Sustainability and the Green Supply Chain in Toyota Motor Corporation - Essay Example

?Sustainability and the Green Supply Chain in Toyota Motor Corporation Table of Contents Introduction 3 Discussion 4 Supply Chain Management (SCM) and Logistics 4 4 Structure, Dynamics and Key Processes of Marketing Channels and Logistics 6 6 Adoption of Environmental and Social Sustainability Principles by TMC 11 Conclusion 17 References 18 Bibliography 22 Introduction Toyota Motor Corporation (TMC) is regarded as one of the foremost automakers throughout the globe, headquartered in Japan. The company is recognised to be a multinational corporation (MNC) operating on a global context. It is a renowned automobile manufacturer, producing millions of vehicles for worldwide customers. The company, operating in worldwide business market segments is based on different activities that include ‘research & development’ (R&D), sales, manufacturing and exports. The core intention of the company is to produce automobiles in accordance with the needs along with the requirements of the customers. Additionally, the company maintains a balance between its production services and other factors such as environment, drivability, safety and reliability [1] (Toyota Motor Corporation, 2013). In this respect, the company aims to offer vehicles of enhanced features, so that customers are availed with products beyond their expectations. The company, in order to retain its worldwide position and provide customers with quality products has developed an effective global network [2] (Toyota Motor Corporation, 2013). Supply chain management (SCM) and logistics play a decisive role for TMC in obtaining required materials from suppliers proficiently and providing finished products to customers in the market segments appropriately. In general, SCM is regarded as a process, which is involved in the movement along with the storage of materials from suppliers to customers. Logistics are a part of SCM on the basis of which effective plans and strategies are formulated according to which raw materials and goods or services are obtained from different suppliers for production of products and finally delivering the products to end customers efficiently (Macmillan Publishers Limited, 2013). In this respect, TMC has developed an efficient SCM and logistic networks in a global context, ensuring that products and/or services are produced and manufactured in a time effective manner. In this regard, the company has developed ‘Toyota Production System’ (TPS) with the aim of ensuring that materials along with inventories are handled properly. Additionally, TPS ensures that manufacturing along with logistics operations of the company are managed and integrated with the suppliers along with the customers (Strategos, 2013; Ludwig, 2013). With this concern, this essay intends to discuss about how TMC is adopting the principles of environmental along with social sustainability particularly in its supply chain management and logistics operations by using certain relevant examples. Discussion Supply Chain Management (SCM) and Logistics In the present business scenario, market competition has augmented due to increased level of globalisation and advent of technologies. In this regard, business organisations are required to adopt effective strategies for the purpose of enhancing their respective operational efficiencies and meeting the needs of customers with offering innovative products and/or services to them in a timely manner. SCM is a process comprising different activities in accordance with which supply of raw materials and distributions of final products and/or services are based upon. It develops a linkage between the suppliers and the consumers, so that a business organisation is able to execute its business processes and operations in a cost-effective manner. SCM is a procedure of managing the logistic activities of an organisation in order to make its operation and distribution cycle more productive. Additionally, SCM and logistics operations are required to conduct their operations in a social responsible manner and must take into concern about the environmental factors, which is the most discussed topic in the present business scenario. In this regard, business organisations are required to formulate appropriate policies along with plans with the objective of ensuring that supply chain operations are conducted effectively with following enhanced ethical along with social practices. Specially mentioning, business organisations with effective SCM are offered with the opportunity of producing as along with distributing products and/or services to worldwide customers in appropriate time, location and quantity. The development in the field of transportation along with communication technologies have assisted in enhancing supply chain networks. Respectively, SCM is often viewed to be one of the imperative management tools of business organisations, which requires to be managed effectively due to the factor that it might affect the success and the failure of operations in the worldwide business market segments. Business organisations adopt different strategies in relation to supply chain, that are effective in developing an appropriate balance between procurement of raw materials and supply of finished goods in a social and time-effective manner (McGraw-Hill Education, 2013). On the other hand, logistics management is duly considered to be an integral