Toyota's Supply Chain Management Strategies

This assignment examines Toyota's approach to supply chain management. It highlights the company's use of strategies like just-in-time and lean manufacturing to enhance efficiency and meet customer needs effectively. The analysis emphasizes the role of identifying and evaluating various aspects of operations and supply processes for continuous improvement and delivering high-quality products on time.

Understanding Operations,
Logistics and Supply Chain

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
Critical review :...........................................................................................................................1
Analysis.......................................................................................................................................2
Conclusion and recommendations:.............................................................................................5
REFERENCES................................................................................................................................8

INTRODUCTION
Toyota motor corporation is one of the world's largest auto-maker firm in terms of
volume. This Japanese motor company was established in 1937, and its name was originated
from its founder whose name was Kiichiro Toyoda. Now, this company run its business
operations throughout the world with 53 overseas firms in 28 nations and regions. This produce
and sell motor vehicles throughout the world, and its motor vehicles are sole in above than 170
nations. It became 1st auto-maker company by volume in 2008 and supersede General Motors,
for the first time. At that time it's total international market share was 13.8%. since then, the fight
to become world's top auto-maker company started (Colicchia and Strozzi, 2012). This
continuously goes on in the next forthcoming years. The company earlier had some issues
relating to defects in the auto-cars which spoiled the firm values. Although, Toyota overcome
such controversy by recalling whole batch motor-cars. But this spoils entire firm performance.
SCM is an integration of supplier, manufacturer, whole seller and the customers. The supplier of
deliver raw material to the producer who in turns produce the goods and makes the final product
and deliver to the customer.
TASK
Critical review:
Toyota apply supply chain management in its business operations in order to get an
effective business operations. As, supply chain management is the tool where the raw material is
buy from suppliers and then it processed for making final outcome which can be used by the
consumers. If this supply chain management is effectively applied in the firm. Then the company
can get the competitive advantage over the rivals (Gimenez and et. al., 2012). However, this can
be said that the Toyota uses supply chain management in an effective manner. Such report
includes of the evaluation process of the performance of the supply chain management although,
the performance of the firm can be assessed by taking help of quantitative and qualitative
measures. The assessment done by the management helps the Toyota to eliminate the weak
performance. The performance measurement criteria covers customer satisfaction, supplier
performance, integration of material flow and information. It can be rightly stated that
performance assessment assist the firm in enhancing strategies of the firm for great competitive
advantage.
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The performance of the Toyota Motors can be evaluated by using quantitative and
qualitative measures. These are discussed in details:
quantitative tools would covers the following tools:
Satisfied customers: Consumers plays a crucial role in supply chain management
because the final outcome goes to the consumers. Consumers are required to be satisfied about
what the product or service company provides to its consumers. As customer satisfaction can be
divided into three parts which are: before transaction satisfaction, satisfaction during transaction
and satisfaction after transaction is done. The customers who are satisfied would renders more
business to the cited company.
Integration of material flow and information: The supply chain management is the
tool which assist the firm to effectively communicate information in an adequate manner so that
the transportation of material is done in effective manner. The information exchanged must be
adequate and within a time frame.
Supplier performance: This is imperative for the firm to have the supplier who are
capable and efficient in sound time management. In addition to this, connection between supplier
and firm is likewise imperative. This is crucial to have strong relationship between the Toyota's
suppliers and the company.
Qualitative measures will covers financial and non financial performance measures:
Non financial measures would covers the level of customer service, level of inventory and uses
of resources. In addition to this, the waste management is also one of the evaluation factors in the
production industry and most probably in the auto-maker supply chain.
Financial measures oversee the performance of the supply chain on the basis of optimum profits
and least loss.
Analysis
Toyota company makes strategy in order to improve supply chain management so that
the final outcome can be delivered to the ultimate consumers within the allotted time.
Henceforth, there is a need to make certain things so that the business can able to get the
competitive advantage over the others, and this is also crucial for the survival. Henceforth, there
is a requirement of strategies and their application (Waller and Fawcett, 2013). Once these
strategies are assessed by the firm then in that case, implementation of supply chain would get
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succeed. these kind of strategies that could be implemented to improve the supply chain in
Toyota motor's manufacturing unit covers the following:
Lean and Agile strategy to the supply chain: Lean is applied in the supply chain for
enhancing the performance and likewise assists in competitiveness in the market. Although, agile
is succeeding step to the leanness, that are requires to be implemented after the lean. They both
together form leagile supply chain, where suppliers and the cited firm are beneficial. So that the
business can be applied in an effective manner.
