018). Company. Retrieved from https://www.toyota-global.com/company/
Toyota. (2018). Logistics. Retrieved from
https://www.toyota.co.jp/en/environmental_rep/03/pdf/E_p34_35.pdf
Toyota. (2018). Toyota Global. Retrieved from https://www.toyota-global.com/
Zacharewicz, G., Deschamps, J. C., & Francois, J. (2011). Distributed simulation
platform to design advanced RFID based freight transportation systems.
Retrieved from https://hal.archives-ouvertes.fr/hal-00588338/document