Toyota Value Chain Essay

Costco is among the leading global retailers which provide customers a wide range of merchandise, ranging from small to well-known brands. The company began operations in 1983. Over the years, Costco has been a retailer in low cost membership-only leader, in warehouse club of merchandise. Moreover, Costco does not offer frills warehouse business models as its competitors do.  Costco’s major competitors are BJ’s Wholesale Club and Sam Club (Costco, 2010).

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.

Communication is the most important aspect of conducting business. Toyota must improve their means of communication and it must start at the beginning of the customer/supplier relationship. The Process Flow chart will identify the communication process between Toyota and supplier is further updated to show improved processes. Expectations should be established to ensure that suppliers are providing the quality products that represent the Toyota brand. Currently, Toyota has sacrificed quality and safety to meet the demands of the customers. Toyota must take into consideration the market they enter and the major players that exist to provide the support necessary. Toyota uses the Annual Purchasing Policy process to communicate their expectations to suppliers. “The purpose of supplier expectations is to highlight key priority activities and emphasize broader, more philosophical issues universal to all suppliers (ToyotaSupplier.com, 2012).” In addition, “individual expectations, on the other hand, are developed uniquely for each supplier and include specific targets in the key areas of quality, delivery, value improvement and minority sourcing (ToyotaSupplier.com,

Toyota uses processes that are both implicit and explicit. Toyota’s operations are enormously flexible and responsive to customer demand. According to ASHP Foundation (2007). Many credit Toyota’s success to aspects of the Toyota Production System, established by Taïchi Ohno and Shigeo Shingo from the late 1950s through 1970 (when it gained the name). It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects. The system is used worldwide, but is only one of the reasons for Toyota’s success. The very rigidity of the operations that makes the flexibility possible. That’s because the company’s operations can be seen as a continuous series of controlled tests.

1. What is the relationship between Toyota’s organizational strategy and Toyota Production System? TPS is viewed as the benchmark, the

Lean manufacturing originated long before Toyota and Ford, however the thought that it originated with Toyota is flattering since they are the ones who perfected it. By creating the Toyota Production System (TPS), Toyota found a better way to produce large quantities of product efficiently with eliminating the waste factor and while cutting down cost. Taiichi Ohno a former Toyota vice president promoted the idea of JIT (Just-in-Time) which means “producing the necessary units in the necessary quantities at the necessary time.” (Monden) Which leads to Toyota’s ultimate goal in the TPS is to improve productivity for better return in investment. To have continuous flow in a production system Toyota sought out to achieve the concept of JIT and autonomation . Since the TPS is what creates the parts who monitors the JIT system? The kanban system which is an informational system that controls quantities being produce in each process. As the discussion carries on throughout this paper about Toyota and their use of the kanban system the topic

Toyota faced a challenge related to the poor visibility and low quality of a supplier for the Suprima model. The Japanese brand, being related to a top quality product and a Just in Time manufacturing scheme could not afford to have stock out problems nor not meeting consumers’ demand for quality.

Toyota motor products include; Hybrid, Plug-in Hybrid, Cars, MPVS/Vans, SUVs, Fuel Cell and Commercials. The strategy Toyota uses for marketing is mostly to showcase its different range of vehicles to the market as they also get inspired through the same to manufacture better vehicles. With this method both the clientele and the company benefit from each other.

Toyota is a key player in global automotive market. Its structure constitutes if various production plants in different locations and a very strong branding which helps it capture a major market share. Like other enterprises, Toyota has several strengths and weakness which makes it what it is now. Toyota heavily invests in Research and development which helps it come up reputable product line which is spread out throughout the world because of its strengthening global distribution network however its recent product recalling, loose grip in key geographic areas and wrong allocation of resources shows that even a strong brand like Toyota has its weaknesses.

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 characterizes by well design and plan management process through it strategic decision by operation manger which lead to be this firm in operation excellence sustainable. Toyota works on six

Promotion can get more profit and increase the product value. In order to motivate consumers to purchase Toyota product, Toyota use the promotion method to inform, persuades and remind potential customer, stakeholders and the broader public respond on their product. Toyota also successfully integrates its many communicates channels in the process of development and sustain brand identity and equity. Those are the strategies apply by Toyota in two different countries which are Malaysia and US:

Toyota orders the raw materials from all over the world and in the interest of maximizing their availability of raw materials; they maintain good relationships with their suppliers. Toyota uses Just-in-Time system to manage the supply of raw materials as well as optimizing the supply and production processes.

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.

team at Toyota built partnerships with suppliers. In effect, under the direction of Engineer Ohno,