Benefits:
 The implementation of lean and agile in supply chain of firm would limit the working
hours. Because, the firm would pay more care to the value added work.
 The quality of work is enhanced as the wastage is little and the value added activities are
optimised.
 This also enables the regular betterment of the quality of the product and services.
 Competitive advantages is sustained as the implementation of agile and lean would
increase the productivity of the firm.
Constraints:
 Training cost of the firm would be high.
 For lean and agile implementation, this is imperative to have the skilled labour.
 Efforts for enhancement is required to be made at whole level in the supply chain.
Logistic Strategic: The success of the supply chain is mostly connected to the logistics of the
firm. Henceforth, this is crucial for the firm to have the logistic strategies in place. This is
imperative for Toyota to frame decisions strategically on the logistics. Such kind of strategies are
required to be planned by way of distribution points, transportation tools which the firm would
implemented. If the firm needs to make certain things which are required to make certain tools
that are used by the firm (Ashby, Leat and Hudson-Smith, 2012). There are certain benefits
which can avail after implementing logistic strategies.
Benefits:
 Access to the resources, processes and techniques enhanced.
 Enhancement of customer satisfaction by using logistics strategies.
 With the help of logistic strategies, firm could determines in a transparent manner.
Constraints:
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 Distance between clients, human touch is missed.
 This is possible that there is the much gap in the views of the third party provider.
 Logistic operations are not managed.
Purchase and procurement strategies: This plays a crucial role in the supply chain
management. This limits the rates of raw material which could enhance the profits margin in the
final outcome (Significance of Mobility in Supply Chain Management, 2016.). In addition to this,
this can be said that this is most crucial to have the clear objectives for purchasing the firm.
Although, the firm likewise requires to implement Total Quality Management by which quality
of the firm improves in an effective manner with zero defect and error.
Benefits:
 If purchasing strategies are made, then it is apparent that the operation cost would limit as
buying of raw material would be at low price.
 By implementing this, the service quality is getting improved.
 Supplier connection with the firm would be sound if both divisions would make their
operations in an efficient manner.
Constraints:
 If purchase strategies are not right then there is a possibility of enhancement of inventory
which would ultimately affects the firm's profits.
 In a similar way, the procurement division made the contract without assessing third
parties could introduce bother to the firm.
Lean production system: Although, Toyota uses lean production system for producing the
Toyota cars. Such kind of methodology overlap the six sigma methodology. But differ in that,
lean production system is driven by determining of customer wants and tries to enhance process
by eliminating activities which are non value added. Processes in the lean methodology includes
value maximising activities in a great possible sequence to permits consistent operations. Such
methodology is based on root cause assessment to examine mistakes and then tries to improve
them in an effective manner.
Toyota's success is based on its lean production system, effective supply chain
management and Just-in-Time methods (Monczka and et. al., 2015). Lean production system and
supply chain management is discussed earlier and now, Just-in-Time methods are discussed in
details:
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Toyota's Just-in-Time methods: Toyota's motors is capital intensive in nature. Such
method is the driving cause behind efforts by the auto makers to implement cost effective
business strategies in order to lower their production costs. Cited company's production system is
one of the key most notable business strategies used by the auto maker. As this is an integral
part of the firm production related activities which are used by the firm in order to find out the
methods or ways by which cost of production can be reduced in order to minimise the costs.
Toyota uses Just-in-Time approach in 1938. although, an exact potential of such strategy was
implemented at the time when integrated such kind of strategy with the Toyota's Production
System (Colicchia and Strozzi, 2012). The firm affirms that this system depends on the concept
of “complete elimination of waste”.
As per the firm, the Toyota performance system emerged via so many years of trial and
error to enhance the efficiency which is based on the Just-in-Time method founded by company's
founder whose name is “Kiichiro Toyoda”. The cited firm elaborates JIT as forming only what
firm is required, at the time it required, and in the amount required.
Implementing JIT in the firm, Toyota manufactured its vehicles which depends on the
orders firm get via its dealers. Under the manufacturing process of the firm, it uses supply chain
management tool in an effective manner so that the final outcome which is produced by the firm
received on time to the dealer (Schönsleben, 2016).
Just-in-Time likewise the importance of work efficiency. As per the company's website,
the implementing of JIT within the TPS means that individual cars could be incorporate to order
and that each component has to fits effectively first time as there are no options available under
this.
