Supply chain management is considered as the management of the flows of goods and services. It comprises the association and storage of raw materials, inventory of work in progress and the detail of finished goods from origin point to consumption. The importance of supply chain management is vital in every organization because it is able to optimize the operation to increase the efficiency and speed of the work flow. The report will focus on supply chain management of Toyota Manufacturer Automobile Company. The key flows in supply chain of Toyota Company will be described with complete understanding.
Toyota Motor Corporation is the multinational automobiles manufacturer company of Japan. The head quarter of this company is situated in Toyota, Aichi, Japan. The employees of this company are 364,445 approximately worldwide. Akio Toyoda is the present CEO of Toyota Company. It is the fifth largest company in all over the world in the context of revenues. As of now, Toyota is the largest automotive manufacturer company in all over the world. It was first automobile manufacture that produced more than 10 million vehicles per year. Toyota Car Manufacturer Company has been using its principles to manufacture the consistent car as well as sustainable development of society through occupies innovative and super quality products and services.
Figure 1: Brand Power of Toyota
Source :(Bhasin, 2016).
Toyota is used differentiation cost and low cost as generic strategies to gain a competitive advantage in the automobile industry.
The philosophy of Toyota is people and perfection that is why it includes a set of tools that are designed in a way to support people in the term of improving constantly (Christopher, et. al., 2017). For instance, one piece flow is a very demanding process in Toyota Company that hastily surfaces issues that requires fast solution.
Supply chain management can be considered as the systematic flow of goods, materials and information regarding suppliers, buyers and consumers. It emphasizes the information flow, cash flow, products flow and return flow. It is integral for appropriate flow of services to manage all flows in sophisticated manner. There are various techniques related to supply chain management which can be facilitated an organization to attain a reputable position in the same industry (Hill &Fredendail, 2016). These techniques can be helpful to figure out the threats in the existing market for the chosen industry so that it can be reduced without allowing them to take huge form of issues. Toyota is multinational well known company and it applying various techniques of supply chain management.
Figure 2: Supply chain management flow
Source: (Soosay, Fearne &Varsei, 2014).
Information flow is the vital aspect of the supply chain management that involves quotation demand, purchase, change demand, product description, queries of customers about products and the feedback of the customer about the provided services by company. In the reference of Toyota Company, information flow is vital aspect of the supply chain technique of the Toyota Company. The procedure of information flow initiates when Toyota declares the product of its company in front of the customers with entire details of cost and entire information regarding products (Jacobs & Chase, 2013). The quotation is become efficient when Toyota offers its customer a heavy discount of buying car. The information of products of company is published on the website of the company to show the entire ad relevant information about the product to the customers.
The flow of goods and products by manufacturer to customer is known as product flow. Toyota is using various strategies to flow it s product in systematic manner. The Toyota Production System (TPS) is an integrated socio-technical system by Toyota. It manages manufacturing and logistics for the automobile manufacturer, involving interaction with suppliers and customers. The main focus of Toyota is to diminish the cost of manufacture by increasing the demand of customer. The production system of Toyota is effective. Constant flow of production is divided into just in time production and Jidoka (automation). Just in time involves pull system and continuous flow while Jidoka prevent and notify of abnormalities and separate the work of man and machine appropriately.
Figure 3: Toyota Production system
Source: (Stadtler, 2015).
It has been evaluated that Toyota is leading company in the manufacturing world of car industry. It is willing to compensate suppliers for raising raw material costs.
Figure 4: Toyota leads the pack
Source: (Stadtler, 2015).
The production flow of Toyota is systematic and its employee has to follow them step to step for effective manufacturing. The production flow of Toyota is mentioned below:
Figure 5: production flow of Toyota
Source: (Lucky & Takim, 2015).
Toyota is able to manage its cash flow wisely and efficiently. The cash flow statement gives information about the cash payment and cash receipt of during an accounting period. Toyota is able to gather the amount of products from their clients and able to pay back to their customers. The normal expectation of Toyota is 3% to 4% price reduction per year after launching new model. Customers pay the cost of product to the manufacturer of the product and on the basis of bill statement; customers check the product in efficient manner so that they get right car in best quality. The main focus of Toyota Corporation is providing best quality car to its customer as per their affordability. That is why it distinguishes the category of car with high quality so that its customer remains happy with products as well as price.
Return flow does not include any value for clients and revenue for the company. Toyota is using inbound as well as outbound logistic technique for handling its return flows. Inbound logistics of Toyota Company encompasses two operations; the first operation is the part of transports from local suppliers to the local plants. The second is considered as the separate operation in which company establish a relationship with certain manufacturers of third party logistic providers to deliver logistic services (Piotrowski & Guyette, 2010). Outbound logistic is also considered as the product distribution. Toyota is very trustworthy company and in case of any return products due to lack of perfection, it repairs the product for making satisfied its customers.
The production plan process is vital component for Toyota Company because it determines the product, planning, sourcing and design of the product as per trend of the world (Matsuo, 2015). The process of Toyota Company is mentioned below:
It has been analyzed that 80% cost are fixed at manufacturing stage. The Toyota production system is enhancing the efficiency of production through the elimination of waste. It is based on two concepts such as Jidoka and Just in time. Jidoka is also known as automation in which prompt action is being taken to correct mistakes at any stage in the production process (Stadtler, 2015). The machinery in Toyota production system is able to detect an issue and prevent so that any essential adjustment can be made. The “andon” display board is able to present the information to others and operators can constant working on other machines. It is the way which is helpful to preventing the issues from happening again while maintaining quality and productivity (Stadtler, 2015). On the other hand Just in time means making only what is required, when it is required, at every step of production. The main focus of Toyota Company is to deliver the new stock at right time in the right quantity so that no interruption can arise in the process of production. There is system available in Toyota Company that is Kanban system which is central to the just in time process and provides a real time method to restock parts to the line side (Schaltegger & Burritt, 2014).
