An Analysis of Toyota's Strategic Procurement and Supply Chain Management

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  • Topic: Toyota Production System, Toyota, Supply chain management
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  • Published : March 26, 2013
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Purchasing & Materials Management|
| Strategic Procurement & Supply Chain Management|

Introduction

The topic selected is (Strategic Procurement & Supply Chain Management). For this study, we have selected Toyota Motor Corporations as our company of choice. Toyota is without doubt the best in the world, with its many philosophies and principles on how to make the best out of the least; JIT, lean production and elimination of waste and the desire for continuous improvement are just a few ways how Toyota has become the best in the auto industry. Toyota as a name, a company, and as a brand has become synonymous with Quality. At the heart of its success, lie family values that have been passed down; a norm that has become the Organizational Culture of Toyota – The Quest for Excellence, and The Passion to Lead. Toyota’s achievement of excellence stems from implementing lean production, or which they refer to as ‘The Toyota Way’. The most visible product of Toyota’s quest for excellence is its manufacturing philosophy, called the Toyota Production System (TPS).

We have selected to apply this topic to Toyota, because to perfect their way of lean production, they work on it from the root; i.e. their suppliers, and purchasing strategy.

Scope of Project

Analyzing the strategies of Toyota, and how they implement it in their purchasing and procurement policy. Also, analyzing how Toyota selects it suppliers and what selection processes do they go through; and also conducting an analysis of Toyota’s supply chain and its supply chain management.

Limitations

This study was really difficult to attain, as personal interviews or interactions with Toyota’s direct employees was beyond our budgets to conduct. This study is a result of hard work and extensive internet and textual or written research from more than ten websites and three books. Also, the study of Toyota was too large and very difficult to summarize into the limited requirements of this paper.

Company Background
The Toyota Motor Co. Ltd was first established in 1937 as a spin-off from Toyoda Automatic Loom Works, one of the world's leading manufacturers of weaving machinery.The Toyoda Automatic Loom Works was then headed by Japan's "King of Inventors" Sakichi Toyoda. The patent rights to one of his machines had been sold to Platt Brothers (UK) and provided the seed-money for the development and test-building of Toyota's first automobiles.August 2007 marked the 70th anniversary of TMC. The fledgling company founded by Kiichiro Toyoda, Sakichi's son, has since blossomed into the leader that it is today.In 1950 the company experienced its one and only strike. Labour and management emerged from this stoppage firmly committed to the principles of mutual trust and dependence, and that corporate philosophy still guides T0oyota’s growth today.Production systems were improved in the late 1950s, culminating in the establishment of the 'Toyota Production System.' It became known as TPS in 1970 but was established much earlier by Taiichi Ohno. Based on the principles of Jidoka, Just-in-time and Kaizen, the system is a major factor in the reduction of inventories and defects in the plants of Toyota and its suppliers, and it underpins all of Toyota’s operations across the World.Toyota launched its first small car (SA Model) in 1947. Production of vehicles outside Japan began in 1959 at a small plant in Brazil, and continued with a growing network of overseas plants. Toyota believes in localizing its operations to provide customers with the products they need where they need them; this philosophy builds mutually beneficial long-term relationships with local suppliers and helps the company fulfill its commitments to local labour.Over and above manufacturing, Toyota also has a global network of design and 'Research and Development' facilities, embracing the three major car markets of Japan, North America and Europe.In every...
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