With the changes in time, every organization needs to assess available resources so that they could accomplish set objectives and goals in effective manner. The paper’s objective is to discuss the supply chain management of Automobile Manufacturing Company, Toyota. This company has strengthened its business by effectively managing its logistic and supply chain management activities. The paper flows through the understanding of information flow effectiveness within the Toyota, the company’s product flow, return flow and the cash flow. In the second part of the paper, the cash flow is discussed wherein the production planning process and its effectiveness is stretched in detail, along with the planning of material requirement using the supply chain theories. In the last section of the report, the models discussed are reviewed and the most effective being discussed so far is stretched in detail for Toyota.
Toyota Motor Corporation was founded way back in 1937, by Kiichiro Toyoda. It is a 75 years old automobile manufacturing and selling company based in Japan, having its headquarters at Toyota Aichi. The company is Global and a multinational Corporation having more than 3.5 Lakh employees working around the globe, According to a report it scored 13th place in terms of revenue in 2016. Toyota has been considered as the first company in the automotive industry to produce more than 10 million vehicles every year. The well known brands under Toyota are, Lexus, Alphard, Harrier and Dyna. It is considered as the Largest Multinational, manufacturer and seller in the world.
There are three types of key flow in the supply chain, Product flow, Information flow and Money and Revenue flow. The key flow in the supply chain management activities is related to supply of goods and strengthen the overall outcomes. In addition to this, it is also supported by the inbound and outbound activities based on the logistic supply chain management program.
The product flow refers to the flow of product from raw material stage to the end product that the customer purchases from the showroom. The information flow, however, is in both the directions, from suppliers and to and from the customers. Money flow on the other hand, is the fund flow from the customers to the manufacturers and from them to the suppliers.
The nature of the product considering the safety and security features makes supply chain a complex process comparing to the industries such as clothing. The raw material or the parts are sourced from the supplier and are sent to the assembly line, using the inbound logistics. The assembly plant is in the factory where the vehicle is being sent, wherein the body is made and transferred to the paint shop area, the product is then sent for the assembling and inspection. Once the final product is ready for the market, it is sent to the outbound logistics to be sent to the dealer. The above given chart shows the inbound and outbound activities of the Toyota Company and how it has managed its business value chain in effective manner.
Across the development of the vehicle, there has to be a continuous flow of information from the suppliers to the manufacturers to the customers and from them to the suppliers. There is also a value stream mapping which helps the company in tracking the flow. The flow of information in business is dependent upon the set functional program and undertaken activities of the business. The information flow from the business is based cyber computing system and information based technologies of business. It helps company to make easy flow of information in its business activities.
The flow chart interprets the information flow in the corporation. The flow chart is made in a way to ease the flow in order to respond quickly to the customers by minimizing the lead time. The processes are interlinked for a continuous flow of material (Christopher, 2016). The customer requirement needs to be meant on time, therefore there is a requirement of a simplified information flow, having a clear idea of the quantity, the volume and the product mix (Stadtler, 2015).
This effective flow of information in business strengthens the business outcome and also adds value for effective management of business activities (Hugos, 2018).
The Money flow is majorly from the company stockholders. These are the real owners of the company who contribute their capital in the business functioning.
The funds flow starts from the company stockholders to the directors on board, the company owners (Coyle et al., 2016). The fund from there is billed to the treasurer and controller who are then responsible for the supervision and further money allocation to all the members of the company. In Toyota, it has been seen from the review that the allocation is organized with an effective supply chain management. The inflow and outflow of the cash from the business is based on the resolution passed and consent given in the meeting of company (Cooper, 2017).
The operational process which is executed in order to ensure the efficient and effective supply chain management and logistics management is known as the make process. Production planning and scheduling are the parts of the major processes being followed. There is monthly order the production team deals with, and on the basis of this month’s orders the next months’ sales is forecasted. There is a sequence for every vehicle, and a schedule for its production. Heijunka is a scheduling principle that Toyota follows for production scheduling. In this process the entire schedule is spread over a month smoothly as per each part weighatge, for example, the color has less weighatge as compared to the engine production. In Toyota there are 53 weeks for production in a year, after the production is completed the scheduling dates are being given to the dealers which comprises of the tentative build date of the vehicle. The consumers can then place orders basis on the given dates, the dealers provide the same schedule to the production and assembly plants (Stadtler, 2015). As per the demand the materials are planned locally or overseas. The local materials however, are assembled on availability, for overseas, the assembly depends upon the shipping time, frequency and lot size. There has to be standard hours for working and overtime for the employees, in Toyota according to the study, the work hours are sixteen and over time depends upon the requirement. Apart from work hours Takt time which is the time taken by the vehicle from one station to another is also an important component, which is calculated as sixty seconds. The delay affects the overall production (Bozarth & Handfield, 2016). Toyota is known for the quality automobiles it manufactures, which is why, the workers are given the authority to stop the production in the assembly line as and when they come across any problem (Brandenburg et al., 2014). There is a fixed number for per day and per hour vehicle, through which the total work hour is calculated. For a particular model, the ratio of production is calculated by the ratio and model volume. The Toyota Company has set up strong value chain in which all the activities are undertaken and production value of the organization is made strong. The above given process of Toyota Company shows the equilibrium in all the undertaken activities and strengthens business process which eventually adds value for the effective business outcomes (Brandenburg, et al. 2014).
