Application of Theory and Concepts to a Real Life Example of Operations Management - Case Study Example

Improvement There are not enough references to support your idea about how Toyota uses this theory concept to improve their competitive power. Most of the references in the context are talk about the theory. 2. When you talk about application of the real case (Toyota) is too descriptive you should talk more about the application rather than just use some general sentences to summary the achievement. Such as: “…stock holding along with aiding the organisation to reduce…” there is no reference to support it; there is no details to show that how did the organisation to use this theory to help Toyota reduce cost. Another example, “The introduction of agility in operations planning and forecasting of costs associated with procurement and shipment facilities helps Toyota to ascertain significant opportunities to deal with the changes.” It is better to talk about the details about how Toyota use it in operations planning and forecasting rather than just summary the benefit of the theory/ concept. There is no references, no details, no specifically information when you talk about the application of Toyota. You should really focus on how Toyota uses this theory. The problem now is: there no evidence or specifically information to show that it is related to Toyota. It seems like it can make sense if you just change the “Toyota” to any one company. Table of Contents 1. Introduction and Brief Background to the Subject 3 2. Application of Lean and Agile Supply Chain Concepts in Toyota 4 3. Brief Summary of the Supply Chain Tools and Recommendation to Improve the SCM Functions of Toyota 8 References 10 1. Introduction and Brief Background to the Subject The selection of effective supply chain tools has long been recognised to provide adequate support to the marketers to gain competitive advantage in the fiercely growing markets. In relation to the recent trends in the supply chain management process, changing customers’ along with technological requirements and increasing volatility in the global sourcing mechanisms have been a cause for deliberation for the marketers (Wright, 2010). Additionally, the discerning notion of fulfilling consumers’ expectation has been merely observed to bear severe risk for the organisations complying with traditional method of supply chain management as the process involves lengthy supply line untenable notions towards mitigating changing consumer trends. In this context, it has been ascertained that an effective practice of lean and/or agile approach of supply chain can leverage the marketers to take up the rising challenges in the supply chain management functions (Fachmann & Hunter UK, 2012). Therefore, the rationale of choosing lean and agile supply chain is to minimise the potential risks by the organisations due to the changing supply chain trends in the global business environment. Moreover, the supply chain model also ascertains specific objectives including low operational cost, quick response along with minimum and deployed stock related practices that are highly effective for the modern organisations to address various types of potential risks within the market. Therefore, the study intends to critically evaluate the application of lean and agile supply chain with regard to the real life scenario in Toyota Motor Corporation (Toyota). In this regard, the discussion would highly focus on describing the major characteristics of both supply chain models along with their beneficial aspects with reference to the business performance of Toyota. 2. Application of Lean and Agile Supply Chain Concepts in Toyota The supply chain management (SCM) functions in Toyota can be highly considered as a key functional area that provides adequate support to the organisation to gain competitive advantage in the global automobile business industry. A lean supply chain and manufacturing system enables Toyota to achieve competitive position in the global automobile manufacturing industry. The following section exhibits the key objectives of a lean supply chain along with its major characteristics that provide adequate support to Toyota while performing its manufacturing functions in different geographical locations. Considerably lower amount of cost associated with the company’s SCM process can be regarded as the primary objective of lean supply chain. In relation to the objective of cost minimisation, the lean supply chain improves productivity and quality through minimising cost and waste associated with each aspect of an operational process ranging from procurement of raw materials to the delivery of finished goods to the consumers (Ventana Research, 2007). With regard to the application of lean supply chain in Toyota, the model helps the organisation through demonstrating adequate cost planning associated with raw material procurement, production and shipment of final products to the markets. Owing to the fact that, the Just-In-Time (JIT) approach in supply chain functions in Toyota enables the company to maintain an effective flow of materials from the suppliers though