Description of the company
Toyota is recognized a Japanese automotive producer headquartered in Toyota, Aichi Japan. Toyota founded by Kiichiro Toyoda in 1937 initially it launched its frits product as the Type A engine which was followed by Type AA engine. Some of the notable initial brands of the company needs to be considered as per Hino, Lexus, Ranz, and Daihatsu. Toyota is also seen to hold a stake worth 16.66% in Subaru and 5.9% in Isuzu. The company is also known for holding JV stocks with two in China namely GAC Toyota and Sichuan FAW (Toyota-global.com, 2018).
In 2018, the corporation was known for being the sixth largest company in the world in terms of the revenue. The automotive giant was identified as the world’s first producer of more than 10 million vehicles over a time period of ten years. It needs to be also seen that the overall production process of the company was reported with production of 200 million vehicles. On 2014, the company was depicted as the largest listed company in the country in terms of market capitalization. The main form of the technology implemented by the company has been recognized in terms of leader in the sales of hybrid electric vehicles and encourage the mass market for the adoption of the hybrid vehicles across the globe (Toyota-global.com, 2018).
Strategy of the company
The global vision of Toyota is seen with leading the way to the future with the use of mobility and enhancing the lives of the people globally which is identified as one of the safest and responsible manner of moving people. The company further stats in in its global vision statement that with the commitment to quality the company aims for a constant innovation in terms of exceeding expectations. It also states of meeting any challenging goal by engaging with talent and passion of the people (CORPORATION, 2018).
- Attracting and attaining of customers with high value services and products
- Ensuring most satisfying experience of the customers all over the globe (Toyota.custhelp.com, 2018).
Core Values of Supply Chain
- The SCM of Toyota is mainly depicted with the amalgamation of the vendors, manufacturers, dealers and customers.
- The vendors are seen to source the local parts, while the manufacturers are mainly responsible for receiving the stock and contribute to the production process.
- The next step is identified with moving the supply chain process to the dealers and customers (Jacobs, Chase & Lummus, 2014).
Analysis of the supply chain strategy and its strategic fit
SCM at Toyota is identified as a process which is mainly composed of the elements thoroughly based on “Toyota Production System (TPS)”. The main conceit of this was developed in 1940s by Shigeo Shingo and Taiichi Ohno which is concerned with the integration of socio-technical system. This is often identified with the philosophy and practices as per the instructions of the customers. Since then the company has gained a wide range of success worldwide in TPS and such a principle has been mainly considered under the concept of lean manufacturing (Matsuo, 2015). Therefore, the main considerations for the strategic fit is identified with not only following a lean approach to the production system but also include the strategic fit model which focuses on TPS through better quality, smoother operations and promoting team work. In addition to this, some of the other strategic fit of the supply elements of the company needs to be identified as per smoother operations, pull scheduling, maintaining better quality, smaller batches and improving the overall setup skills.
The Production process of Toyota is seen to use the benchmarking system of lean approach. The overall production process is considered with the supplier partnership hierarchy which is associated to the theory of Kaizen and learning theory. These theories suggest to the joint improvement activities along with the various type of the improvement which are seen to be considered with the appropriate information sharing of supply chain contributing to the interlocking structure and mutual understanding and trust. The main elements of the supply chain strategy of the company are composed of basic elements of lean supply chain concepts such as cellular layouts, pull scheduling, six sigma quality and team work. The supply chain strategy of Toyota has been further depicted to be based on the arioso type of strategies which are related to maintaining of fast set up time and lesser value of the inventory. In addition to this, the contribution of the overall results of the company has been further considered with superior quality of products, maintaining lower cost and fastening the response time (Tiwari, Wee & Daryanto, 2018).