Conclusion and recommendations:
Conclusion
From the above mentioned report, this has been observed that the Toyota Auto-maker
applied effective supply chain management so that the company gain the sustainability in their
operations. Although, this can be said that the company is required to make effective strategies
which assist the firm to gain their pre-set target. Under this report, Just in time, lean and Agile
approaches are used by the firm so that the business can attain their pre-set objectives in an
effective manner (Van Wassenhove and Pedraza Martinez, 2012). Analysis has been done on the
certain strategies so there advantages and limitations. This is assessed that it is crucial for the
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firm to make the strong strategies in order to attain sustainable development in this perfect
market. Under this report, this is assessed that the cited firm is required to implement these
strategies for managing and enhancing the performance of the supply chain and likewise emerge
and keep sustainability in SCM. If such factors are implemented by the firm, then they are
required to enhance their performance of the supply.
Supply chain management of Toyota is considered to be suppliers and dealers as partner those
are sharing profitability with them. It has helped them to manage supply chain efficiently.
Through levelling out production, demand and supply that has helped to maintain stability in
supply chain management in an organisation. With the effective demand forecasting, production
and supply chain activities are manageable in more specific manner (Rushton, Croucher and
Baker, 2014). Toyota takes maximum responsibility for procuring parts from suppliers which
enhance reliability on inbound logistics. The company is increasing sources of strategies to risky
extremes without proper risk management oversights which required closer observation on tier-2
and 3 suppliers. If they are going with wide expansion of their business that means working with
unfamiliar suppliers that makes proper and effective understanding of Toyota culture. There is
need for improvement in outbound logistics. Responsibility for selling the vehicles that are
produce by the manufacturers to the retail customers. Toyota sales model is designed in that
manner to get high percentage of vehicles is sells from low level of dealers stocks. The
description of outbound logistics are starts from vehicles at marshalling yards from where all the
accessories are get installed and reached to final quality assurance team to check the product
quality. Then, it get transfer to the other segment of the branches of an departments.
Recommendation
As per the above data it is recommended to Toyota firm that company needs to analyse
process of its supply on continuous basis. With this manager can identify the loopholes and
shortcoming and can eliminate the same with use of effective tools and methods. It is essential
that supply process of firm should be effective as this help enterprise in offer featured products to
its customers in time and which increase satisfaction of customers and loyalty toward enterprise.
In this way, company can retain its customers for long period of time which provide number of
long term benefits to company. With use of various approaches firm can bring coordination
among its various functions which ensure effective completion of various business activities. In
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order to make the whole activity of operation and supply more effective it is recommanded to
manager to analyse the activity on continuous basis through various aspect. In this way,
manager of Toyota can maintain the quality of its final products and at the same time can
maintain the cost of final products. With this, company can offer quality products to its
customers in time and at affordable prices. Effective execution of supply and operation activity
increase efficiency of various business activities and makes the enterprise able to better satisfy
needs and wants of its customers (Gligor and Holcomb, 2012). At present Toyota use various
approach such as just in time and lean which aid effectiveness in various activities of business.
Further, to perform better various aspects of operation and supply process must be identify and
evaluate by manager. With help of this, organisation can increase effectiveness of its supply
activity and at the same time can offer quality products to its customers in right time.
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REFERENCES
Books and Journals:
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Gligor, D.M. and Holcomb, M.C., 2012. Understanding the role of logistics capabilities in
achieving supply chain agility: a systematic literature review. Supply Chain Management: An
International Journal. 17(4). pp.438-453.
Van Wassenhove, L.N. and Pedraza Martinez, A.J., 2012. Using OR to adapt supply chain
management best practices to humanitarian logistics. International Transactions in Operational
Research. 19(1-2). pp.307-322.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
Monczka, R.M. and et. al., 2015. Purchasing and supply chain management. Cengage Learning.
Ashby, A., Leat, M. and Hudson-Smith, M., 2012. Making connections: a review of supply chain
management and sustainability literature. Supply Chain Management: An International Journal.
17(5). pp.497-516.
Waller, M.A. and Fawcett, S.E., 2013. Data science, predictive analytics, and big data: a
revolution that will transform supply chain design and management. Journal of Business
Logistics. 34(2). pp.77-84.
Gimenez, C. and et. al., 2012. Supply chain integration and performance: the moderating effect
of supply complexity. International Journal of Operations & Production Management. 32(5).
pp.583-610.
Colicchia, C. and Strozzi, F., 2012. Supply chain risk management: a new methodology for a
systematic literature review. Supply Chain Management: An International Journal. 17(4).
pp.403-418.
[Online]
Significance of Mobility in Supply Chain Management. 2016. [Online]. Available through: <
http://www.rigelnetworks.com/significance-mobility-supply-chain-management-2/ >.
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