the manufacturing process onto the final customer. Consequently, in this process, there is a minimum or less stock of materials or components within the warehouse, zero buffer stocks of the different finished goods or materials in its manufacturing units along with zero level of stock of outputs related to finished goods (Fachmann & Hunter, 2012). Hence, it is affirmed that the lean model of Toyota’s supply chain enables the organisation to demonstrate adequate cost planning associated with raw material procurement, production and shipment of final products to the markets The model also helps Toyota to maintain adequate balance of its stock holding along with aiding the organisation to reduce a significant amount of inventory cost while performing its extensive manufacturing and shipment related operations (Fachmann & Hunter, 2012). Besides, the model also emphasises high utilisation of the organisational resources that enables to minimise lead time required to produce and deliver finished goods to the consumers. In relation to Toyota, the model further facilitates the company to maintain effective flow of its internal resources including required appropriate number of employees, raw materials along with machines and equipment and to ensure defect-free automobile products to the customers. With regard to the statement, it can be stated that the lean supply chain process in Toyota helps the managers and production supervisors to estimate an appropriate number of workers along with compulsory raw materials and equipment to manufacture quality based products for the emerging markets. Moreover, the organisation also maintains an effective execution process in the production assembly lines that also facilitates Toyota to produce and deliver defect-free products in the target markets (Fachmann & Hunter, 2012; Ventana Research, 2007). Elimination of wastes can also be regarded as an effective characteristic of lean supply chain. The implementation of the model enables Toyota to remove waste materials in the inventory management processes and helps the organisation to add more value in accordance with the changing desires and expectations of the consumers. The integration of lean model in the Toyota’s supply chain helps the company to eradicate non-value added activities and also facilitates in not repeating those wastes in the manufacturing or supply of finished goods process. In order to increase the value of the SCM functions, Toyota incorporates an effective approach, which helps the organisation to classify the non-value activities or wastes in its manufacturing functions. The waste identification approach is generally known as seven ‘mudas’ which include ‘excess production’, ‘waiting’, ‘movement or transportation’, ‘unnecessary motion’, ‘non-essential process’, ‘inventory’ and ‘defects’ (Fachmann & Hunter, 2012; Wright, 2010). Indeed, the continuous implementation of the model also aids Toyota to maintain smooth flow of its operations along with increasing the efficiency level of manufactured automobile products with respect to the vision and objectives of the organisation (Konecka, 2010). In relation to the current SCM functions of Toyota, the manufacturing functions of the organisation are highly influenced by the use of agile supply procedures. The approach emphasises adequate opportunity to the organisation in terms of maintaining flexibility in supply chain decisions and acts in accordance with the future volatilities or uncertainties within the automobile segment of a particular marketplace. The introduction of agility in operations planning and forecasting of costs associated with procurement and shipment facilities helps Toyota to ascertain significant opportunities to deal with the changes. In this context, the adequate competency of reducing possible uncertainties through finding data within the nature of agile supply chain considerably empowers Toyota to make effective planning or forecasting. Moreover, shortening lead times and increasing flexibility in the manufacturing process also help Toyota to effectively forecast or plan better supply chain activities or manufacturing functions (Fachmann & Hunter, 2012). For instance, Toyota uses two stages of planning including monthly ordering as well as annual planning. The annual planning process aims to establish a sales, cost and production forecast for three years. In addition, there is a monthly process followed in Toyota on a global basis which focuses on receiving sales orders from each of the sales related organisations throughout the world (Iyer & et. al., 2009). Moreover, the stated supply chain methodology also enables the organisation to deploy innovative business strategies with respect to the changing trends in the global automobile industry due to its adequate flexibility while shifting supply chain decisions (Wright, 2010; Ventana Research, 2007). The extensive use of information technology within the agile supply model enables to share data among the key suppliers and buyers of the organisations and helps them to formulate a virtual supply chain. In this process, the agile supply model tends to reduce a large