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Supply Chain Management at Toyota Motors - Case Study Example

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The company that is the subject of this paper "Supply Chain Management at Toyota Motors" is Toyota Motor Limited, a Japanese automotive company which ranks second globally after General Motors of the United States. The company has its headquarter in Toyota, Bunkyo Tokyo, Japan…
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Supply Chain Management at Toyota Motors
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Download file to see previous pages The first product of the Toyota Motor Corporation was Type A engines and Toyota AA passengers car which were manufactured in 1936. The company is celebrated as one of the world’s largest automakers mainly because of the company’s stupendous sales record over the last two decades. Toyota also ventures into the financial service provision, an exercise supervised by Toyota Financial Services. The company also produces robots. Alongside the father company (Toyota Industries), Toyota forms the majority shareholders in Toyota Group. Being the Leading shareholder in Daihatsu Motors, Toyota owns the operations of Lexus, Scion, and Toyota brands. The company is also the minority shareholder in Isuzu Motors, Fuji Heavy Industries, Hino Motors, Mitsubishi Aircraft Corporation, and Yamaha Motors and craft manufacturers. In India, Toyota established a partnership agreement with Kirloskar Group to forming Toyota Kirloskar Motor Private Limited (TKM); a company formed with sole objectives of creating employment to the unemployed youths as well as serving the automobile industry. As of March 2012, Toyota had about 529 subsidiaries globally and manufactured more than 11.5 million vehicles (Toyota, 1996). Toyota supply chain management is one of the elements of the operational strategy which is founded on Toyota Production System (TPS). The system was proposed by Taiichi Ohno and Shigeo Shingo in the 1940s as the company gained global success in the automotive industry. TPS was founded on the principle of “lean manufacturing”. The two partners identified the components of this tool as mutual trust and understanding, interlocking structures, compatible capabilities, control systems, joint improvement activities, learning, and information sharing. As stated by Krajewski, Ritzman & Malhotra (2009), “JIT system – a system that organizes the resources information flows and decision rules that enable a firm to realize the benefits of JIT principles” (Burnes & New, 1996). Total Quality Management reduces waste, and inventory by involving suppliers in continuous improvement, planning process, focusing on co-operation and improving machinery. The capacity planning method adopted by Toyota was based on inventory elimination. To achieve a zero-inventory, the company heavily depended on pull systems. Toyota also pioneered operational excellence commonly referred to as “Lean Concept”. This concept was adopted by a number of companies in the manufacturing sector. The philosophy of this principle (lean philosophy) aimed at eliminating all wastes and prioritizes customer care (Burnes & New, 1997). Lean philosophy closed linked with the JIS inventory management system to add to the competitive edge of Toyota. Therefore, the production of new material was only possible when the existing stock of inventory is exhausted. Toyota operated under “non-value-adding waste in business and manufacturing” (Liker, 2004) which were overproduction, unnecessary transport/ conveyance, waiting, over-processing, unnecessary movement, excess inventory, unused employee creativity, and defects. The improvements in the supply chain management at Toyota are cited as the key element for the increased competitiveness of the company in the fierce motor market. Besides, the improvements made in the supply chain department of Toyota were very critical in reducing the cost of operations, increasing the efficiency, and advancing the necessary strategic approach towards economic success of Toyota. ...Download file to see next pagesRead More
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