Toyota Supply Chain Management - Report Example

Role Of Supply Chain of the of the of the College ROLE OF SUPPLY CHAIN IN THE TOYOTA AUTO MANUFACTURING ORGANIZATION 1. INTRODUCTION Effective supply chain management, usually referred to as SCM has now become a source of winning edge over competitors. Competition has now taken imperative where companies are attempting to compete with respect to effective supply chain management which in turn has a direct impact on the bottom line performance of the organization. Moreover, the supply chain plays an effective role in strategically binding the players across the value chain which includes strategic level supplier relationship, management of customer relationship, information sharing altitude, quality of the information, and postponement aspects (Li et al.,2006). Almost all successful companies have integrated various supply chain concepts, theories and strategies to eliminate the leakages in their value chain and Toyota has been one of them. Toyota, Japanese Corporation with global footing currently holds around 18% of the global market share with the leadership position (Lowry, 2014). There are various factors that led Toyota to such position of global leadership, and one of the main factors are the level of attention that Toyota gives to managing its supply chain of system. 2. SUPPLY CHAIN MANAGEMENT OF THE TOYOTA The overall strategy of the Toyota Corporation has been continuous improvement in addition to solving problems. Different styles and techniques developed in this course have now become a management jargon as in Toyota Way. Supply chain strategy of the Toyota way stands on four v4L principles. These principles evaluate performance and generate learning in terms of variety of the products i.e. cars floated to the market, speed of moving new products and existing cars to the market, variability or deviations in planned and actual performance and process visibility that contributes towards learning (Iyer, Seshadri, & Vasher, 2009). The Toyota Production system or TPS is based on the lean management with a focus on kaizen which means continues improvement, Just-In-Time Inventory, Jidoka and collaboration with suppliers. Kaizen or continues improvement implies that every aspect of the mass production undergoes continuous improvement in the overall function of mechanical and by human being. In line with it, consistently information is being shared across the supply chain. The continuous improvement is direct by the objective of quality improvement, waste reduction and efficiency integration. This improvement imperative goes beyond the manufacturing process to the overall betterment of the community. Toyota substantially controlled the cost by developing strong linkages with the supplier and customer demand. The production processes in Toyota are pulled on the basis of the customer demand (Toyota a, n.d.). The concept of Jidoka also drives the supply chain and production system of Toyota that means continue improvement and automation by people. Work being divided into jobs, as defined in the mass productions system of Henry Ford, teams at Toyota constantly instills improvement in overall performance. The suppliers play an equal role in managing the flow of production at Toyota. Overall Toyota SCM is described in a building form that connects the elements as follows: (Black, 2008) Hence, tightly bonded players of the value chain ensure and make efforts to reduce the cost and improve efficiency in across the value chain (Toyota b, n.d.). 3. SCOR ANALYSIS OF SCM OF TOYOTA SCOR model is an acronym for The Supply Chain Operations Reference. The model is a unique, and unified framework designed for the links across the elements of the supply chain including performance measurement metrics, processes and among defining of best practices, along with the people linked to the supply chain of business into a unified structure (Supply Chain Council, 2010). The model is presented in the figure below: (Ren, et al., 2012) Toyota is well known for the constant integration of efficiency measures in its supply chain. The SCOR analysis considers following aspects (Supply Chain Council, 2010): Performance Metrics: are determined to measure the performance of the process in terms of reliability, responsiveness, costs, agility, assets. Processes: The process aspect of the SCOR model takes into account the ability of the process to achieve a predetermined outcome. Process is broadly three level aspects; first, defining the scope of the overall supply chain; level two, defining strategies for different process, and third level takes into consideration the execution of strategies planned in level two. Practices: The practices perspective assess the leading or the emerging practices, best practices in the organization, common and the poor practices and their impact on the returns. People: SCOR people assesses the fit between the people and the process with respect to skills, experience, aptitudes, training and competency to meet the job task. The efficiency generation and integration across the supply chain model, involved technology, processes, and partners are supported with communication to enhance the effectiveness (Supply Chain Council, 2010). For instance, Toyota has recently re-placed human in place of robotic systems that provide higher accuracy in performance (Nisen, 2014). The performance is then compared with the global vision set for the production. Moreover, efficiency integration practices are also complemented with the best practices such as efforts to constantly produce the environment friendly cars. Also, the relationship with the supplier is guided by the Toyota Supplier CSR Guidelines to ensure environmental friendliness in the organization (Toyota, 2014b). Toyota Environmental Action Plan is another best practices measure introduced in the process for the reduction of the level of burden on the environment. Finally, best people are employed across the manual production line to master the job and are constantly guided and trained for the integration of the improvement in the process. However, company skill requires overcoming the challenges of agility and risk management (Honeywell, 2012; Bowman, 2014). 