Assessment of Toyota Company's Logistics and Supply Chain Management

This report offers a comprehensive assessment of the logistics and supply chain management of the Toyota Company, Singapore. It begins with an executive summary and table of contents, followed by an introduction to the company and its global presence. The core of the report analyzes the key flows within Toyota's supply chain, including product, information, and money flows, supported by relevant figures and diagrams. It then delves into the company's making processes, such as production scheduling, material requirements, and production planning, using the Heijunka principle. The report evaluates the supply chain forecasting techniques employed by Toyota, including the Kanban system and its role in managing inventory and responding to market demands. Finally, the report concludes with recommendations for enhancing the key flows, making processes, and demand forecasting methods, aiming to improve productivity and efficiency within Toyota's supply chain operations.

Running head: SUPPLY CHAIN
Logistics and Supply Chain Management
Name of the University:
Name of the Student:
Authors Note:

1SUPPLY CHAIN
Executive Summary
In this study the Assessment and evaluation of the Logistics and Supply Chain Management
of the Toyota Company, Singapore. The study discusses the key flows in the supply chain,
the making processes and the supply chain forecasting techniques. It also provides
information to enhance the productivity in each aspects.

2SUPPLY CHAIN
Table of Contents
Introduction................................................................................................................................3
Key flows assessment of the Toyota Company.........................................................................4
Product flow...........................................................................................................................4
Information flow....................................................................................................................5
Money flow............................................................................................................................6
Strategies to enhance the Key flows in supply chain.............................................................7
Assessment of the making process of the Toyota Company......................................................7
Strategies to enhance the making processes of the Toyota Company...................................9
Assessment of the Supply chain forecasting techniques of the Toyota Company...................10
Strategies to enhance the demand forecasting methods.......................................................12
Conclusion................................................................................................................................12
Reference list............................................................................................................................13
Introduction
Logistics refers to the framework and planning orientation for the flow of information
and products in a business. Management of supply chain is implemented in companies to

3SUPPLY CHAIN
streamline the supply chain operations such as material procurement, management of
inventory, production, logistics and distribution (Mangan & Lalwani, 2016). It is the
“network of organizations that are involved, through upstream and downstream linkages, in
the different processes and activities that produce value in the form of products and services
in the hands of the ultimate consumer” (Stadtler, 2015). This study deals with the assessment
of the supply chain of the Toyota Company, Singapore. It’s basically a Japanese company
whose headquarters is situated at Toyota Aichi. It has more than 3.5 lakh employees and has
secured 13th position in terms of revenue in 2016. It has a productivity of 10 million vehicles
per year making it the first automotive company to reach such a benchmark. Kiichiro Toyoda
founded the company in 1937 and released various models of which Ranx, Hino, Lexus and
Scion are the famous ones.
Figure 1: Supply chain system of Toyota
Source: toyota-global.com
In this article the supply chain of Toyota Company, Singapore is discussed in detail.
The key flows in supply chain (the product flow, information flow and the money flow) to
the making process of the company and its effectiveness is discussed and at last the supply
chain forecasting is evaluated followed by various recommendations in each sections to
enhance productivity.
Key flows assessment of the Toyota Company
The key flows in logistics and supply chain comprises of information flow, product
flow and money flow. The product flow refers to the flow of product starting from the
development of product (raw material gathering) to final delivery of product to the end
customer (Mensah & Merkuryev, 2014). In information flow, the required information is
communicated in both directions (upstream as well as downstream) between the customer

4SUPPLY CHAIN
and the supplier. Money flow means flow of funds (upstream and downstream) between
customer and manufacturers and between suppliers and manufacturers.
Product flow
Figure 2: Product flow chart
Source: created by the author
In Toyota automotive factory, the product flow is complex as it depends upon the
nature’s product. The suppliers manufactures the parts and send it to assembly plants via
inbound logistics (Monden, 2019). In the flow chart mentioned above, the assembly plant is
identified by the factory. The parts are transferred to the body shop, and then it is further
carried to the paint shop, thereby taking it further to the assembly section and finally after
assembling it is sent for the inspection purpose (Kito et al., 2014). The finished vehicle is
transported to the dealer through the outbound logistics.
Suppliers Inbound
Logistics Factory Outbound
Logistics Dealers

5SUPPLY CHAIN
Figure 3: Production system of Toyota
Source: toyota-europe.com
Information flow
Figure 4: Information flow in Toyota Company
Source: the-lmj.com

6SUPPLY CHAIN
The information flow chart of the Toyota Company is very effective as it gives quick
responses to customer’s requirement. It reduces the lead time between the order receive and
the final delivery of the product (Bevilacqua, Ciarapica & Paciarotti, 2015). The processes
involved are well configured by the continuous flow and pull of the materials. The
customer’s requirements related to quantity, time, production mix and volume are kept in
mind for a simplified information flow. The time required for each task is settled by the value
stream and flow loop of the company. This strategy is strictly followed at all levels of
company so that there is an effective flow of information between the companies and its
employees.
Money flow
Stock holders plays a crucial role in the money flow. The following chart shows the
money flow (Coyle et al., 2016). The cash flows from the stock holders to the owners of the
company (board of directors). The money is then transferred to the president who then
allocate it to the treasurer and controller. The controller administers the flow of funds in the
company.
Figure 5: Supply chain and purchasing of Toyota