Analysis of the design of the current supply chain network
The design of the present supply chain process of the company has been mainly seen to be relied on the concept of JIT system. In this system the company is seen to be mainly responsible for identifying the areas of supply chain issues by having a proactive role in the pull production based in Kanban, Total Quality Management. The application of the such a supply chain design mainly relates to the reduction/elimination of the waste and reducing the overall value of the inventory in the planning process. It needs to be also seen that the overall depiction of the supply chain strategy followed by the organization has been mainly related to the different types of the concepts of capacity planning and supply chain design. In terms of achieving the Toyota supply chain activity the company is seen to rely on the pull system (Martínez-Jurado & Moyano-Fuentes, 2014).
The implementation of the lean system by the company was seen at a later stage. In this stage the company as depicted to be involved in the putting higher focus on the elimination of waste in the production. This stage was also seen with an augmented focus on superior customer service (Ross, 2015). In addition to this, the JIT inventory management done by the company was also seen to be result of the consideration of number of factors which are seen with the philosophy of production of the new materials only at the stage when the old stock of the materials had exhausted (Ho et al., 2015).
The seven main types of the non-value adding wastes in the company are seen with overproduction, incorrect processing of orders, unnecessary transportation of the material, surplus investor and improper usage of creativity among the employees. In terms of the highly competitive global marketplace there has been number of options which re excised by the company. These considerations are seen to be implemented by the company in terms of the current culture practiced within the organizations and companies along with the qualification of the employees (Puche et al., 2016).
Analysis of the collaboration across the (global) supply chain
The collaboration of the across the global supply chain of the company is mainly identified as per the Technology advancements which has triggered the global economy and impacted the manner in which the business and supply chains are designed. In the era of global village the process of designing the supply chain is based on the consideration of harmony requiring impeccable execution, planning and strategy. The company is further considered as the pioneer in the fields of automobile production and it has been able to cope up with the relevant difficulties which are relevant to the shortfalls in the production process as a result of natural causes. The learnings from the different concepts exercised in the past are often considered with production systems are designed as per today’s technology and the manner in which supply chain is seen to be working in the automotive industry. The important nature of the strategic approach followed by the company in the global supply chain has been seen to be depicted as per the connection and dependencies of the planning problems among the other groups and suppliers (Snyder et al., 2016).
The global vehicles sales of the company since 2000 was seen to be stagnant with about one percent annually despite of the global sales of Toyota flourished in 1990s. The low growth in the global sales of the light vehicles are considered with a time period of 1991 to 2003. The automotive industry is identified with largest global supplier base with General Motors. The various types of the principles and practices exercised by the global manufacturers is depicted as per the concentration on consistent high quality by a process of continuous improvement (Dubey et al., 2015).
Analysis of the sourcing and cooperation in the supply chain
According to Mr. Chiharu, Toyota outsourced about 70% of the car parts of the overall vehicle. Additionally, roughly 30% of the in-house adjustments are made for specific reasons. This is often considered as strategic objective of the business. The outsourcing of the labour are often depicted due to the reasons which are seen with skill requirement which are often evident in form of engineering knowledge about engines, assembly and transmissions process (Melnyk et al., 2018).
The automotive industry of the SC of Toyota is segregated into three main divisions which are seen as Original Equipment manufacturers (OEMs), second tier suppliers and first tier suppliers. Some of the main form of the examples of the OEM suppliers are considered as the mainstream suppliers of the company. The purchasing strategy of the company has been considered as traditionally conservative in nature. The company has relied on years of partnership which are closely associated the technology and quality demands. The scope of sourcing and cooperation in the field of supply chain achieved new heights with its global operations in North America and Europe. The automotive makers was able to enrich the suppliers panels with the leading suppliers from the various types of the regions such as Johnson Controls, Autoliv and Continental. The process was not only started overnight but also revolutionized with the suppliers of the company. The overall approach taken by Toyota was spread among the suppliers in an attempt to procure a business from the company (Dou, Zhu & Sarkis, 2018).
