How the Supply Chain Could Be Made More Flexible in Order to Enhance the Performance - Case Study Example

How The Suррly Сhаin Соuld Bе Mаdе Mоrе Flехiblе In Оrdеr Tо Еnhаnсе Thе Реrfоrmаnсе Name of Student: Name of Course: Name of Instructor: Date of Submission How The Suррly Сhаin Соuld Bе Mаdе Mоrе Flехiblе In Оrdеr Tо Еnhаnсе Thе Реrfоrmаnсе Introduction Supply chains are an important aspect in the operations of any organizations. Precisely put; they are influence the operational efficiency of an organization by a large extent. For this reason, it has been the aim of every organisation to establish a state of art supply chain which ensures that it is able to meet market demands, market forecasts at the highest possible efficiencies and at minimum costs. Supply chains are a crucial part of the entire processes in an organisation. According to Christopher and Holweg, the aim of supply chain management is to develop control from the start to the end of processes in a bid to ensure that an organization is able to establish a seamless of elements in the system (Christopher & Holweg 2011, p.63). In the verge of increased turbulence in the market, it is important for organizations to enhance flexibility in their supply chains so as to be able to counter the challenges presented by the turbulence. This crucial aspect of supply chains will be discussed in depth later in this paper. This paper will present a case study on Toyota’s supply chain management system and will highlight some of the important aspects of a supply chain management system. Managing Crisis Owing to the dynamic nature of business, crises are certain to occur in any industry. The one factor which determines the successful continuity of business is sustainability. This crucial operational aspect is achieved when an organization has strategic operational strategies in place. One of such strategies is by establishing a strategic supply management system. On this point, it is important to acknowledge the fact that supply systems are a very important operational aspect of an organization (Hittle & Leonard 2011, p.1183). Any crisis which is due to affect supply systems negatively is certain to affect the success of an organization equally. In addition to this, it is important to note that organizations are faced with the challenge of managing global supply chins in the wake of increased globalization. Ideally, a crisis is the supply chain translates to the inability of an organization to satisfy the demand in the market and also an inability to source raw materials from their various locations (Svensson 2010, p.17). For this reason, there s an inherent need for an organization’s supply chain to exhibit high flexibility which ensures that it is able to counter the challenges which are posed by various crisis. Flexibility in a supply chain is a characteristic which enables an organization to align its suppliers towards a common set of goals and objectives (Duclos, Vokurka & Lummus 2003, p.446).Flexibility enables an organization to be able to react to changes in the market of operations promptly hence evading possible occurrences which might have led to a crisis. On this point, it must be noted that flexibility is not generic but is a justified, well planned and carefully managed aspect which is integrated into a supply chain system. Its benefits are only seen when the organization finds itself in a situation calling for flexibility (Kumar, Fantazy, Kumar &Boyle 2006, p. 304). Toyota Supply Chain Management System Toyota Motor Manufacturing Company’s supply chain management system is regarded to be one of the best in the world. This explains the reason as to why it is used as a benchmark by many world class organizations (Marksberry 2012, p.278). At this point, it is important to note that Toyota’s supply chain management system is a source of its competitiveness in the market. In the wake of increased globalization, supply chain management systems have become an important source of competitiveness for organizations; something which Toyota has perfected over the years to become a global leader in motor vehicle manufacturing (Marksberry 2012, p.278). Toyota Motor Manufacturing Company’s supply chain is focused on two main operational aspects. The first aspect is focused on ensuring that the company is able to get high quality raw materials and parts for use in its automobile manufacturing. The second aspect is focused on ensuring that the company s able to meet market demands in addition to increasing its market share in the globe. Toyota’s supply chains is focused o developing several sections of the broader supply chains which are targeted to ensuring that the company develops suppliers capability; hence ensuring that its suppliers are able to supply its with the parts characterized by high quality and minima economic costs (Marksberry 2012, p.283). The following figure illustrates Toyota’s supply chain structure Toyota’s supply chain structure (Marksberry 2012, p.283). Toyota Car Manufacturing Company operates as a complex industry web which is made up of various stakeholders who are responsible for the manufacturing and supply of various parts used by the main automobile manufacturer/ assembly. The main manufacturers are produced by original equipment manufacturers (OEMs) who are responsible for the manufacture of individual parts. On the company’s supply chain outer ring are the original equipment manufacturers who are referred to as tier-three suppliers. These suppliers manufacture single components. The tier three suppliers supply their products to tier two suppliers, who are responsible for the assembly/ manufacture of various components. Tier two suppliers supply to tier one manufactures that are responsible for the manufacture/ assembly of complex parts who then supply to original equipment manufacturers for final assembly / manufacturer (The Economist 2010, p.1). The following section will analyze some of the important features of Toyota’s supply chain management system as outlines in its 4V principle. Variety Variety outlines the number of products produced by a company which are available in a specific market. Under the 4V principle, Toyota strives at ensuring that it has a variety of automobiles in the market depending on the demand in that specific market. This explains the reason as to why Toyota motor manufacturing company boasts of various automobile models which come in various series. The role of the supply chains is to ensure that the right model is available at the location where it is needed. This explains the high number of land cruisers in rugged terrains such as those found in Africa’s wild world and the high number of Toyota Hilux pickups in construction focused regions. On this point, it