7SUPPLY CHAIN
Source: created by the author
Toyota Company monitors cash flow for an effective management of supply chain.
On time payments are made to the suppliers and transporters so that the product movement is
carried out without any hindrance between the supplier and the ultimate customer (Seuring,
2013). The fund reserves are maintained by the treasurers and the controller ensures an
effective flow of finances.
Strategies to enhance the Key flows in supply chain
JIT (just in time): It is an important tool to manage inventory level, optimize
operations and manage customer demands with no wait time (Battini, Boysen & Emde,
2013).
TQM (Total Quality Management): TQM is another tool that ensures high quality
standards and quality outputs delivered to the consumers (Yazdani et al., 2016). It reduces the
chances of defect and delivers right output to consumers.
Meeting deliverables and product specifications: keeping a quality check ensures
that the products are delivered on time and products (vehicles) are made according to the
defined specifications.
Assessment of the making process of the Toyota Company
To ensure the effectiveness of supply chain and logistics, various operational
processes are carried out periodically. The make process looks into this context only. It
includes processes like scheduling, planning processes for material requirement, production
planning etc. for the smooth processing of the supply chain.
In the production scheduling process, the orders are noted down and future forecasts
are predicated according to the no. of sales. Each vehicle is assigned a production date and

8SUPPLY CHAIN
their sequencing is done. On the basis of Heijunka principle, the production schedule is being
made for each day of every month (Chenz & Dong, 2017). Heijunka is a Japanese term which
means smoothing, referring to the smoothness by which it schedules the production process
taking into accounts the different parts of the automobile. For example, more weightage is
given to the manufacturing of engine as compared to the body colour work as production
process is hampered greatly if the engine’s production is not carried out efficiently in
contrary to the colouring of body parts.
Figure 6: Heijunka principle
Source: toyotavn.com.vn
The material requirement is done by two different processes.1) local material
requirement and 2) overseas material requirement. Placement of local materials follows the
same sequence as the assembling of the parts of the vehicle. Parts to be assembled are placed
according to the calculated time. Any delays in the scheduled time will subsequently affect
the productivity of the upcoming scheduled vehicle, eventually affecting the overall monthly

9SUPPLY CHAIN
production. Overseas material requirement involves the adaptation in production process
according to the lot size and shipping frequency.
Material planning process and production planning involves the establishing of
overtime hours and standard working hours. 16 hours is the standard working hour in the
Toyota Company and overtime depends upon the operational condition of the plant. Takt
time (time consumed in the movement of vehicle from one station to another station) is 60
seconds (Bozarth & Handfield, 2016). Any delays in takt time affects the overall
productivity.
Another important component in the making process is the operations rate. In Toyota
plant, it is set at less than 100% (Brandenburg et al., 2014). The company lays greater
emphasis on the product quality, so the assembly line is stopped whenever any fault occurs.
Time involved in vehicle correction reduces the operation rate. The vehicle/day and
vehicle/hour are also components of making process of Toyota Company which helps I
calculating the total work hour. The production ratio of a model is calculated by the model
volume and the model ratio.
Strategies to enhance the making processes of the Toyota Company
Transformations to improve capacity: process capacity can be improved by
transforming assembly lines, supply chain and production processes. Transformation can be
achieved by enhancing quality standards, reducing manual productivity and commencement
of product with minimum turnaround time.
Managing output and production using metrics: predictive metrics can be used to
manage inventory levels and customer demand. These metrics can thereby be improved by
diverse analysis of the market and big data technologies.

10SUPPLY CHAIN
Enhancing quality standards: high quality standards ensure low production waste,
on time completion of product and good brand image of the company. These standards can be
achieved by Quality Control Management.
Assessment of the Supply chain forecasting techniques of the Toyota Company
Supply chain forecasting methods are developed on the principles of regionalization,
connection strategies and new talents. It varies from industries to industries (Fawcett, Ellram
& Ogden, 2014). Simulation techniques and optimization are commonly used forecasting
methods. Optimization technique involves the planning of transportation, planning processes
and inventory so that the cost of supply chain can be minimised. Simulation technique
involves the assessment of the demand history of four year on the basis of which
management plans are constructed on a regular basis.
There are various places in the world where the production cost is cheap, the
multinational corporations takes advantage of the geographical locations and mobilize their
production site to these places to gain competitive edge in the market. This regionalization
step is only possible through proper management of supply chain by the company
(Schönsleben, 2016). Here, optimisation technique comes in handy to take advantage from
these centres.
There are certain markets where the input costs are high, so in order to reduce the
production cost, the supply networks are being localized by the company (Stadtler, 2015). To
ensure no delay in the supply of goods, the supply chain is forecasted by the company.
Simulation method can be used here.
Forecasting of supply chain involves effective analysis and problem solving skills
(Christopher, 2016). One has to be creative and innovative to forecast demands, so companies
are nowadays giving importance to these talents with integrated background.

11SUPPLY CHAIN
Toyota follows the Kanban system to effectively manage the logistics and supply
chain. Inventories are maintained by sending visual signals for fresh production arrivals and
shipment delivery. Replacement cycles tracks these signals and help buyers and suppliers to
understand the requirements (Wisner, Tan & Leong, 2014). In order to understand the
supermarkets in US, Kanban System was developed. The production rate is controlled by the
market’s demand rate by transferring the demands of the market to the producer via supply
chain system. This type of phenomenon is referred to as pull system because the consumer’s
demand is influencing the production of goods.
Earlier, suppliers were notified with the help of Kanban cards. Nowadays, electronic
systems are used to send signals when the resources are consumed by the customers. This
system is incorporated in Enterprise Resource Planning Systems (SAP ERP & Microsoft
Dynamics).
Figure 7: Kanban system of Toyota
Source: toyota-global.com