The competitive industry is also considered with outsourcing at low cost. This is often viewed with the gaining the competitive advantage and business design model. The overall supply chain model cooperation of the company has been further seen with the optimization of the delivery flow. This is also seen to enhance the quality aspect of the company and maintain high level of availability of the products. The lean layout of the company is often considered as per maintaining lean layout and trapping of the JIT system. The main part outsourced in terms of the physical items needs to be depicted with the engines of the car (Art of Lean, 2014).
Analysis of the planning and coordination in the supply chain
The important aspects of planning and coordination by the company is maintained as per the several blocks of SCM and SC planning. The main aim of the SC planning is determined as per the determination and integration of the entire supply chain process. Despite of the complexity of the process Toyota is able to contribute in a significant manner for the SC processes. The countless types of the analysis of the planning and coordination in the supply chain needs to be identified when single item is considered, the demand deterministic is constant and replenishment of the lead time is zero. The inventory holding and replenishment of the items is also considered with the fixed ordering costs. The company also analysis the relevant lot sizes for the decisions which are determined with the optimal order quantities which is basic for lot sizing and incapacitated dynamic single item lot sizing. The matters relating to the coordination has allowed the company for decentralization and providing a leeway to the production plans (Distelhorst, Hainmueller & Locke, 2016).
Toyota has further ensured the coordination with the considerations of the several types of the other factor which are seen to be relevant with the ordering and decentralization of the parties. In several occasions it has focused from centralized to decentralized supply chain planning. This analysis is depicted to be inherent with the coordination in the decentralized planning. This is further considered with the several types of the coordination in the decentralized planning which is resulting from any relevant issue. The coordination of the supply chain is identified as per the direct consequence of the division of labor which is created as per the activities and interdependencies among them. The coordination of the supply chain is further seen to be depicted as per the balancing off the factors to meet the common objectives (Chopra & Sodhi, 2014).
Analysis of the forecasting and managing of inventories in the supply chain
Toyota is depicted to use a highly complex and sophisticated inventory and PLC management capabilities for moving and maintaining its products across the channels for maintaining excellent quality. This is considered as a major factor for the company and enabled Toyota to outpace its competitors. The forecasting procedure followed by the company is identified with a clearly defined strategy. This relates to the critical step in the SC networks and design process. However, in case this strategy is too limited, then the company priories the market requirement factors and participants feature, delivery and price. There are multiple number of the strategies which are defined as per the consideration of the several types of the other factors which are seen with platitude promised to all the customer. Toyota further uses high quality design data for aiding its process of forecasting. In terms of the present strategy the management will be able to contribute to a better decision making with the availability number of vendors who are involved in the offering of the SC services. Alternatively there is a significant scope for the mangers to efficiently configure and decisions which make up for the unique business process. The structure of the SC to optimize the strategic goals has been further depicted in terms of the different types of the initiatives taken by the company which relates to specific and measurable goals (Patil & Kant, 2014).
Toyota gets advice during the design phase which is considered as the main contributory factory associated to the common technology and supplier community. The SC modelling is further based on the specific range of the factors for the suppliers. The implementation and refinement process is also seen with the considerations of the different elements of the supply chain network and the process of design which is not static in nature. Some of the various types of the other considerations of the discourse needs to be depicted as per the revisiting the process on a regular basis (Monden & Minagawa, 2015).
Analysis of the design and planning of the transportation network
The designing of the SC network is done in such a manner that the network is able to meet the requirements of the business in an appropriate manner. Moreover, defining the strategy is also considered by Toyota which are critical to the network analysis and design process. In case these features are depicted to be restricted then it may be prioritized with the factors and market requirements. The implementation of the technology will further contribute to a better decision making for the vendors (Tachizawa & Wong, 2015). This will be possible with the use of various types of network optimizations tools. Similarly, the analysis of the design and planning of the transportation network is depicted as per the decisions and which will represent the unique logistics and business network. The typical components of the model will further include the customer service requirements and capacity which will consider the operating capabilities and the lead times related to the different operating capabilities and costing of different options (Yu, Chavez, Feng & Wiengarten, 2014).