Figure 6: Toyota Production system
Source: (Lucky & Takim, 2015).
Master production scheduling is a planning process made by company to organize the staff, handling the inventory and managing the cost and production of the company in an appropriate manner. A typical Toyota assembly plant is highly integrated. The process of Toyota assembly plant presents how a vehicle flows through a Toyota plant. The production schedule of Toyota is created once a month from the sales order and forecast. The first step of making the production schedule is to utilize the sales order to build the particular records for each vehicle and assign a reference number for that vehicle. It is an integral step because it is important that each vehicle should be assigned to a production slot (Swink, Melnyk, Cooper & Hartley, 2014). The Vehicle Identification Number (VIN) can be used to identify a unique vehicle.
Figure 7: Master scheduling system
Source: (Swink, Melnyk, Cooper & Hartley, 2014).
It has been recommended to the Toyota company to apply various strategy of supply chain management as it has been analyzed that Toyota has faced various issues and complaints from the customer due to lack of quality in its products. It is important for the company to keep focus on quality. The task should be divided to employees within a company as per tier working capability; it will be helpful to enhance the productivity in efficient manner.
The main focus of supply chain management at Toyota is on the demand planning and demand forecasting. Technology and innovation is an integral component in the techniques of supply chain management of Toyota Company.
Figure 8: demand of Toyota car by region
Source: (Bhasin, 2016).
Every step of the company of fulfilling the demand of customer is done with efficient manner and every car has some specific name which helps manager to maintain all the related data to the incoming and outgoing products. The demand forecasting data is facilitated to resolve the issues for improving the condition of market place, public condition and system improbability.
Figure 9: supply chain management in Toyota Company
Source: (Soosay, Fearne &Varsei, 2014).
The targeted customers of Toyota corporations retail customers, suppliers, rental companies, government entities and commercial fleet. Toyota hands out the prizes yearly to suppliers that enhance the profit if the company in an appropriate manner along with it maintains its relations with suppliers. The range of suppliers of Toyota is wide that involve Tesla motors, which signed a $100 million agreement with Toyota to supply the power train for RAV4EVs. The Detroit plan of Toyota, the Camry model has suppliers like Good ridge fluid transfer system, Magnaflow, Autometre, goodyear, optima batteries and IPT performance transmission. Since modern cars have built-I infotainment system, Microchip Technology is considered as the supplier for not only Toyota corporation but also for other manufacturers involving general motors. It is the expectation of the Toyota Company to remain one of the most popular manufacturers of car in all over the world.
It has been recommended to the company to provide the innovative products to its customer by inspecting each and every component of model. It has been analyzed that Toyota was highlighted in three separates but related recalls of automobiles by Toyota Company happened in 2010. Toyota should use polices of CPFR: Collaborative, Planning, forecasting, Replenishment. It is effective strategy and by applying this strategy, company can get their targets within time frame.
Conclusion
It has been concluded that Toyota is the biggest car manufacturing company of Japan. The role of supply chain management in its company is vital because it provides the entire information about the movement and storage of raw materials, inventory of work in progress and the detail of finished goods from origin point to consumption. Customer power, long term orientation, leveraging technology, inventory stock, inter-organizational collaboration and communication across organization are key attributes of supply chain management. The report has covered the key flows in supply chain, make process analysis and supply chain forecasting of Toyota Corporation. The discussion has been made in appropriate manner which can be helpful for further study.
References
Bhasin, H, (2016). Marketing mix of Toyota – Toyota Marketing mix. Retrieved on 15th September 2017 from: https://www.marketing91.com/marketing-mix-toyota/.
Christopher, M., Christopher, M., Holweg, M., & Holweg, M. (2017). Supply chain 2.0 revisited: a framework for managing volatility-induced risk in the supply chain. International Journal of Physical Distribution & Logistics Management, 47(1), 2-17.
Hill, E. &Fredendail, L.D. (2016). Basics of Supply Chain Management, CRC Press.
Jacobs, R. & Chase, R. (2013). Operations and supply chain management, McGraw-Hill Higher Education.
Lucky, B, O & Takim, S. (2015). Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota?s transmission malfunctions in cars, International Journal of Engineering and Applied Sciences, ISSN: 2394-3661, Volume-2, Issue-8, August 2015.
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.
Piotrowski, C., & Guyette, R. (2010). Toyota Recall Crisis: Public Attitudes on Leadership and Ethics, Organization Development Journal, 28(2), 89-97.
Schaltegger, S., & Burritt, R. (2014). Measuring and managing sustainability performance of supply chains: Review and sustainability supply chain management framework. Supply Chain Management: An International Journal, 19(3), 232-241.
Simchi-Levi, D., Schmidt, W., & Wei, Y. (2014). From superstorms to factory fires: Managing unpredictable supply chain disruptions. Harvard Business Review, 92(1-2), 96-101.
Soosay, C., Fearne, A., &Varsei, M. (2014). Extending sustainable practices beyond organizations to supply chains. In Linking Local and Global Sustainability (pp. 71-90). Springer Netherlands.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28), Springer Berlin Heidelberg.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Swink, M., Melnyk, S.A., Cooper, M.B. & Hartley, J.L. (2014). Managing operations across the supply chain (pp. 248-249), New York, NY: McGraw-Hill/Irwin.
Victor L. H. & John, R. D,. (2011). Toyota in crisis: Denial and mismanagement, Journal of Business Strategy, 32(5), 4-13.
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