Nguyễn Thị Minh Ánh

Nguyễn Khánh Linh

Trần Hoàng Long
Hồ Lê Trúc Quỳnh
Quan Trí Tín
Supply chain of Toyota
Volume Of Processes (High)
Toyota manufactures a large number of vehicles (8,736.5 thousand
units in 2012, Toyota Production figures) and for such high output,
there’s greater degree of repeatability in the process.
The high volume of output has allowed Toyota in systemization of
activities and Toyota believes in developing deep expertise in
specialities among its workforce as an essential requirement to its
product-development system (Sobek II and Liker, 1998).
Such high volume process output helps Toyota gain economies of
scale and thus reduces the unit cost of its production.

Variety Of Processes (Low)

Toyota carefully chooses a variety to balance market demands and
operational efficiency (Iyer, Seshadri and Vasher, 2009)
The company is present in all the segments of automotive and at least
70 different models of vehicles are sold by Toyota (Automotive, 2014)
making the portfolio with a wide range of products and this accounts
for a higher variety of processes.
High variety of processes enables Toyota to match a wider range of
customer demands and be more flexible in eyes of customers. This,
however, accounts for higher unit costs and makes the process
relatively complex but Toyota has advanced other productions
methods to control such aspects.

Variation Of Processes (Low)

With predictably constant demand, it’s easier to allocate resources to a
level that is capable of meeting the demand Slack et al. (2012).
The variation in demand for Toyota’s products is low in past few
years and the company’s production has integrated Just in Time
production techniques to fulfill those demands. Low variation enables
Toyota to implement stable, routine and predictable operation
processes.

Visibility Of Processes (Low)

Process visibility indicates how much of the processes are exposed to
its customers Slack et al. (2012). Toyota has low process visibility, as
most of its operation process is ‘factory-like’.
Low process visibility means there’s a time lag between production
and consumption of Toyota products but it enables the company for
high staff utilization and enjoys low unit cost for its products.
Few of its processes such as those of sales center and test drive
facilities, however, have some kind of contact with customers
allowing limited visibility.
Supply-chain management at Toyota is an element of company’s
operations strategy which is thoroughly based on the Toyota
Production System (TPS). Components of Toyota Supplier Partnering
Hierarchy: mutual understanding and trust, interlocking structures,
control systems, compatible capabilities, information sharing, joint
improvement activities, and Kaizen and learning.
The elements of just-in-time system are being pro-active in exposing
problems, pull production based in Kanban (a Japanese
manufacturing system in which the supply of components is
regulated through the use of an instruction card sent along the
production line), Total Quality Management, elimination of waste,
reducing inventory through involving suppliers in planning process,
continuous improvement, improving machinery and focusing on co-
operation.

According to Kanban each part travels with a card. New stock will
only be required when that part has been used, the card is removed,
using signals to re-stock this part. Kanban is well integrated in
Toyota’s production system, because in Toyota there are limited
number of parts with stable demand for them. Also, product mix is
low and exchanges are infrequent.

Capacity planning in any company is part of a supply-chain

management for that specific company. Toyota’s way to capacity
planning is that it strives to eliminate inventory. In achieving this
objective Toyota relies heavily in pull system. Generally, the main
objective is continuous improvement.

Another operational excellence pioneered in Toyota and later adopted

by other companies worldwide is a “Lean Concept”. Lean philosophy
aims to achieve are the elimination of all waste, superior customer
care, and Lean is based on pull system where the elimination of waste
seen as a primary objective. Just in time inventory management allows
a company to gain a competitive edge by not having to have a large
amount of inventory in their warehouses, but only to order parts
when they are actually needed. According to just in time philosophy
new material will be produced only when old stock of that material
has finished.

Toyota Motor Corporation is currently one of the model companies

worldwide in many aspects of conducting a successful business
practice, including supply chain management. They principles of Just
in time, Kanban, lean manufacturing, Kaizen (Kaizen is a Japanese
term meaning "change for the better" or "continuous improvement." It
is a Japanese business philosophy regarding the processes that
continuously improve operations and involve all employees. Kaizen
sees improvement in productivity as a gradual and methodical
process) and others provides competitive edge for Toyota and provide
efficiency in many business functions along with supply chain
management.