The optimization process of the SC is done in an appropriate manner in which the users are able to use the relevant resource and supply chain design. Additionally, the supply chain network strategy and design cannot be regarded as a static process. Therefore, the various types of the elements composed in this system is based on the evaluation of the number of factors which are in close relation to operations. The analysis of the SC network and design process needs to be ongoing in nature and process in general is revisited by the company. The transportation network of the company is also benefitted with the assistance of the different types of the third-party logistics service providers. These companies are conducive in contributing to the overall effectiveness of the transport network and aid in the future planning. The advanced planning of the company is further identified with several types of the expansive measures which are closely identified with the SC modelling throughout the organization (Asprova.net, 2018).
Analysis of the information technology (IT) used in the supply chain
The transformation in the company brought by the IT implementation has been brought by the consideration of the order taking and order fulfillment approach. In terms of accomplishing this objective the company is often seen to be involved matching the projects against the proposals and business units in way that it is able to contribute to the overall implementation of the goals along with efficiency. The Toyota Motor sales in USA is seen to use the information system group with the use of the new model and next generation demand management. This approach is seen to be evident with meeting the overall needs of the corporate requirements as per the project by project demands. This approach has been also seen to be conducive for the partners of the business units and assisting the solution in case of any discrepancy. In addition to this, it needs to be also seen that the IT professionals were responsible for changing the cycle of behavior. The beginning of the process of the IT integration has been considered with the resolution of the different types of the relevant upstream issues which are concerned with overall structure of the company. It needs to further seen that there is a relevant link among the financial performance and SC relation as per the drivers of SC and metrics such as facilities inventory and transportation (Chopra & Meindl, 2007).
In many cases it is also evident that the creation of the new operating model may assist the business units place their Wishlist in the IT infrastructure which will be conducive in the perspective of the enterprise. This will be helpful in keeping the business running. This approach will be further considered with the global economies providing the relevant support in the auto industry and company. This is required for delivering the best performance as per the industry standards. Toyota has further implemented the IT infrastructure for delivering faster work at a cheaper price. This will be further helpful in improving the delivery of business process and reducing the complexity of the process (Cooper, 2013).
Analysis of the level of sustainability in the supply chain
As per the sustainability report published by the company the SC of the company is depicted to be in compliance with environment and social activities. The fundamental approach for incorporating sustainability in the supply chain is considered with collaborating with the business partners. The company has provided a recovery support in accordance with Humanitarian aid and early recovery assistance in the affected areas. This is also seen to be evident in terms of restoration of the production and operations of Toyota. In terms of allocation supply chain information, the company has received a highly confidential information pertaining to the suppliers and building up the database. The concept of RESCUE (“REinforce Supply Chain Under Emergency”) system which is considered with the concept of protecting the Japanese monozukuri. It needs to be further seen that this is depicted as per the protection of the confidential information pertaining to the suppliers and conduction of regular training with the suppliers (Dubey, Gunasekaran & Ali, 2015). This system is also shared and standardized with the various types of the other companies via Japan Automobile Manufacturers Association thereby assisting in building a disaster resilient SC. Additionally, the company is also responsible for implementing the equivalent initiatives in each region and countries across different parts of the world. In order to continuously improve the supply chain sustainability, Toyota is seen to incorporate survey inquiry to get relevant details about the suppliers in Japan tracing their past records (CarterKosmol & Kaufmann, 2017).
The contribution of the sustainability is identified with the respect of the company for the contribution towards sustainable development. The company respects that the business partners like suppliers, dealers and workers often tend to opt for a long-term relationship for attaining mutual trust. In any occasion the company seeks for a new business partner then it is open to business partners and candidates irrespective of the nationality and size of the business evaluating the overall strength (Govindan et al., 2015).
