Product Supply Contracts : Toyota Essay

Supply-Chain Management is the activities that procure materials and services, and transform them into intermediate goods and final products and deliver them, through a distribution system (Heizer & Render, 2011, p. 452). DELL is a computer technology corporation that develops sells, repairs and supports, computers and computer related products. DELL has realized that supply chain is becoming more and more important for the success of today’s business world and they work accordingly to keep a competitive advantage in the market. This study will examine to what extent Dell has used supply chain management to gain and retain a competitive advantage in the computer market.

The topic selected is (Strategic Procurement & Supply Chain Management). For this study, we have selected Toyota Motor Corporations as our company of choice. Toyota is without doubt the best in the world, with its many philosophies and principles on how to make the best out of the least; JIT, lean production and elimination of waste and the desire for continuous improvement are just a few ways how Toyota has become the best in the auto industry. Toyota as a name, a company, and as a brand has become synonymous with Quality.

Just like the other industries such as apparel, electronics, and consumer goods, the automobile industry has accelerated its foreign direct investment, cross border trade and global production. The automobile industry has increased outsourcing and bundled value chain activities in major supplier chains. As a result, more developed countries that serve as suppliers have increased their involvement in trade and FDI. With these increased supplier capabilities, large national suppliers have become global suppliers and are now controlling multinational operations. This is because of their increased capability of providing good and services to various lead firms all over the world. The automotive industry has a distinct firm structure. This

This helped the company to have a competitive advantage for the suppliers opportunity cost. Suppliers were paid incentives for improving the process. Continuous contact with the suppliers helped the company to have control for quality and also the computer aided layouts were dispersed. If the supplier used ideas to reduce cost then profit was being shared with them. This encouraged the suppliers to bring more innovation the process and thus Toyota had a competitive advantage over its suppliers if compared to its

What is the right supply chain for your product ? is the question asked by Marshall L. Fisher in his article titled, “What is the Right Supply Chain for Your Product ?” published in March-April 1997 issue of the Harvard Business Review. Author raises the question stating the fact that new ideas and technology implemented haven’t lead to improved performance. Performance has not become better but rather in at least some cases, has worsened due to costs rocketing to unprecedented levels.

Toyota is one of the leading vehicle manufactures in the world and has faced some challenges throughout the years. This paper will discuss a key issue that Toyota has faced and how they can utilize communication software to improve the business relationship between supplier and Toyota.

Toyota and Honda succeeded in constructing effective supplier relationships because of the methods they used for it. In article they were the following:

Over the years, the U. S. auto industry's market has been experiencing fluctuations due to many reasons including: price, quality and foreign competition. General Motors Corporation (GM) which had been the leading car and truck manufacturer had been experiencing declining market share and facing stiff competition from both U.S manufacturers and foreign imports such as the Asian auto producers that included Toyota, Honda and Nissan. The main reason for increased foreign competition was that foreign cars were more fuel efficient, smaller, less expensive, and often more reliable than their American counterparts.

Toyota Motor Manufacturing, U.S.A. (TMM) is deviating from the standard assembly line principle of jidoka in an attempt to avoid expenses incurred from stopping the production line for seat quality defects. This deviation has contributed to the inability to identify the root cause of the problem, which has led to decreased run ratios on the line and an excess of defective automobiles in the overflow lot for multiple days. If this problem isn’t fixed quickly, an increased amount of waste will continue to be incurred and customer value will be threatened.

The average general supply and average population of supplier’s gives suppliers’ substantial but finite bargaining power on companies like Ford. Plus, many of the suppliers have low forward vertical integration, meaning that they have no stake or controlling power on the dispersion and selling of their products to Ford. The suppliers bargaining ability becomes even weaker due to Fords backward vertical integration by the Ford River Rough Complex. Through the Complex, Ford makes several materials it uses to make cars and colligated completed products. This suggests that Ford needs to understand the substantial but finite outside factors connected with its supplier’s effect on the company.

Toyota today is one of the leading lean example in today’s manufacturing market. Starting back in the 1930’s with the idea of Just-in-Time to cut down cost in waste from overstocked storage rooms to a better efficient assembly lines who produced what was needed at a certain time. The Kanban system is one of the most used methods that the Japanese found during the 1950’s during a trip to United States in a super market.

4. In a service supply chain, the (explicit) cost of information is higher than in a product

Supply chain management (SCM) is a core part of organizational effectiveness in order to achieve goals characterizes efficiency. Globalization and international agreement led Toyota to develop it is SCM process to increase outsourcing supply raw materials from foreign market that are low cost and high quality.

Toyota is committed in developing its supplier base, which more closely reflects the diversity of its customers and the diversity of its team members who build Toyota vehicles. Having a diverse supplier base enables it to contribute to the economic well being of all its segments. Also, it recognize that partnering with suppliers who provide a diversity of ideas in addition to delivering manufacturing support, goods and services that creates a significant competitive advantage for Toyota.

According to [6], the original TPS was adopted the principle which invented by Henry Ford. Henry successfully integrated interchangeable parts with standard work and moving conveyance.