SUPPLY CHAIN MANAGEMENT A STRATEGIC APPROACH TO THE PRINCIPLES OF TOYOTA’S RENOWNED SYSTEM ANANTH V. IYER SRIDHAR SESHADRI ROY VASHER New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2009 by Ananth V. Iyer, Sridhar Seshadri, and Roy Vasher. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. ISBN: 978-0-07-162340-7 MHID: 0-07-162340-X The material in this eBook also appears in the print version of this title: ISBN: …show more content…
Lee Acknowledgments Introduction Chapter 1. Toyota Learning Principles and the v4L Framework Chapter 2. Comprehensive Overview of Supply Chain Chapter 3. Mix Planning Chapter 4. Sales and Operations Planning Chapter 5. Production Scheduling and Operations Chapter 6. Parts Ordering Chapter 7. Managing Suppliers Chapter 8. Logistics Chapter 9. Dealer and Demand Fulfillment Chapter 10. Crisis Management Chapter 11. The Toyota Way of Managing Supply Chains Chapter 12. How to Apply Toyota Way Principles to Nonautomotive Supply Chains Chapter 13. The Beer Game and the Toyota Supply Chain Chapter 14. Reflections of Supply Chain Participants Chapter 15. Reflections vii ix xi 1 5 25 37 55 73 85 103 121 133 147 173 185 201 215 219 221 v Appendix Index This page intentionally left blank Foreword F or decades, Toyota’s success in the marketplace has been admired by business practitioners and executives alike. The automaker is the envy of others within the automobile industry, but the company is also considered to be the symbol of excellence in business in general. The firm has been the focus of research in academia. The power of Toyota has been attributed to its two distinct core values:
Starting from 2008, it is the number one automotive manufacturers and sellers in the US and around the world. Toyota is leading the automobile manufacturing, assembly and sales. The company uses a very efficient management style, the success of Toyota is related to its proficient marketing strategy. There are signs that the market has enabled the company to achieve a number of other factors that leading outstanding niche. The company’s market structure is not clearly stated. Some people might think it is monopolistic, due to the fact that the company is a dominant market participant in auto exports. In fact, Toyota’s differentiation strategy has made it monopolistic in the world, especially in the developing countries. Toyota is keen to see what their competitors are doing and make sure it reflects their way to ensure its market leadership in action.
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Toyota Motor Corporation is one of the most important automaker that has been operational since 1973, based in Japan. The company has gone global and their operations are massive such that it trades in the New York Stock Exchange (NYSE). The company started as a department of the human resources that used to employ 317,734, before it become the biggest automobile due to the huge production that it used to make from the huge labour. It was until the operations were now very stable that the automaker became globally known and being the largest conglomerate in the world. Toyota was able to attain a high number of customers who were
With domestic markets becoming saturated with competition, organizations with the financial reach look to international market segments to obtain growth potential. Though not all companies hold the capabilities to obtain such a feat, Toyota has and is competitive.
After six decades in the car manufacturing business, Toyota continues to be one of the most admired, most popular and most dependable car makers in the world. Providing a complete line of powerful, innovatively designed vehicle models
Toyota Motor Corporation is a Japanese automobile manufacturing company which was founded in 1937 by Kiichiro Toyoda from his father’s spinning and weaving company. The company rises after post war era and became the world’s largest automobile manufacturer in 2012 beating General motors and Volkswagen behind and is by revenue it stands at twelfth place. Toyota group presently consist of 15 companies involved in design, manufacture, and sales of all classes of automobiles and their parts, also steel manufacturing, and textile machine production. With more than 3 lakh employees, revenue around $210 billion and presence all across the globe with 14 overseas manufacturing facilities Toyota is competing to sustain the leadership position in the sector.
Toyota is a standout among the most historic business examples of overcoming adversity ever. With a yearly benefit level higher than GM, Portage and Chrysler together, Toyota is an exceptional benefit generator. Within the 2006/2007 monetary year benefit became by 19.8 percent and came to 100 billion SEK. Its return on resources is roughly 8 times higher than the business normal and the organization has made a benefit the last 60 back to back years. Toyota is an in number or even prevailing player in every fragment from economy to extravagance and autos to pickup trucks. In 2008, Toyota turned into the greatest auto maker on the planet and it is quickly constructing new creation limit around the world.
