Demand Chain Management

Introduction
Toyota Motor Co. ltd was established in 1937 by Kiichiro

Toyoda. By 2004 Toyota was worlds second largest manufacturer of automobiles with combined sales of 6.78 million in 2003

Domestic Distribution
Toyota is Japan's market leader with 42.6% market share. Distribution is done through 4 channels Toyota (High end, large size) Toyopet (Medium size) Corolla (Compact) Netz Toyota (Compact). Dealers: 5,000 outlets Employees: 120,000

Managing Dealers
Principles Independence to dealers as outside Investors Winning Jointly Encourage competition
Measures of performance criteria Sales of new and used cars Sales from after sales Customer satisfaction Profitability Number of service shops, staff, showrooms

Production System
JIDOKA ( automation)
JUST IN TIME KAIZEN (continuous improving) pull process

Ordering Process
Three Planning Cycles

a.)Monthly.

b.)Weekly.
c.)Daily.

Overseas Distribution
1 distributor 1 country.
U.S Market has 1200 dealers in 12regions. Toyota decides price and model for each country.

Overseas Planning Cycles

Annual plan:

October: Present the 3yr sales plan and request to TMC. December: Production plan created June: Revision of plan

production

 Monthly Planning:

Submit 3 month forecast.10-20% flexibility. A month prior DOD requests for final order. Sends 3 month production request (PPR) to OPD. OPD builds production plan. DOD runs allocation. (in case of shortage, aims at max fairness to all regions)

Shipping to US (West- 11-14 days, East- 1 month)

Dealer tracking (Dealer Daily)

Matching Demand & Supply

Matching supply and demand is not easy.
Allocation to dealers are bimonthly. Actual production level can be adjusted upwards and

downwards. Uses various means to temporarily adjust its production capacity.

Supply chain process

In domestic market, delivery to customer takes place

within the same month of production. In overseas market, delivery to customer take place two months after production.

Prius experience

Prius Experience
Introduced in 1997 In 1998 the demand was 1500 units per month and it

declined in 2000 to 33% and in 2002 it has raise to 47%. sale of prius in japan

year
1997 1998 1999 2000 2001 2002

Monthly sale
300 1500 1300 1000 900 600

Prius Electronic vehicle in US

Introduced in 2000 December
High margin given to dealers Used web to take order

Introduced EV in same distribution channels.

Sale was lesser than prius normal version. Prius normal version and prius EV ratio was 15:1 in sales.

cont
Traditional channel for prius
New prius 2004 model Prius sales by previous car owners

Increases the customer base for toyota

Scion experience

Scion experience

To increase market share from 5% to 25%. To attract younger customers Creation of Genesis group in 1999 Not successful in attracting youth New scion brand with learned experience product marketing Dealership experience

Cont..
Two models xA and xB.
More accessories than the typical Toyota sedan Detailed information available in online

Much greater options with shorter lead time than others

Production and distribution network

All production took place in japan. With scion the quantity ordered was increased

by 20 to 30 percent. Cars were shipped from Japans port to Long beach California in 10-12 days. Customization of cars took place at the port or at dealers base, according to the customer need. In undersupply situations the cars were moved through the system as fast as possible.

Cont
Early demand for the xA model was overestimated by

50% so the production was shut down for four months because of excess inventory at Long beach. The distribution was all demand based with high flexibility between the ports. To control the demand for accessories i.e. after market they worked with SEMA(specialty equipment marketing association)

Sales experience
By early 2004 ,Toyota has sold about 1000 cars

in California ,as the geographical expansion the expected sale was to 5000-10,000 my mid 2004. Toyota has set up a radar system for customer satisfaction and the first company to offer online chat . Total sales level has also been quoite promising: 2003 year-end sales totaled 10,898 vehicles.

Demand chain alignment

Toyota has certainly created a high-performing demand

chain linking production with distribution ,and serving customers with efficient channels . Toyota has managed its demand chain on the principle of having basic core values in the design and management of demand chain. a right demand chain for the right product at right place and right time.