is important to acknowledge that a supply chain should have the ability of sorting the variety of products which it handles and aligning its efficiencies towards satisfying the market demands associated with the products. Key to the management of variety is considering the market demand (Anath, Sridhar & Roy 2010, p.1) Velocity Velocity is a feature of a supply chain which enables an organization to react to the market changes promptly demand (Anath, Sridhar & Roy 2010, p.1). It can be acknowledged that the speed in which an organization is able to react to changes in the market is a key determinant of an organization’s success. The variety aspect of Toyota’s supply chain is focused on maintaining a steady flow of processes throughout the chain Variability The variability of a supply chain enables an organization to be able to counter the inconsistencies which occur during operations demand (Anath, Sridhar & Roy 2010, p.1). In so doing, an organization is able to counter inconsistencies before they develop into crises. Variability is an important aspect of flexibility which has enabled Toyota to be able to counter several crises. On this point it is important to give an example of the devastating effects of Tsunami on the supply chains of various organizations. Flexibility enabled the company to recover from the crisis within a record time of two weeks; an occurrence which affirms the need for flexibility in a supply chain (Supply Chain Digest 2012, p.1). Visibility To Toyota, visibility is a feature in their supply chain management system which enables the company to track all the processes which occur in the organization with intent of enhancing transparency and encouraging continuous improvement and learning demand (Anath, Sridhar & Roy 2010, p.1). Other Features of the Supply Chain Toyota considers its operations as integrated to form a single network where every activity is important to its success. Toyota is the initiator of several manufacturing policies such as lean and Just in Time which in addition to the supply chain system form the broader Toyota Production System. For this reason, Just in Time and Lean systems have an important part to play in Toyota’s supply chain management system. Crisis in Toyota Motor Supply Management System In it’s strive to expand its global market share, Toyota found itself in a product quality crisis. The company recalled several automobiles from the market owing to quality related issues in the market (Andrews, Simon, Tian & Zhao 2011, p. 1065) (The Economist 2010, p.1). This can be traced to its move to expand its supply management chain so as to accommodate the large volumes expected with the increase in market share. This exposed the company to suppliers which the company had not worked previously, hence affecting the supply chain altogether. On this point, it is important to note that the supply chain at the top most level is not the problem behind the crisis rather problems lay in the new suppliers. On the verge of the turbulence which is currently experience in Toyota Motor manufacturing chain supply system, the company should devise a strategic plan which would ensure that all its suppliers conform to the previous standards which were established by the originators of the company’s strategic supply system. Appropriate decision making is an important factor which the company ought to consider in its recovery process. It must be acknowledged that decisison making processes are vital to a supply chain in times of a crisis (Hittle & Leonard 2011, p.1183). On this point, it must be acknowledged that the management of supply chains in the verge of turbulence should be focused on ensuing that an organization benefits maximally from the supply chain (Natarajathinam, Capar & Narayan, 2009, p.536). Summing up, Toyota should integrate in high flexibility aspects in its supply chain so as to ensure that it is able to restore its process to its initial flawless system (Christopher & Holweg 2011, p.63). Concluding, it can be seen from this paper that it is important for organization to integrate flexibility in their chain supply systems so as to ensure that they are able to counter uncertainties which occur during operation. The case study has focused on Toyota Automobile Manufacturing Company which is the largest automobile manufacturer in the world. The case started by giving an insight into the management of crisis in the industry and highlighted the need for flexibility which enables an organization to handle challenges which occur in the operations of an organization hence enabling it to evade possible crisis. The paper gave an insight into the 4Vs principle which includes variability, variety, velocity and visibility; which are critical to the efficiency of the company’s supply chain system. The case has also highlighted the quality crisis in the company which is a result of problems in the supply management system. References Anath, Y.,Sridhar, S.,& Roy, V., 2010. Toyota Supply Chain Management, Toyota Supply Chain Management - Business Book Summaries; Vol. 1 ,No. 1, p1 Duclos, L., Vokurka, R., & Lummus, R., 2003. A Conceptual Model Of Supply Chain Flexibility, Industrial Management & Data Systems, Vol. 103, No. 6, pp. 446 -456 Hittle & Leonard 2011. Decision Making In Advance Of A Supply Chain Crisis, Management Decision,Vol. 49 No. 7,pp. 1182-1193 Christopher, M., & Holweg, M., 2011. Supply Chain 2.0”: Managing Supply Chains In The Era Of Turbulence, International Journal of Physical, Distribution & Logistics Management, Vol. 41 No. 1, pp. 63-82 Kumar, Fantazy, Kumar &Boyle 2006. Implementation and management framework for supply chain flexibility, Journal of Enterprise Information Management, Vol. 19 No. 3, pp. 303-319 Marksberry,P., 2012. Investigating “The Way” For Toyota Suppliers A Quantitative Outlook On Toyota’s Replicating Efforts For Supplier Development, Benchmarking: An International Journal, Vol. 19 No. 2,pp. 277-298 Natarajathinam,M., Capar,I., & Narayan, N., 2009. Managing Supply Chains In Times Of Crisis: A Review Of Literature And Insights, International Journal of Physical Distribution & Logistics Management. Vol. 39 No. 7, pp. 535-573 Svensson, G., 2010. Teleological Approaches In Supply Chain Management: Illustrations, Supply Chain Management: An International Journal, Vol.15, No.1,pp.16–20 Supply Chain Digest 2012. Global Supply Chain News: Toyota Taking Massive Effort to Reduce Its Supply Chain Risk in Japan, Supply Chain Digest, Retrieved on 7th September 2013 from http://www.scdigest.com/ontarget/12-03-07-2.php?cid=5576&ctype=content The Economist, 2010. Toyota's Supply Chain the Machine That Ran Too Hot, The Economist, Retrieved on 7th September 2012 from http://www.economist.com/node/15576506 Read More