Operations and Logistics of Toyota Company - Case Study Example

Operations, Logistics and Supply Chain Management of Toyota Company

Toyota Motor Corporation is a Japanese automobile company that deals in the manufacture of a variety cars and auto-spare parts. The company was established in 1937. However, it has since expanded to North America, Europe, and Asia where it deals in quality production of cars like Lexus, Daihatsu and Hino as some of its latest brand. Therefore, the company competes in an automotive industry with other rivals like Mazda, Nissan, Peugeot and Hyundai among others. One of the greatest concerns is the tumultuous Skyrocketing fuel prices and growing environmental concern that have forced consumers to seek for eco-friendly vehicles that consume less amount of fuel. Besides, the company has also diversified its production to manufacturing of hybrid motor vehicles. The success factor Toyota Motor Corporation is based on distinct core values and the Toyota Production System (TPS). In essence the company thrives under a culture of respect chat characterized by promoting and innovation that foster cooperation. The company’s production and supply chain management remains a platform under which quality systems, just-in-time, and continuous improvement practices have been developed. Therefore, this study is designed to explore the operations, logistics and supply chain management of Toyota Motor corporations.

Supply Chain Management of Toyota Company

The supply chain management is an element of the company’s operation that traces back to 1940 when its Toyota Production System (TPS) was initiated. The TPS was introduced by Shigeo Shingo and Taiichi Ohno who saw the need to reduce the production and distribution costs while concentrating on quality and revenue. According to Drake and Business Expert Press (2012)Bottom of Form, the company has maintained a unique process to effectively operate and manage its supply chain. Some of the process associated with the TPS has enabled the company to maintain consistent performance for years. Through combined insights of practitioners for more than 20 years, Toyotas supply chain management and execution has shown a positive influence on the supply chain practices at auto and nonmanufacturing companies.

The supply chain management of Toyota Company is supported through by design, research and development R&D bases distributed in nine locations across the world. With reference to development and design production technique of the company, it is clear that Toyota is utilizing sales and service to achieve consistent globalization and localization. Therefore, globalization has become the most important distribution strategy of the company towards achieving quality assurance. Despite whatever the location Toyota s products is made, supply chain management is designed in a way that a high level of quality is maintained. It is under this premise that all Toyota products are marked "Made by TOYOTA." In his sentiments, Liker and Toyota Motor Corporation (2012) explain that the supply chain management of Toyota Motor Corporation is designed in a way that it spread Toyota's philosophy — the "Toyota Way" to any other Toyota affiliated company. Moreover, the company employs policies such as total quality management (TQM) continuous improvement, team work among others as means of ensuring sustainable supply chain management.

The company believes that the only way to ensure sustainable logistics and supply chain management is through quality assurance spread through “Toyota way”. In 2003, the global production center for the company was established in Motomachi where regional centers such as the United States, the United Kingdom and Thailand later emerged. Besides, the company has regional logistics and supply chain academies where standardized training on how to deal with issues of supply chain is conducted.

How Toyota operations supports its market services

The organizational infrastructure

Toyota motor corporation operates on a lean supply chain where each product produced by the company travels with a card. The company also operates on a principle that a new part will only be required when the previous part has been used. Besides, the company utilizes signals for restocking. Toyotas has a well supply chain management system that is integrated with the production system, a strategy that has enabled the company to consistently maintain a stable demand of spare parts with low exchanges that are frequent. The company also uses capacity planning as part of its supply chain management strategy. Toyotas capacity planning is designed to eliminate inventory while achieving the objective of Toyota that relies heavily in pull system.

Toyota Motor Corporation is also known to operate supply chain that is characterized by an operational excellence known as the “Lean concept”. Having been adopted by Toyotas outlets across the world, the lean supply chain management is aimed at reducing wastes associated with the supply chain management and that is also considered as the primary objective. Employing just in time inventory management system has enabled the company to gain a competitive edge through reduced accumulative inventory in their warehouses. Below if the 4 lead principles of supply chain that has been adopted by Toyota company. It is important to note that the supply chain management processes to systematically focus on the v4L balance:

Variety is carefully chosen to create sustainable balance between market demands and operational efficiency. The company is fully conversant with the impact of different market demands and manufacturing supply chain costs. As such, the cost of supply chain as used in all outlets are all put into consideration when the when decisions regarding variety are being made. Under the same premise, the company’s variety is represented by a crucial supply chain design intended to create an impact on all supply chain participants. Of importance to note is that Toyotas supply chain is supported by feedback loop to enhance a selection of variety depending on the response to current market situations. Therefore, the variety principle of lean supply chain of Toyota Motor Corporation is designed to encourage the constant loop of Plan, Do, Check, and make timely delivery of Toyota products.