4. LEAN SUPPLY CHAIN ANALYSIS OF TOYOTA Lean manufacturing implies that supply chain processes are developed in a set of series of activities in a way that identifies the ways to reduce the waste. Using a tool of Value Stream Mapping, activities with limited or no value addition to the whole process is reduced or eliminated while emphasizing or increasing value adding operations across the supply chain. For instance, using automated machines based on robotic structure Toyota has also carved the highest possible efficiencies across the production. Therefore, in order to innovate new ways of efficiency generation under the thoughtful masters, Toyota has recently replaced robotic machines by human being in some of the Japanese factories. This measure will emphasize the opportunity of driving new-innovative ideas for further improvement in the processes (Nisen, 2014). Similarly, inventory system has been considerably reduced by implementing Just In Time Inventory System. The use of Kanban Card for the material handling controls the excessive inventory handling in the assembly area. It is a simple highly-visible device that defines detail of the components that are required for the production of particular order (Toyota., n.d.c). Another example can be accessed from the inbound logistic of Toyota that is synchronized in a way that combines a multiple suppliers in a location and it also reduces the number of contacts that material comes across. The inbound plan of Toyota is as follows: (Ludwig, 2013) Similarly, Jidoka in the Toyota Production system is set that it halts the machine to process the component to further production or process stages in case a fault is identified. This eliminates the production of waste or rejected components in bulk on the completion of the job (Monden, 2011). Hence, across the board, TPS has made almost every possible action for strictly link the players, components and processes of supply chain. 5. RECOMMENDATION It is important to understand that successful supply chains are not those which can reduce the cost to the minimum possible point; a successful supply chain integrates efficiency along with effectiveness with security and safety. This also implies on Toyota as well. Consistent pressure to generate efficiencies sometimes creates a dis-balance between factors that in turn affects the performance of the supply chain processes. For instance, though Toyota has managed to optimize the day-to-day operations; however, Thailand floods posed a serious question to the agility of the supply chain. Therefore, a global corporation like Toyota must be able to continue its production system in the long run without any disruption. This can be achieved by sharing the supply of products and components from the multiple sources as compared to the relying on a single source to control the short run disruption in supply (Honeywell, 2012). Similarly, Toyota is also required to consistently evaluate the plan and system as well in addition to measuring the efficiency derived from such processes. For instance, Toyota had to pay a settlement amount of USD1.2billion due to the mismanagement of the gas pedals with defect issues (Undercoffler, 2014). Hence, the testing system can be integrated with the supply chain that can test each and every part that is fixed in the car. This would though incur a cost and would have an impact on the efficiency, but at the same time it would halt the raise of questions on its supply chain system that is known for its innovation and efficiency 6. CONCLUSION Supply chain has become the nexus of the competition among the global industries and business. Toyota has been among the leading position in the Global Automaker firm as a result of its consistent ability to tighten its supply chain for the integration of efficiency across the board. The above has taken into the assessment of the supply chain management of Toyota. With the assessment it has been identified that company is highly concerned and connected with the fact of the strengthened supply chain. However, there are instances and aspects that still requires consideration and attention in the long term interest and sustainability of the supply chain of Toyota for the competitive advantage. List of References Black, J. R. (2008). Lean production: implementing a world-class system. Industrial Press Inc.. Bowman, R. (2014). Disaster Looms: Why Todays Global Supply Chains Are At Risk. Forbes, Retrieved August 18, 2014 from  http://www.forbes.com/sites/robertbowman/2014/04/01/disaster-looms-why-todays-global-supply-chains-are-at-risk/ Honeywell. (2012). Supply Chain of the Future: Minimize Short-Term Disruptions To Gain The Agility Needed To Take On Long-Term Disruptions. Retrieved August 18, 2014 from http://www.honeywellaidc.com/CatalogDocuments/supply-chain-of-the-future-whitepaper.pdf Iyer, A. V., Seshadri, S., & Vasher, R. (2009). Toyota Supply Chain Management: A Strategic Approach to Toyotas Renowned System (Vol. 240). New York, NY: McGraw-Hill. Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., & Subba Rao, S. (2006). The impact of supply chain management practices on competitive advantage and organizational performance. Omega, 34(2), 107-124. Lowry, W. (2014). Why Companies Like Toyota Lead In Global Automobile Market Share. Yahoo! Finance, Retrieved August 18, 2014 from http://finance.yahoo.com/news/why-companies-toyota-lead-global-170009110.html Ludwig, C. (2013). Toyota’s Total Supply Chain Vision. Automotive Logistics Magazine, Retrieved August 18, 2014 http://www.automotivelogisticsmagazine.com/interview/total-supply-chain-vision Monden, Y. (2011). Toyota production system: an integrated approach to just-in-time. CRC Press. Nisen, M. (2014). Toyota Is Becoming More Efficient By Replacing Robots With Humans. Quartz, Retrieved August 18, 2014 from http://qz.com/196200/toyota-is-becoming-more-efficient-by-replacing-robots-with-humans/ Ren, C., Shao, B., He, M., & Dong, J. (2012). Transforming Your Supply Chain With IBM Supply Chain Process Modeler, Part 2: Using Process Reference Models In Supply Chain Transformation. IBM, Retrieved August 18, 2014 from http://www.ibm.com/developerworks/websphere/library/techarticles/1202_ren/1202_ren-pdf.pdf Supply Chain Council. (2010). Supply Chain Operations Reference (SCOR®) Model: Overview - Version 10.0. Retrieved August 18, 2014 from https://supply-chain.org/f/SCOR-Overview-Web.pdf Toyota a. (n.d.). Operations: Toyota Production System. Retrieved August 18, 2014 from http://www.toyota.com.au/toyota/company/operations/toyota-production-system Toyota b. (n.d.). Toyota Production System And What It Means For Business. Retrieved August 18, 2014 from chttp://www.toyota-forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf Toyota. (2014b). KPI And Activity Condition (PDCA): Sustainability. Retrieved August 18, 2014 from http://www.toyota-global.com/sustainability/csr_initiatives/kpi/ Undercoffler, D. (2014). Toyota And Justice Department Said To Reach $1.2 Billion Settlement In Criminal Case. Los Angeles Times, Retrieved August 18, 2014 from http://www.latimes.com/business/autos/la-fi-hy-autos-toyota-justice-department-settlement-20140318-story.html#axzz2xbYedzuy Read More