Supply Chain Management at Toyota Motor Corporation - Case Study Example

Supply Chain Management at Toyota Motor Corporation

Introduction

Toyota Motor Corporation is a Japanese multinational firm that manufactures automotives. The company is an original manufacturer of automatic looms. From this, Toyota Motor Corporation emerged and it has since developed. Currently, in regards to revenue, Toyota is among the world’s largest manufacturer of forklift trucks. The supply chain at Toyota Motors mainly comprises vendors, manufacturers, dealers, and customers. This research paper aims to explore the supply chain system at Toyota Motors. Firstly, the paper will critically evaluate how Toyota manages innovation in its supply chain. Second, it will critically evaluate the supply chain information technologies the organization uses to enhance its competitive advantage.

• Critically evaluate how the organization of your choice manages innovation in its supply chain.

Management of Innovation at the Supply Chain

As one of the multinational corporations, Toyota Motors has implemented effective innovation strategies to survive in the competitive market (Li et al. 2016). The supply chain management at Toyota is such that it comprises a vendor, manufacturer, dealer, and customer (Bernard, 2013). All these partners play a major role in ensuring that the supply chain is complete. The manufacturer takes the key role of receiving dock, pc store, and the process of production. Dealers help in getting the products to customers. Customers/ clients represent the last group in the supply chain since they receive the manufactured goods.

For the past years, the company has had an effective supply chain over the years, which has contributed to its performance and position in the market. Having an effective supply chain is important since it assists firms in delivering their products to customers in different areas. At the firm, Toyota insists on innovation and creativity in regards to managing the supply chain. At the firm, managers have a responsibility of thinking innovatively in a bid to balance product flow as well as cost throughout the life cycle of a product. The high level of innovation at the multinational firm has had a positive influence on the performance of its supply chain system. Precisely, the company’s management has been working on improving the supply chain sector by focusing on ways to implement the supply chain strategies for its customers. According to Li et al. (2016), there are five aspects of the supply chain that the company tries to innovate to meet the needs of customers as well as to save on costs. The five aspects are designed for the manufacturer, design for six stigmas, design for assembly, design for product serviceability, and design for environment.

Luo (2012) asserts that in design for manufacture, Toyota Corporation has been aiming at reducing its manufacturing costs by designing their automobile products in a manner that is easy to design. Additionally, the design for assembly is such that Toyota Corporation has been designing its automotive products in a way that reduces the number of components. This strategy is effective in ensuring that the firm manufactures subsystems and spare parts that can be easily put together. In the competitive environment, the company has also tried to manage its supply chain innovation by designing its automotive products in a manner that is easy to assemble, disassemble, and reuse (Roy, Sivakumar, & Wilkinson, 2004). The firm is also known to currently design its products for Six Stigma by eliminating past failures associated with their products, boosting consistency, and minimizing costs. The company also designs its products for the environment by trying to minimize the negative environmental impact of the automotive. Toyota has also resulted in the use of open innovation, which encourages the use of both external and internal ideas to promote its innovative techniques (Chesbrough, 2010). Therefore at Toyota, external and internal technology act as the main guidelines to innovation. Open innovation also involves exploring ideas from other markets to boost creativity.

Another key strategy implemented at Toyota Motors in regards to managing and enhancing the firm’s supply chain innovations is the use of technology. In a firm’s procurement supply chain, the technology involves product development as well as innovation, in a bid to boost customer value propositions. According to the company’s management, employees at the firm should realize the importance of using modern technology to create sustainable and innovative supply chain Luo (2012). Through the use of new technology, Toyota has managed to control its inventories effectively and to manage its automotive products as they are supplied to clients. To gain a competitive advantage in the automotive industry, Toyota Motors is currently trying to come up with effective strategies to ensure that products and services flow effectively within the network. The international firm has also been working on ways of boosting the supply chain strategies through improved relationships and flow of information within the company.

To enhance innovation at the firm, Toyota Motors also customizes its products based on the customer preferences (Hoover, 2011). The company’s supply chain professionals have also been evaluating the changes that occur in the automotive industry about the differentiation and supply processes. Establishment of these effective supply chain strategies has enabled Toyota Motors to gain a competitive edge in the market by widening its overall market share. The overall aim of this automotive corporation is to form a supply chain system that enhances innovation and meets the future economic and social requirements. Implementing sustainable supply chain innovation goes a long way in enabling the firm to deliver the order in time to customers. However, Toyota has been facing several challenges while managing its innovation supply chain. For example, challenges such as increased complexity in supply chain operations have posed as a problem, when the company is delivering it automotive products to customers (Hoover, 2011). Second, the management of supply chain innovations is quite expensive such that it leads to increased production costs and ultimately high prices. The management has to be willing to employ effective supply personnel who can deal with the challenges accordingly.