With every industry facing greater turbulence and uncertainty there is a corresponding urgent need for concepts, frameworks, models and methodologies that provide enterprises with greater intelligence and agility in responding to threats and opportunities. The unique or special series of issues that complicate the change process are detailed in this analysis. Of the many industries faced with the need to be vigilant to change processes and seek out their contributions continually is the global auto manufacturing industry. Toyota has been able to capitalize on the most valuable aspects of internal change management in the concepts and methodologies of their Toyota Production System (TPS) (Dyer, Nobeoka, 2000). Many of the best practices Toyota has created for onboarding new suppliers reflect the foundational elements of the Parallel Incremental Transformation Strategy (PITS) methodology (Taylor, 1999). Foremost among these is the need to provide a high level of agility in organizational change management strategies and frameworks to ensure core areas of a company stay responsive and focused on supply chain dynamics (Dyer, Nobeoka, 2000). The special issues that complicate the change process relating to supply chain performance are abundant in the auto industry, as this analysis illustrates.
Worldwide supply chains giving low cost sources of work and raw materials to proficiently benefit worldwide business sector opportunities offer broad advantages to firms. However, with such open doors, supply chains amplify and their complexities build, making numerous vulnerabilities and dangers. There is today more dependence on systems of different suppliers bringing about expanded dangers of disturbance and disappointment in supply chain operations (Gerschberger et al., 2010). For instance, Toyota has more than 340 suppliers over the globe, conveying to more than 51 assembling plants outside of Japan in five landmasses, in which they create more than six million cars yearly, over one hundred models (Toyota in the World, 2010). This spread and number of suppliers and assembling plants displays the reliance of Toyota with different firms, their undertaking viewpoint and the many-sided quality of their system of operations.
When Toyota managers as well as its executives were interviewed, they are asked why the company was there as a business. Based on their opinion, it is evident that the company’s success is a result of motivation and consistence in their labor. In addition, they argued that the purpose of the company is not to make money. The company only makes money in order to focus on the future. The company invests in order to ensure that it continues to grow and develop in investments. According to managers and executives response, it is evident that Toyota makes money to help the community in many ways.
In the year 2000, automotive industry was going through a major transition globally. This transition in terms of consolidation of networks forced automotive part suppliers to change their working styles and adopt new changes made by automotive industry worldwide. In the long run, these changes can be handled but short-term volatility was creating an environment of uncertainty.
One factor that adds to the success of Toyota’s supply chain is their relationship with their suppliers and how they do business with those suppliers. Toyota does not simply give their supply contracts to the highest bidder; instead they work incredibly closely with their suppliers so that they can get the highest quality products possible. Toyota uses long-term, just-in-time contracts with all of their suppliers (Winfield & Hay, 1997). Toyota does not engage in any kind of mutual contracts, such as buy-back or revenue-sharing; however, they do take multiple steps to ensure a mutual benefit when they pair up with a supplier. Toyota invests in their suppliers to help them develop products (Liker & Choi, 2004). They also ensure that they share information with their suppliers in a structured fashion. They believe that targeted information leads to results and they ensure that specific communication is relayed to their suppliers at set times and in set ways (Liker & Choi, 2004). Perhaps the most unique aspect of Toyota’s relationships with their suppliers is that they embark on joint improvement ventures together. They set up study groups with suppliers to help both parties learn how to improve operations and send executives and engineers to the supply plants to help them improve processes (Liker & Choi, 2004). These kinds of benefits are described in the contracts Toyota keeps with their suppliers (Toyota Supplier, 2011). The close relationships that
Toyota Company is a pillar company in the auto mobile business, a flag of economic progress. The Toyota Company has been a core company, a unique phenomenon, which has dominated the twentieth century. However, the automobile industry, including Toyota Company has suffered a series of structural problems and has become
Toyota Motor Corporation, or Toyota in short, is a Japanese automaker. It is the world's second largest automaker behind General Motors [http://www.hino.co.jp/e/pressrelease/press.htmhl]; however it ranks first in net worth, revenue and profit. It is also the only car manufacturer to appear in the top 10 of
Toyota always believed that strategic long-term view must be taken to drive, enhance, and cultivate business growth. This long-term commitment is focused on what is best for the customer and reinforces the belief that Toyota's focus starts and ultimately ends with its customer base. Toyota puts its long-term commitment to its business objectives ahead of short-term financial gains, a strategic element both Airbus and Boeing have clearly neglected, much to their detriment. This has been amply demonstrated by the well-chronicled downward slides in production levels. As demonstrated by these production slides, both Airbus and Boeing have underestimated the absolute need to cultivate, align and integrate their global supply chain partners into