Conclusion and recommendation
The discourse on the analysis of the SC strategy and its strategic fit has shown that SCM at Toyota is identified as a process which is mainly composed of the elements thoroughly based on TPS. In addition to this, the overall consideration of the SCm is identified with basic elements of lean supply chain concepts such as cellular layouts, pull scheduling, six sigma quality and team work. Forecasting and managing of inventories in the SC can be recognized with maintaining a high-quality design data for aiding its process of forecasting. In terms of the present strategy the management will be able to contribute to a better decision making with the availability number of vendors who are involved in the offering of the SC services. The company is also seen with implementation of the technology which will further contribute to a better decision making for the vendors.
The key issues faced by the organization at present is depicted in its design manufacture and circulation network. To improve the relevant areas of the supply chain the company needs to incorporate the strategy of redesigning of the plants so that it may remain strong in the export market even at the time when the local market becomes weak. This strategy will be considered as global complementation and as a global manufacturer, the company must address the questions are related to the manufacturers’ capability in the SC design. Moreover, the standard allocation needs to optimized at the time of planning phase. There needs to be necessary adjustments which shall be reviewed either twice in a year or annually.
The analysis on the design of the present supply chain network has provided me the opportunity to know that that there are several elements of pull production based in Kanban, Total Quality Management incorporated within the corporate design. I have been further able to know about the information on the collaboration across the (global) supply chain shows that the company is mainly identified as per the Technology advancements which has triggered the global economy and impacted the manner in which the business and supply chains are designed. Moreover, I have known about sourcing and cooperation in the supply chain which is seen with outsourcing of more than 70% of the car parts. It needs to be also considered that 30% of the in-house adjustments are made for specific reasons. This is often considered as strategic objective of the business.
Art of Lean. (2014). Toyota and In-sourcing vs. Outsourcing Decisions - Art of Lean. [online] Available at: https://artoflean.com/index.php/2014/01/07/444/ [Accessed 8 Nov. 2018].
Asprova.net. (2018). Toyota Production System | Asprova. [online] Available at: https://asprova.net/category/toyota-production-system/ [Accessed 8 Nov. 2018].
Carter, C. R., Kosmol, T., & Kaufmann, L. (2017). Toward a supply chain practice view. Journal of Supply Chain Management, 53(1), 114-122.
Chopra, S., & Meindl, P. (2007). Supply chain management. Strategy, planning & operation. In Das summa summarum des management (pp. 265-275). Gabler.
Chopra, S., & Sodhi, M. (2014). Reducing the risk of supply chain disruptions. MIT Sloan Management Review, 55(3), 72-80.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Cooper, B. (2013). Toyota’s IT Transformation. [online] strategy+business. Available at: https://www.strategy-business.com/article/09213?gko=f88d9 [Accessed 8 Nov. 2018].
CORPORATION., T. (2018). Toyota Global Site | Toyota Global Vision. [online] Toyota Motor Corporation Global Website. Available at: https://www.toyota-global.com/company/vision_philosophy/toyota_global_vision_2020.html [Accessed 8 Nov. 2018].
Distelhorst, G., Hainmueller, J., & Locke, R. M. (2016). Does lean improve labor standards? Management and social performance in the Nike supply chain. Management Science, 63(3), 707-728.
Dou, Y., Zhu, Q., & Sarkis, J. (2018). Green multi-tier supply chain management: An enabler investigation. Journal of Purchasing and Supply Management, 24(2), 95-107.
Dubey, R., Gunasekaran, A., & Ali, S. S. (2015). Exploring the relationship between leadership, operational practices, institutional pressures and environmental performance: A framework for green supply chain. International Journal of Production Economics, 160, 120-132.
Dubey, R., Gunasekaran, A., Papadopoulos, T., & Childe, S. J. (2015). Green supply chain management enablers: Mixed methods research. Sustainable Production and Consumption, 4, 72-88.
Govindan, K., Azevedo, S. G., Carvalho, H., & Cruz-Machado, V. (2015). Lean, green and resilient practices influence on supply chain performance: interpretive structural modeling approach. International Journal of Environmental Science and Technology, 12(1), 15-34.