part of SCM process, signifying the movement of products or services. It is a process of planning, controlling and implementing different strategies in relation to flow and storage of information, products along with services. The logistic network of a business organisation comprises suppliers, warehouses, manufacturing centres, retail outlets, movement of raw material along with finished goods and distribution centres. The main objective of logistic management is to meet the expectations of the customers for improving the competitiveness of businesses (TUM, 2008). In this regard, it can be apparently observed that TMC as a global producer and manufacturer of vehicles has adopted an efficient measure of managing and coordinating its supply chain activities and logistics operations by following the principles of social along with environmental sustainability. For instance, it has been viewed that the company has developed TPS in order to manage its worldwide networks of suppliers and dealers. The SCM of the company is typically based upon operations strategy with the intention of managing its operational activities. The key principle on the basis of which TPS is based is the approach of ‘lean manufacturing’. The concept of TPS has been initiated in order to facilitate the customers with better quality vehicles at an economical and ethical manner. TPS has assisted its employees and associated members with better job security, fair treatment and greater job satisfaction. Moreover, TPS has improved the flexibility of the company towards changing market conditions, so that the company is facilitated with the opportunity of conducting its business operations cost effectively and also in a timely manner. The company has adopted this tool i.e. TPS of managing its procurement, production and distribution activities with the objective of retaining its global position and improving competitiveness as compared to other automobile manufacturers in the worldwide business market segments (Wisner, 2011; Toyota Motor Corporation Australia Limited, n.d.). Structure, Dynamics and Key Processes of Marketing Channels and Logistics SCM and logistics management are based on certain framework and model in accordance with which information, products and services flow effectively. In this respect, movement of material and products in adherence with a structured process ensure that supply chain operations are conducted in an efficient, resourceful and responsible way. The activities that are executed on the basis of certain structure or process will ultimately facilitate in minimising wastages by a certain degree. Moreover, it will also assist in considering certain important factors such as eliminating carbon emission and conducting operations in a social along with ethical manner. In this similar regard, an effective framework of logistics model has been presented below. Fig.1: The Framework of Logistic System Source: (Tseng & et. al., 2005). The logistic system comprise three major components that include logistics services, infrastructure and information system. Logistics services denote the support which is offered towards the movement along with the flow of materials from production process and finally to the end consumers. Moreover, it also provides measures of disposing waste and initiates reserve flow. There are different activities that are included in the logistics services such as storage or control of inventory in logistics operations and materials offered to the providers of external services. Information systems, on the other hand involve in the management of valuable information, so that effective decisions can be made. Moreover, it assists in tracking the performance of logistics operations. Infrastructure system often encompasses different elements that include financial resources, warehouses, human resources, transport, packaging materials and communication. It can be affirmed that the aforementioned resources aid in providing adequate support to perform logistics operations effectively (Tseng & et. al., 2005). It has been apparently observed in this similar concern that TMC has developed logistics with different operations including movement of required car parts along with products. In this respect, required parts or materials are procured from different suppliers and finished products are supplied to customers in a timely manner. The process amid the procurement of materials and deliverance of finished products to the end customers is recognised as ‘production parts logistics’. The production process of the company is based on the notion of TPS, which ensures that only required products are developed in appropriate quantity and time efficiently. In this context, production of required quantity of products facilitates in minimising wastes of the company at large [4] (Toyota Motor Corporation, 2012). SCM is such a framework, depending on which planning, controlling and implementing various sorts of operations in relation to supply chain are managed. In this context, the aspect of SCM is based on a certain framework, in accordance with which supply chain activities are required to be managed and coordinated. This framework has been presented in the figure provided below. Fig.2: Supply Chain Management Framework Source: (Chen & Paulraj, 2004). The management of business organisations with the assistance of an appropriate SCM will be facilitated with the opportunity of identifying opportunities