Expendable versus Returnable Shipping Containers
at Toyota Motor Manufacturing, Indiana, Inc.
February 14, 2008
Teacher: A.R. van Goor
Table of Contents
Toyota Motor Manufacturing, Indiana, Inc. (TMMI) manufactures Toyota’s first full-size truck. In order to make TMMI as profitable as possible there are a couple of fundamental logistical processes that had to be defined. An important decision that had to be made was the use of appropriate shipping containers for the delivery of parts and materials from suppliers.
TMMI has the following three alternatives:
Expendable containers with post-use recycling,
Expendable containers with post-use disposal,
The logistical department of TMMI knows that the least cost alternative thus not have to be the best alternative for Toyota on the long run. We were given the assignment of recommending a containerization system for the new truck that will satisfy as many parties as possible. We examined the issue from different point of view and especially considered the consequences for the main suppliers of TMMI, Transfreight, TMMI third-party logistics provider, and the cost for TMMI itself.
To guide the analysis of the three alternatives we made some necessary assumptions. Below you will find a summary of these assumptions: •
Evenly balanced annual production per year is 102,000 Tundra-trucks. •
Daily production volume is 400 Tundra-trucks.
Production year covers 51 weeks, 5 days p/wk, for a total of 255 days. •
Differences between expendable and returnable containers only appear in weight, durability, damage protection and cost of container. •
Totes owned by a given supplier must be returned to that same supplier. •
Customer pickups are the same for expendable and returnable containers.
For our analysis we examined the prospective usage of four different common container types and we focused our effort on five key suppliers.
In the next sections we will described the different alternatives. For each alternative we determined the annual costs incurred by each suppliers, Transfreight and TMMI. We combined these calculations to determine the system-wide cost for each alternative. We would like to point out that you will find a clearer version of the calculation in the appendixes. As mentioned before the least cost alternative does not mean the best alternative for Toyota on the long-run. Therefore we will discuss in section three each alternative’s impact on the following aspects: •
Supply chain relations
In section four will discuss some additional questions that have to be considered before making a final decision. At last will we give a conclusion of our findings and recommendations in section five.
Analysis of the three different alternatives
Alternative 1: Expendable Containers, Recycling
This alternative requires suppliers to use expendable corrugated containers for shipping parts inbound to TMMI. After that TMMI would gather week’s volume of used containers and ship them to a recycler location, Mercury Grissom of Mitchell, Indiana.
In the table 1 below you can find the number of containers used each year by Toyota and its five suppliers, including their five-day buffer of containers for each part. In table 2 on the next page you can find the annual usage level of each container per supplier.
No of Buffer
Container Blue grass Industries
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