Ho, W., Zheng, T., Yildiz, H., & Talluri, S. (2015). Supply chain risk management: a literature review. International Journal of Production Research, 53(16), 5031-5069.
Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2014). Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Martínez-Jurado, P. J., & Moyano-Fuentes, J. (2014). Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, 134-150.
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.
Melnyk, S. A., Flynn, B. B., & Awaysheh, A. (2018). The best of times and the worst of times: empirical operations and supply chain management research. International Journal of Production Research, 56(1-2), 164-192.
Monden, Y., & Minagawa, Y. (2015). Lean management of global supply chain. World Scientific Publishing Co. Pte. Ltd..
Patil, S. K., & Kant, R. (2014). A fuzzy AHP-TOPSIS framework for ranking the solutions of Knowledge Management adoption in Supply Chain to overcome its barriers. Expert Systems with Applications, 41(2), 679-693.
Puche, J., Ponte, B., Costas, J., Pino, R., & De la Fuente, D. (2016). Systemic approach to supply chain management through the viable system model and the theory of constraints. Production planning & control, 27(5), 421-430.
Ross, D. F. (2015). Distribution Planning and control: managing in the era of supply chain management. Springer.
Snyder, L. V., Atan, Z., Peng, P., Rong, Y., Schmitt, A. J., & Sinsoysal, B. (2016). OR/MS models for supply chain disruptions: A review. IIE Transactions, 48(2), 89-109.
Tachizawa, E. M., & Wong, C. Y. (2015). The performance of green supply chain management governance mechanisms: A supply network and complexity perspective. Journal of Supply Chain Management, 51(3), 18-32.
Tiwari, S., Wee, H. M., & Daryanto, Y. (2018). Big data analytics in supply chain management between 2010 and 2016: Insights to industries. Computers & Industrial Engineering, 115, 319-330.
Toyota.custhelp.com. (2018). What are Toyota's Mission and Vision Statements?. [online] Available at: https://toyota.custhelp.com/app/answers/detail/a_id/7654/~/what-are-toyotas-mission-and-vision-statements%3F [Accessed 8 Nov. 2018].
Toyota-global.com. (2018). [online] Available at: https://www.toyota-global.com/sustainability/report/archive/sr18/pdf/sdb18_full_en.pdf [Accessed 8 Nov. 2018].
Toyota-global.com. (2018). TOYOTA MOTOR CORPORATION GLOBAL WEBSITE | 75 Years of TOYOTA | Part1 Chapter1 Section1 | Item 1. Sakichi Toyoda. [online] Available at: https://www.toyota-global.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business/chapter1/section1/item1.html [Accessed 8 Nov. 2018].
Toyota-global.com. (2018). TOYOTA MOTOR CORPORATION GLOBAL WEBSITE | 75 Years of TOYOTA | Part1 Chapter2 Section1 | Item 1. The Great Kanto Earthquake and Rapid Increase in U.S. Vehicle Imports. [online] Available at: https://www.toyota-global.com/company/history_of_toyota/75years/text/taking_on_the_automotive_business/chapter2/section1/item1.html [Accessed 8 Nov. 2018].
Toyota-global.com. (2018). TOYOTA MOTOR CORPORATION GLOBAL WEBSITE | 75 Years of TOYOTA | Sales Volume | Sales Volume Overseas. [online] Available at: https://www.toyota-global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_volume/overseas/index.html [Accessed 10 Nov. 2018].
Wee, H. M., & Wu, S. (2009). Lean supply chain and its effect on product cost and quality: a case study on Ford Motor Company. Supply Chain Management: An International Journal, 14(5), 335-341.
Yu, W., Chavez, R., Feng, M., & Wiengarten, F. (2014). Integrated green supply chain management and operational performance. Supply Chain Management: An International Journal, 19(5/6), 683-696.