along with problems in relation to supply chain activities. In this respect, suitable decisions in relation to SCM will facilitate business organisations in managing its supply chain operations in an improved manner with enhanced competiveness. It has been recognised that there are four major elements that are present in SCM process such as strategic purchasing, logistic integration, supply management and supply network coordination (Chen & Paulraj, 2004). These elements have been discussed hereunder. Strategic Purchasing The business environment is changing in a rapid manner with increased market competition. In this regard, the purchasing functions of business organisations must based on internal along with external purchase operations. Business organisations should conduct a thorough analysis of the perception of the customers, which can be regarded as internal purchase operations. Accordingly, business organisations should formulate effective strategic planning in order to undertake innovation and risk taking plans to provide customers with products on the basis of their preferences (Chen & Paulraj, 2004). Supply Management Supply management emphasizes developing the process of providing products and/or services to the customers in the worldwide business market segments. Business organisations with efficient supply management functions ensure that better quality of products or services are offered in a time efficient and also in a responsible way. In this regard, communication plays an effective role in supply chain activities, facilitating in exchange of ideas and information efficiently. In this regard, a smooth flow of ideas along with information in relation to SCM process is likely to assist in developing better suppliers along with buyer relationship (Chen & Paulraj, 2004). Logistics Integration The logistics operations should be integrated efficiently with proper planning, controlling along with implementing various operational aspects for better flow along with storage of products and/or services. It involves different activities like warehousing, distribution, transportation and purchasing. Basically, it can be viewed that there are two sorts of logistics that include inbound and outbound logistics. In this context, inbound logistics assist in integrating the internal activities such as marketing, purchasing, production and finance. On the other hand, outbound logistics is fundamentally based upon developing an extensive relationship with external suppliers, logistics partners along with customers (Chen & Paulraj, 2004). Supply Network Coordination The supply network of SCM is required to be coordinated, so that the activities are performed in an integrated manner. In this context, coordinating the supply network will aid in identifying operational problems in relation to inventory management and control along with logistics operations (Chen & Paulraj, 2004). In the present business scenario, business organisations are focused on developing a sustainable SCM. Theoretically, a sustainable SCM facilitates business organisations in executing their respective supply chain activities in a sustainable way with a better consideration of environment along with social factors (Chen & Paulraj, 2004). Adoption of Environmental and Social Sustainability Principles by TMC In order to determine about how TMC is adopting the principles of environmental along with social sustainability in its SCM procedure and logistics operations, it can be viewed that the company adopts a lean supply chain process. This process implies developing different activities along with providing solutions with the objective of eliminating wastes, advancing value added based products and/or services along with minimising ‘non-value added’ operations (Emerald Group Publishing Limited, 2006). In this regard, it is identified that TMC has developed TPS in order to manage its supply chain activities along with logistics operations in a sustainable way with better competiveness and responsibilities. The TPS model of the company is based on two major concepts that include ‘jidoka’ and ‘just-in-time’. ‘Jidoka’ implies that on identification of defective parts, the machines stop automatically to function. In this regard, the production process stops on identifying any malfunction, ensuring that defective products are not produced. Contextually, it ensures that quality products are produced and delivered to end customers. On the other hand, ‘just-in-time’ concept signifies that products will be produced on the basis of their requirements and also in accordance with the amount required. In this respect, quality products will be produced in an efficient manner concerning factors like elimination of wastages, inappropriate use of production line and inconsistencies. Thus, ‘jidoka’ and ‘just-in-time’ are two major concepts based on which TPS is developed [3] (Toyota Motor Corporation, 2013; Toyota Motor Manufacturing, Kentucky, Inc., 2013). This can be better understood with the help of the following pictorial illustration. Fig.3: Total Production System Source: (Toyota, n.d.). TMC with the assistance of TPS is facilitated with acquiring various opportunities that include quality, costs, delivery, environment and safety. These advantages have been explained hereunder. Quality TMC, with the assistance of its developed TPS is facilitated with the opportunity of producing quality and innovative products in accordance with the needs