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TOYOTA

SUPPLY CHAIN MANAGEMENT


INTRODUCTION
Toyota Motor Corporation
Founded 1937
Founder Kiichiro Toyoda
Headquarters Toyota City, Japan;
Industry Automotive, Robotics Financial
services and Biotechnology
Products Economy/mainstream/luxury
vehicles
Revenue USD $203.26 billion (2009)
Employees 316,121
SCM
Minimizing supply chain costs
while keeping
a reasonable service level
customer satisfaction
quality
on time delivery, etc.
Objective
Right product
Right price
Right store
Right quantity
Right customer
Right time
Higher profit
The right
Product + + +
The right
Price
The right
Store
The right
Quantity + The right
Customer + The right
Time
= Higher
Profits
TOYOTA SUPPLY CHAIN
PARTS/
CUSTOMER
SERVICE
CENTERS
DEALER

OVERSEAS DISTRIBUTOR
NETWORK
(EXIM) WAREHOUSE
ASSEMBLY
COMPONENTS PLANT
RAW
SUPPLIER GROUP
MATERIAL
SUPPLIERS
INTEGRATED SCM
INTERNATIONAL
COLLABORATION
END
RAW CUSTOMER
MATERIAL
SUPPLIERS

1ST & 2ND


TIRE
SUPPLIERS DEALER

MANUFACTURING WAREHOUSE
PLANTS
SMOOTHER MATERIAL FLOW
SUPPLIERS
Organized suppliers into functional tiers
First-tier suppliers: worked together in a product-
development team
Second-tier: made individual parts

Encouraged cooperation and communication among first-tier


suppliers
Cross- sharing of personnel through
Toyota sending personnel to suppliers to compensate for
greater workload
Toyota transferring senior managers to suppliers for top
positions
SUPPLIERS
market price minus system, not supplier cost plus
system
Value analysis reduces costs

Production smoothing enables suppliers to maintain a


constant volume of business
Focus is on long-term relationships that underscores
cooperation, teamwork
Procurement
Suppliers are the partners
Suppliers are the integral elements of Toyota
Located within 56 miles radius
Security to the suppliers for guaranteed order
gradual mutual improvement, rather than price
through bidding as a way to choose a supplier
Trained suppliers as per requirement
Suppliers partnership hierarchy
Kaizen and learning
Joint improvement activities
Information sharing
Compatible capabilities
Control system
Interlocking structure
Mutual understanding and trust
Managing suppliers
Suppliers are extensions of Toyota
Care and develop as own associates
Long term partnership
Tier structure : levels of responsibility
Strict cost target and timing
Integrated system (JIT)
Purchasing challenges
Normal expectation : 3 to 4 % price reduction per
year after model year launch
Meet best price with Toyota quality
Trim master goal : 30% price reduction for new
vehicle launch
Key to logistics performance
Packaging : mixed box size, small pallet size
Dedicated transportation service
Consistent daily route, period route revision
Good timing at all connection points
Order fluctuation allowance built into route capacity
plans
Manufacturing
Toyota Production System
Best quality
Lowest cost

Shortest lead time

Best safety

High morale

Through shortening the production flow by


eliminating the waste
Manufacturing
Continuous improvement
JIT

People and teamwork


Jidoka quality (make problem visible)

Waste reduction

Leveled production

Stable and standardize process

Visual management

Kanban flow of correct information


DISTRIBUTION
In Japan, Toyotas sales and marketing work is divided into
four distribution channels
Toyota (mostly high-end, large cars),
Toyopet (medium size),
Toyota Corolla(compact), and
Netz Toyota (compact).
Overall, Toyota offers about 60 car models, with each channel
offering only 15-25 models.
The Toyota dealers as a whole have approximately 5,000
outlets and 120,000 employees.
DISTRIBUTION
This way, each dealer can develop deep knowledge
of all models he has for sale, and can make an effort
to sell all car models assigned to him, rather than only
the few most profitable ones.
DISTRIBUTION
Toyota applies the Toyota Way to manage dealers,
based on three basic principles:
Dealers are free to make independent decisions,
and Toyota can only help them to invest in the right
things to improve. Such a strategy motivates
dealers to be more proactive.
Both the dealers and Toyota must prosper jointly.

Competition is a means to improve.


DISTRIBUTION
Toyota works with one distributor in each country
Toyota markets cars in about 170 countries through
its overseas network consisting of more than 160
importers/distributors and numerous dealers.
Overall, China is the highest-growth market.
TOYOTA GROUP WORLDWIDE

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