Velocity of supply chain is also another lead concept that is observed eat Toyota motor corporation. Velocity aspect is observed in all process across the entire Toyotas supply chain. Marinating a consistent flow of Toyota products along its supply chain allows for capacity planning in the entire distribution cycle. Velocity of supply chain of Toyota serves as a key player for the planning processes transversely in the supply chain system.

Variability of products that goes through the supply chain of Toyota Motor Corporation is greatly synchronized through individual processes. Synchronization of variable products creates a smooth flow of inventories. Moreover, variability of the products as used by Toyota Corporation enhances quality improvement process while reducing chances of interruption along the production cycles. As a consequent, it reduces unprecedented costs of production at the benefit of quality. Finally, it is important to note that variety, velocity, and variability are all meant to stabilize supply chain performance.

Visibility principle is also used by Toyota Corporation to ensure that all the right metrics and the requirement are availed before any new plan is introduced. The management of Toyota Corporation has instituted measures to foresee that the performance metrics are assigned 50 percent weight for results and a 50 percent weight for process compliance. The visibility concept is not only intended to benefit in short term, but it is also aimed at ensuring that the right procedures are followed. Therefore, visibility approach reduces e redundancy and bureaucracy associated with the supply chain by encouraging immediate responses, changes are deliberate, and velocity is maintained

How TSC supports the market

Operations, logistics and supply chain management of Toyota Corporation can be found across its global operations. As such, it has captured the opportunities of the market through informed sourcing decisions. The company has greatly invested in its supply chain as one way of supporting the market. Under the same premise, the company has increased its production capacity to suit the market demands. With over 50.000 units of Lexus and 120,000 transmissions in the US, the company’s logistics strategy is perceived can be graded as exemplary all the year round. Below are some of the strategies through which the company has managed to support the market of automobile industry.

Centralised and de-centralised logistics

Toyotas operations and logistics are characterized by a centralized logistic function designed to monitor and manage packaging requirements during purchase and procurement services. Besides, centralized system has enabled the company to have a great deal of logistics power incorporated as a separate entity at Toyota. Most of the logistic functions of the company are split between plant manufacturing and the production control department; this makes it easier for the company to attain a seamless operation that is also needed for the maximization of revenues. Production planning and ordering of parts at Toyota Corporation is supported by inbound materials and assembly line designed to sort empty containers for return legs and functions of Production Control. This provide a considerable scope for cost saving and innovation. According to Moreno and Charnley (2016), decentralized logistics as utilized by Toyota is reflected one the degree of integration between manufacturing and supply chain.

Packaging loops – a consumer and a supplier

Toyota Production System is supported by different packaging projects made of returnable containers and designing standards. The company’s logistics viewpoint is to gain the benefits of packaging that touches on varied parts of supply chain. With the aid of packaging loops, the company has been able to create integration between the distributors and the consumers. Besides, the company uses the providers to manage its production loops. To enhance quality delivery of Toyotas products e to the market, the company has established tier one suppliers that is carried from one financial period to another. Kortmann and Piller (2016) support that Toyota packaning loops have increased market regionalization of Toyotas products in the market. With the concept of trade having been made it easier, sharing of packaging across locations can now be undertaken thereby reducing on the overhead costs. According to Kortmann and Piller (2016), the more opportunities reduce waste in returnable packaging.

Increased regionalization

Designing and maintenance of anticipatory supply chain requires leaders that exhibit both innovative skills and discipline. At Toyota Company, the executives that are well conversant with global experience of coming up with varied logistic solutions. With increased regionalization, managers at different outlets are in a position to protect Toyotas supply chain from serious and costly disruptions. Therefore, the strategy is utilized to improve inventory while adding to the capacity of multiple suppliers. Moreover, increased regionalization adds on to the supply chain efficiency that in turn supports the market for Toyota products.