If the company fails in forecasting the future requirement it won’t be able to serve the customers on time, hampering the touch points. Therefore, in order to keep up the pace, forecasting is an important tool (Fawcett, Ellram & Ogden, 2014). In order to forecast supply chain, the company needs to follow a few principles, such as regionalization, strategies connections and new kinds of talents. The supply chain forecasting of the organization is based on the undertaken business activities. This has not only increased the overall outcomes but also resulted to setting up globalised work functions (Christopher, 2016).
Regionalization of supply chain: Globalization has taken brands to the whole world and it is imperative for them to gain regional skills in order to excel in the regional markets therefore, Toyota has a supply chain in every region, which gives them a competitive advantage by having a local supply chain to cater the local requirements (Monczka et al., 2015). The regionalization of the supply chain activities program has shown how well company could manage its business activities and set up advance logistics work chain (Stadtler, 2015).
These are the methods which are used by Toyota Company to make its business more effective and strengthen its business outcomes (Hugos, 2018).
The multinationals shift their production units to the places in the world which are cheap in terms of manufacturing and workers cost (Schönsleben, 2016). In places where there are high inputs, the companies try installing their supply chain to gain advantage of the reduced production cost (Stadtler, 2015). The simulation technique is used to procure the supply chain which has lowest lead time. By making supply chain system a part of the strategy, Toyota has effectively increased the production. However, not just the procurement, the talent is procure is also important, therefore, the company employees people with problem solving skills, global experience and great analytical skills (Christopher, 2016). Toyota follows the pull strategy and not the push strategy, on the basis of the consumer demand; the KANBAN system effectively manages and handles the supply chain of the entire Toyota production system. In KANBAN, there are less words being spoken and more visuals through cards being used. There are cards being used by the workers as signals for delivery of the manufactured vehicle or for starting a new production, it saves time, confusion and miscommunication and any delay and difficulty due to wrong or miscommunication. Signals are tracked by the suppliers to be able to understand the exact requirement (Wisner,Tan & Leong, 2014). From traditional cards, now the signals are electronic and are sent automatically from the customers to dealers to suppliers and the production unit. These strategy not only helps Toyota Company to create core competency in product differentiation and cost leadership but also assist in creating effective brand image in long run (Christopher, 2016).
Conclusion
The Literature review explains the Toyota Motor Corporation’s effective and efficient supply chain management, using KANBAN and pull strategy. The study also concludes the models for make process and forecasting the demand. However, the company needs an enterprise resource planning at an advanced level in order to fight in the international market with the international brands. The simulation technique is best suited for Toyota in order to derive the returns. Despite having the pull strategy, the workers need training to reduce the production loss by more efficient time management skills. However, the other supply chain methods are best suited as per the requirements. After assessing all the details and case study on the supply chain management activities of Toyota Company, it could be inferred that there is need to set up strong process chain in which all the activities and undertaken work is managed. All the inbound and outbound activities of the process of company is interlinked and managed with a view to strengthen overall business outcomes. In addition to this, Chatbot of Company is based on the cognitive technologies which has strengthened its support chat with its clients and strengthen its business outcomes.
References
Bozarth, C. B., & Handfield, R. B. (2016). Introduction to operations and supply chain management. Australia Pearson Higher Ed.
Brandenburg, M., Govindan, K., Sarkis, J., & Seuring, S. (2014). Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research, 233(2), 299-312.
Christopher, M. (2016). Logistics & supply chain management. UK Pearson Higher Ed.
Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. (2016). Supply chain management: a logistics perspective.NY: Nelson Education.
Fawcett, S. E., Ellram, L., & Ogden, J. A. (2014). Supply Chain Management: From Vision to ImplementationAn Integrative Approach. USA: Pearson Higher Ed.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. EU: Cengage Learning.
Schönsleben, P. (2016). Integral logistics management: Operations and supply chain management within and across companies. USA: CRC Press.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). USA: Springer Berlin Heidelberg.
Waters, D., & Rinsler, S. (2014). Global logistics: New directions in supply chain management. Australia: Kogan Page Publishers.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: a balanced approach. Australia: Cengage Learning.
Christopher, M. (2016). Logistics & supply chain management. UK: Pearson.
Hugos, M. H. (2018). Essentials of supply chain management. UK: John Wiley & Sons.
Cooper, R. (2017). Supply chain development for the lean enterprise: interorganizational cost management. Australia: Routledge.
Brandenburg, M., Govindan, K., Sarkis, J., & Seuring, S. (2014). Quantitative models for sustainable supply chain management: Developments and directions. European journal of operational research, 233(2), 299-312.
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