amount of inventory costs for the organisations and enables them to effectively act according to the changing market scenario (Christopher, n.d.). With regard to the supply chain operations of Toyota, it can be recognised that the organisation often maintains network based supply chain activities through determining changes in consumer demands or shifting market trends of the raw material suppliers across the different global regions. In this context, it is recognised that the model helps Toyota to make effective operational decisions associated with raw material procurement, production and shipment of finished automobile products in its key market areas (Konecka, 2010). In relation to the present day context, the frequent use of agility in the supply chain activities has also improved Toyota’s capability in deploying innovative equipment and producing inclusive range of automobile products with an extensive variety. The process also enables the organisation to gain high margin as it involves innovation and modern features of the automobile products in accordance with the desires and expectations of the global users. Therefore, it is affirmed that the implementation of agile supply chain also aids Toyota to strengthen its financial position due to the higher margin of products (Christopher & Towill, 2001). Contextually, it can be stated that the effective implementation of lean and agile supply chain process has been critically identified to be a decisive factor towards providing a competitive position for Toyota in the global automobile manufacturing business industry. The adequate effective implementation of these supply chain models has also been identified to provide significant benefit to the organisation not only in reducing operational costs, but also in improving the operational efficiency along with quality for delivering high-end automobile products to the competitive markets. 3. Brief Summary of the Supply Chain Tools and Recommendation to Improve the SCM Functions of Toyota With reference to the major objectives and characteristics of lean and agile supply chain models, it has been recognised that both are highly effective for an organisation to improve its operational activities. The effective utilisation of these supply chain tools ensures to standardise the operational activities due to their quality based characteristics that govern to prevent organisations from various uncertainties. In relation to the implementation of lean and agile models in Toyota, the organisation has been able to improve its operational activities ranging from procurement to shipment of automobile products to the final consumers. The models help the organisation to eliminate waste and increase the operational efficiency during the process of purchasing raw materials, manufacturing and delivering final products to the customers. The effective utilisation of these models also aids Toyota to enhance its supply chain related decisions in accordance with the continuously changing trends of the customers. Although the implementation of both lean and agile supply models improves operational efficiency of Toyota however the organisation can also face significant risks due to the greater fluctuation in the global automobile industry. Consequently, Toyota should highly focus on forecasting and evaluating adequate measures to determine the effective utilisation of these supply chain models. Moreover, the organisation should also aim to focus on complying with the modern concepts of both lean and agile supply chain approaches, which can enable it to maintain its dominant position in the growing automobile industry. References Christopher, M., No Date. The Agile Supply Chain: Competing in Volatile Markets. Documents. [Online] Available at: http://www.sclgme.org/shopcart/documents/agile_supply_chain.pdf [Accessed February 24, 2014]. Christopher, M. & Towill, P. D., 2001. An Integrated Model for the Design of Agile Supply Chains. International Journal of Physical Distribution and Logistics Management, Vol. 31, No. 4, pp. 235-246. Fachmann & Hunter UK, 2012. Lean and Agile Supply Chain. Chapter 13. [Online] Available at: http://fachmannhunter.com/doc/supply-chain/Lean_and_agile_supply.pdf [Accessed February 24, 2014]. Iyer, A. V. & et. al., 2009. Toyota: Supply Chain Mgmt. Tata McGraw-Hill Education. Konecka, S., 2010. Lean and Agile Supply Chain Management Concepts in the Aspect of Risk Management. Electronic Scientific Journal of Logistics, Vol. 6, Iss. 4, No. 3, pp. 23-31. Lamb, C. & et. al., 2008. Marketing. Cengage Learning. Naim, M. & et. al., 1999. Developing Lean and Agile Supply Chains in the UK House Building Industry. University of California, pp. 159-170. Paton, S. & et. al., 2011. Operations Management. McGraw Hill Higher Education. Ventana Research, 2007. Strategies to Run a Lean Supply Chain. How Principles of Lean Manufacturing Transfer Benefits to Operations. [Online] available at: http://www.accountingweb.com/sites/default/files/lean_supply_chain.pdf [Accessed February 24, 2014]. Wright, N., 2010. Lean and Agile Supply Chain. Scandinavian Brewers’ Review, Vol. 67, No. 4, pp. 16-21. Read More