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Supply Chain Management of Toyota

Discuss Supply Chain Management of Toyota within the Elements Of Logistics forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Toyota Motor Corporation (Japanese: トヨタ自動車株式会社, Toyota Jidōsha Kabushiki-gaisha?, TYO: 7203), LSE: TYT, NYSE: TM, commonly known simply as Toyota and ...



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Supply Chain Management of Toyota
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Netra Shetty
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Supply Chain Management of Toyota - December 29th, 2010

Toyota Motor Corporation (Japanese: トヨタ自動車株式会社, Toyota Jidōsha Kabushiki-gaisha?, TYO: 7203), LSE: TYT, NYSE: TM, commonly known simply as Toyota and abbreviated as TMC, is a multinational automaker headquartered in Toyota, Aichi, Japan. In 2009, Toyota Motor Corporation employed 71,116 people worldwide (total Toyota 320,808).[3] TMC is the world's largest automobile manufacturer by sales[4][5] and production.[6]

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries, it created its first product, the Type A engine, and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation group companies are Toyota (including the Scion brand), Lexus, Daihatsu and Hino Motors,[7] along with several "non-automotive" companies.[8] TMC is part of the Toyota Group, one of the largest conglomerates in the world.

Toyota Motor Corporation is headquartered in Toyota City, Aichi and in Tokyo.[9] In addition to manufacturing automobiles, Toyota provides financial services through its Toyota Financial Services division and also builds robots.

Minimizing supply chain costs
while keeping
a reasonable service level
customer satisfaction
on time delivery, etc.

Right product
Right price
Right store
Right quantity
Right customer
Right time
Higher profit
Organized suppliers into functional tiers
First-tier suppliers: worked together in a product-development team
Second-tier: made individual parts
Encouraged cooperation and communication among first-tier suppliers
Cross- sharing of personnel through
Toyota sending personnel to suppliers to compensate for greater workload
Toyota transferring senior managers to suppliers for top positions
“market price minus” system, not “supplier cost plus” system
Value analysis reduces costs
Production smoothing enables suppliers to maintain a constant volume of business
Focus is on long-term relationships that underscores cooperation, teamwork
Suppliers are the partners
Suppliers are the integral elements of Toyota
Located within 56 miles radius
Security to the suppliers for guaranteed order
gradual mutual improvement, rather than price through bidding as a way to choose a supplier
Trained suppliers as per requirement

Suppliers partnership hierarchy
Kaizen and learning
Joint improvement activities
Information sharing
Compatible capabilities
Control system
Interlocking structure
Mutual understanding and trust

Managing suppliers
Suppliers are extensions of Toyota
Care and develop as own associates
Long term partnership
Tier structure : levels of responsibility
Strict cost target and timing
Integrated system (JIT)

Purchasing challenges
Normal expectation : 3 to 4 % price reduction per year after model year launch
Meet best price with Toyota quality
Trim master goal : 30% price reduction for new vehicle launch

Key to logistics performance
Packaging : mixed box size, small pallet size
Dedicated transportation service
Consistent daily route, period route revision
Good timing at all connection points
Order fluctuation allowance built into route capacity plans
Toyota Production System
Best quality
Lowest cost
Shortest lead time
Best safety
High morale
Through shortening the production flow by eliminating the waste
Continuous improvement
People and teamwork
Jidoka – quality (make problem visible)
Waste reduction
Leveled production
Stable and standardize process
Visual management
Kanban – flow of correct information

In Japan, Toyota’s sales and marketing work is divided into four distribution channels
Toyota (mostly high-end, large cars),
Toyopet (medium size),
Toyota Corolla(compact), and
Netz Toyota (compact).
Overall, Toyota offers about 60 car models, with each channel offering only 15-25 models.
The Toyota dealers as a whole have approximately 5,000 outlets and 120,000 employees.
This way, each dealer can develop deep knowledge of all models he has for sale, and can make an effort to sell all car models assigned to him, rather than only the few most profitable ones.
Toyota applies the “Toyota Way” to manage dealers, based on three basic principles:
Dealers are free to make independent decisions, and Toyota can only help them to invest in the right things to improve. Such a strategy motivates dealers to be more proactive.
Both the dealers and Toyota must prosper jointly.
Competition is a means to improve.
Toyota works with one distributor in each country
Toyota markets cars in about 170 countries through its overseas network consisting of more than 160 importers/distributors and numerous dealers.
Overall, China is the highest-growth market.

Last edited by abhishreshthaa; December 29th, 2010 at 12:48 PM..
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