How the business can improve its performance

To enhance Toyotas logistics and production system, the company must aim at regulating supplies to the factory and ensure that deliveries are made just on the right time. The principle objective behind this strategy is to ensure that the levels of supply chain are reduced and suppliers’ interaction with the production line is effectively designed. According to Blanchard (2010), Toyota Motor Corporation can improve its supply chain performance through the following strategies.

On-time delivery to commit: This is a simple metrics that would enable a company to make timely delivery of products and services at the right time to the customers. Embracing On-time delivery to commit will allow the company to make a distribution of meaningful percentage of orders within the required timeframe. Putting into considerations the On-time delivery to commit strategy will enable the company in management of wastes into the entire supply chain thereby improving the organizational performance.

Establish Information Conduits: Information conduits are channels that are used within the supply chain to share vital data about the shipment of products. To enhance performance in line with logistics at Toyota Corporation, the company must embrace the use of information conduits and make data distributed promptly and properly to the stakeholders at different regions. In essence, if a technician from another country would want more materials in his premise, the information can easily be conveyed to the purchase managers then takes the initiative and makes delivery through the right personnel, but on the same platform. As pointed out by Handfield, Cousins, Lawson and Petersen (2015), the use of information conduits reduces distribution time right from the time an order is placed to the time of delivery. In turn, it would enhance performance at Toyota Corporation.

How Toyota can improve its Distribution Network.

According to Handfield, Cousins, Lawson and Petersen (2015), the distribution network of a company is important because it form the basis at which the operational hinge is built. Though the strategy has since been employed by Toyota, it is recommended that the current distribution network be aligned through holistic approach to the organizational goals so as to enhance the organizational logistic success. Embracing holistic view in the distribution network would help in figuring out how the distribution network as well as to figure out how the parts work in sync.

Organizational Analysis

Toyota Corporation has a modern history solidifying as a major international power in terms of automotive industry. With hundreds of millions of vehicles having been exported globally, the company remains a popular distributor of quality and efficient brands of cars. The company makes good use its organizational structure to support business goals and strategic direction.

Economic Factors

There is a proper link between economic factors and market conditions. For instance, favorable economic conditions positively influence the world market. According to Epstein and Buhovac (2014), a higher purchasing power will for customers at Toyota Corporation has contributed to improved sales and profit. Besides, the company enjoys a wide range of customers with higher dispensable income that are mainly inclined to make big ticket purchases.

Environmental Factors

Environmental concerns have become more impotent just as it is for customers. Most customers are currently seeking for products and services that are sustainable to the environment. For that reason, environment friendly products and services have since gained positive popularity and brand image. Toyota Motor Corporation has received a recommendable milestone in terms of environmental sustainability (Epstein & Buhovac, 2014). In essence, the company has adopted the production of fuel cell vehicles alongside engagement with environmental agencies to protect endangered species.

Social Factors

Social environment constitutes anything that influence specific social and cultural factors of an organization. Any element that exhibits an influence to the social environment is often beyond the organizational control. As part of its social engagement, Toyota Company has been engaged in massive production and distribution of electric vehicles with a projection of revolutionizing the production of electric cars across the world by 2020 (Epstein & Buhovac, 2014). Besides, the company is taking part in the production of hybrid vehicle, a situation that led to accumulative global sales 8.90 million units in 2016.

Conclusion

Toyota Motor Corporation remains among the leading manufacturer and distributors of cars and automobile accessories. To ensure highest level of productivity, Toyota has employed production and logistic systems aimed at promoting supply chain infrastructure and to enhance coordinating in various business functions. This report has clarified on the Operations, Logistics and Supply Chain Management of Toyota Company. It has further addressed issues of Supply Chain Management of Toyota Company. By looking at how Toyota operations supports its market services, the report has touched on; variety, velocity, variability and visibility. However, the report draws to a conclusion on measures that should be adopted by Toyota Corporation so as to improve its performance.