Supply Chain Management of Toyota

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Supply Chain Management

Introduction

Many researchers have pointed out the importance of Supply Chain ( SC ) and Supply Chain Management ( SCM ) in competitive environment. In this report, we will discuss about ( i ) Toyota Mortor Manufacturing North America ( TMMNA ) which is located in Erlanger, Kentucky, current supply chain position and one of its suppliers, TAC manufacturing, located in Jackson, Michigan, supplies steering wheels and air bags for TMMNA, current supply position by drawing supply chain diagram, ( ii ) the possible operational and supply chain strategies which could be used to enhance TMMNA's future performance to take competitive advantage over other firms and ( iii ) the technical and human resource ( HR ) changes that need to be made to support the implementation of these strategies. The reason why TMMNA is chosen is it is one of the leading automotive manufacturers in the world. Before we discuss it, we need to know what it SC and SCM.

Supply Chain

" Supply Chain is all the activities involved in delivering a product from raw materials through to the customer including sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, delivery to the customer and the information systems necessary to monitor all of the activities " ( Lummus and Vokurka, 1999 ). The function of SC might be said to the provision of goods/services required by customers and to provide appropriate form, time, place and quantity.

Supply Chain Management

SCM is a integration concept of all the value-creating elements in the supply, manufacturing, and distribution process, from raw material extraction, through the transformation process, to end-user consumption. ( Basnet etal, 2003 ). Chandra ( 2002 ) also describes SCM is a way of improving competitiveness by reducing uncertainty and enhancing customer service through creating relationship with suppliers and customers.

Let us discuss TMMNA and TAC current supply chain position and their contracts.

( i )

Defective parts

Inbound Operations Outbound Marketing and Logistics Logistics Sales, Services

P R I M A R Y A C T I V I T I E S

Fig : TMMNA's SC diagram

Defective parts

Inbound Operations Outbound Marketing and Logistics Logistics Sales, Services

P R I M A R Y A C T I V I T I E S

Fig : TAC Manufacturing's SC diagram

The reason why TMMNA and TAC Manufacturing is similar is TAC follows Toyota Production System ( TPS ). TMMNA get raw materials from TAC and then store it in inventory for a few days. Then, it is assembled. After assembling, if defective parts are found by quality control department, it is sent to the assembly and re-assembly again. The qualified parts are stored in inventory and then it is sent to customers by using TLS. TAC also adopt this same process. But the main differences are TMMNA adopt mass assembly line and TAC follows one by one assembly and single piece work flow rather than batches. If defective parts are found, TAC immediately take action within 24 hours. TAC more rely on visual management control but TMMNA more rely on its SIS. TAC prefers team based culture but TMMNA adopts both individual and team based.

Fig : Differences between TAC and TMMNA

( ii )

Let us discuss about operational and SC strategies which could be used to enhance TMMNA's future performance and achieve competitive edge on other firms. " Operations Strategy is the total pattern of decisions which shape the long term capabilities of an operation and their contribution to overall strategy " ( Lowson, ). SC strategy is a long-term plan with goals and objectives. It is about using all of elements involved in the SC to produce better results for the company. Monczka ( 2003 ) describe it consists of improving the use of technology, reducing costs and cycle times. In short, operational strategy is the planning of day-to-day...
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