of customers in a timely manner. Moreover, TPS has assisted the company in developing a flexible production process, resulting in aiding the company to sustain in this changing business environment (Toyota, n.d.). Costs The customers in the worldwide business market segments are offered with innovative and productive products. In this context, customers are availed to purchase better value added products beyond their expectations. Moreover, customers are also provided with highest quality products with better return on their investments (Toyota, n.d.). Delivery TMC ensures that the customers are offered with quality products in a timely manner. Additionally, the company with the assistance of TPS and timely delivering the products has been facilitated with raising greater customer satisfaction level (Toyota, n.d.). Environment The operational functions of TMC are often viewed to be based on diverse activities. The company majorly takes into concern different environmental factors while performing its day-to-day operations. In this context, TPS assists the company in evaluating the products in every stage that include manufacturing, development, recycling along with operation. It can be apparently observed that the notion of TPS of the company is primarily based upon three imperative factors that include reduce, recycle along with reuse. In the manufacturing segment, the company conducts production process in an efficient manner with the intention of eliminating wastes. In this regard, TPS facilitates the company in minimising wastes in different areas including processing, overproduction, inventory, manufacturing defects and conveyance among others. Respectively, the company with the assistance of TPS is facilitated with the opportunity of executing business operations with environmental benefits. Additionally, the company has adopted along with implemented an effective environmental policy with the objective of minimising carbon emission, efficiently using valuable resources and reducing risk factors associated with environmental based operations of the company (Toyota, n.d.). Safety The manufacturing sites of TMC are to be certified with OHSAS 18001, which implies that international standards in relation to occupational health along with safety management are maintained effectively. The manufacturing sites with this certification will ensure that risks and accidents in the workplaces are mitigated (Toyota, n.d.). TMC has been identified to work in a collaborative manner with its suppliers in the manufacturing process. The company and its suppliers are observed to work cooperatively both in adverse along with good times. In this regard, the company and its suppliers have executed their respective activities based upon developing mutual trust and confidence. Contextually, the company has been facilitated with the opportunity of building a harmonious society. The prime focus of the company has been complying with the needs along with the requirements of the customers. Respectively, the company has developed an appropriate ‘corporate social responsibility’ (CSR) guidelines, on the basis of which suppliers are required to conduct their activities. Accordingly, the company is likely to perform in accordance with the societal standards along with the trends prevailing in the respective industry [5] (Toyota Motor Corporation, 2012). In this respect, TMC with effective communication and collaboration with suppliers is able to maintain and develop a better relationship amid them. Moreover, the company has provided adequate information in relation to CSR guidelines and annual reports to suppliers in a written format, so that the company and its suppliers are able to perform in a collaborative manner. In this context, it can be affirmed that TMC is able to perform is supply chain activities quite effectively in terms of adopting the principles of environmental along with social sustainability in its various operational functions [6] (Toyota Motor Corporation, 2013). Conclusion From the above analysis, it can be comprehended that SCM plays an effective role in the present competitive business environment towards executing various operational functions in an efficient and timely manner. It also assists business organisations in procuring required materials for producing quality products and/or services and providing the finished products to end customers in a time efficient way. In this regard, it has apparently observed that TMC has developed a strong interrelation with the suppliers based on mutual trust and confidence, facilitating in executing its operations in a collaborative manner. Additionally, the company has developed TPS, so that supply chain activities are executed with better social and environmental considerations. TPS of the company is based on two major concepts, signifying that the supply chain operations will be executed with the provision of ensuring deliverance of quality products to the customers in a timely manner. Thus, it can be concluded that TPS has facilitated the company in reaping various significant advantages that include enhanced quality, timely delivery and better environment along with greater safety by following the principles based upon social along with environmental sustainability. References Chen, I. J. & Paulraj, A., 2004. Understanding Supply Chain Management: Critical Research And A Theoretical Framework. 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