2) Critically evaluate which supply chain information technologies the organization of your choice uses to enhance its competitive advantage.

Supply Chain Information Technologies Usage at Toyota Corporation

According to Ross (2011), the use of supply chain information technologies at any given firm is a key strategy towards boosting its operation and overall performance. Specifically, the implementation of supply chain information technologies at Toyota Motor Corporation has gone a long way in widening the firm’s market share. In most cases, supply chains exist as complex entities; hence, implementing effective technology is vital in increasing the wealth of shareholders as well as minimizing the costs. The use of modern and advanced technology at the firm has enabled Toyota Motors to enhance a clearer visibility with the firm’s supply chain. Therefore, Toyota has implemented modern technology into the firm’s internal operations in a bid to boost its supply chain management. Firstly, a key form of information technologies that Toyota Motor Corporation uses for it supply chain system is computerized shipping and tracking (Wang, 2012). This system is beneficial since it has enabled Toyota to reduce shipping errors. Additionally, it has also enabled the automotive company to reduce the time spent on shipping, tracking, as well as compiling order data. As result, this saves the firm money. Another effective form of supply chain technology utilized by the firm is the use of RFID for vehicle tracking. This system technology has greatly helped in enabling Toyota to track its inventory. By using this system, the company has managed to enhance consistent tracking; hence maintaining control and visibility of their car products at all times.

In addition, Toyota Motors has also started using social media as a modern form of supply-chain information technology (Subramani, 2014). In the contemporary society and business environment, the use of social media is currently one of the most popular technologies worldwide through the existence of platforms such as Twitter and Facebook. Many companies operating in the competitive market have turned to using social media as a way of gaining visibility for their firm and as a key marketing strategy. To boost its supply chain system, Toyota Motors is currently using social media to interact with potential clients, report accidents that may affect delivery schedules. Moreover, the company also uses social media as an avenue for forming automated updates about its inventory. Another key benefit is that Toyota Motor Corporations manages to get some of the inquiries as well as orders from Facebook and other social media platforms. Because of a large number of Facebook and Twitter users, Toyota can use the platform for marketing its supply chain strategies. Overall, using social media has created awareness for Toyota Motors; hence improving its brand image (Subramani, 2014). As a result, the supply sector has benefited in that more orders for the automotive products are made. The firm’s management also uses social media to create a more open communication with customers such that they can state any complaints regarding the delivery of Toyota products. Through this, Toyota has managed to make improvements on its supply chain system.

Additionally, the use of information technology (IT) in the supply chain management has been another common strategy used at Toyota Motors (Lee, & Whang, 2015). The advancement in modern technology has made it quite easy for the firm to integrate both IT and SCM for its supply operations. Applying IT in supply chain management has enabled Toyota Corporation to improve its performance by increasing the speed of delivery in regards to the company’s products. The benefits of IT include gaining a competitive advantage, gathering, and evaluation of information, report generation and decision making, cost of information sharing, and quick responses (Lee, & Whang, 2015). IT is a tool that facilitates and streamlines communication between the firm’s management and its suppliers. With the use of information technology, Toyota has managed to ensure the strategic alignment of the company’s supply chain processes; hence, improving the level of flow of goods from the company to its customers (Lee, & Whang, 2015). Toyota Motors needs to deal with the challenges that arise when using the supply-chain information technologies. One of the main problems is the high cost of production, and the firm can manage this by cutting on other expenses.

Conclusion

In summary, Toyota Motor Corporations is one of the most successful automotive companies whose operations are based in Japan. The firm is known for having an effective supply chain system that is supported by modern technology. To boost its operations, Toyota Motors has made some improvements in its supply chain, for example, introducing computerized shipping as well as the use of social media. The overall aim of the company is to ensure that the products supplied are of good quality and that they are delivered to customers in time. Therefore, the existence of an effective supply management system (SCM) has greatly contributed to the improved performance at Toyota Motors