Summary of Toyota Supply Chain

Topics: Supply chain management, Supply chain, Management Pages: 16 (4284 words) Published: December 1, 2013

In one automobile, it is typically features with 20,000-30,000 parts, which all of even the largest manufacturers cannot produce themselves. Therefore, the manufacturers have to either outsource the production or purchase finished products from suppliers (including 1st to 3rd tiers).

In order to achieve effective supply chain integration, the use of collaboration and coordination among channel partners that share business information, to simplify core processes, streamline cross company operations and reduce consequent channel-wide costs are suggested (Lee & Whang, 2001), (Callioni & Billington, 2001) and (Hammer, 2001)

Vertical SCC includes collaboration with customers, internally (across functions) and suppliers. Horizontal SCC includes collaboration with competitors, and non-competitors. In addition, SCC also can be divided into three levels; Strategic, Tactical, and Operational levels.

the formation of SCC into 3 categories; Internal-organization factors, Inter-organization and External factors

There are many supply chain processes that can be joined between the collaborative partners, for example; planning, scheduling, forecasting, sourcing, production process, delivery process, problem solving, selling, etc. Besides, collaboration can be made by sharing of resources, skill, or knowledge.

The success of collaborative efforts cannot be assured unless performance is properly monitored and measured. The collaborative indexes and measurement should be developed and used to determine the success of collaborative efforts and also to identify weakness that need to be improved.

1.Automobile parts manufacturers Tier 1
Who is direct OEM supplier (Original Equipment Market: OEM) and the producer of automobile parts which is directly provided to the factory.

2.Automobile parts manufacturers Tier 2 and Tier 3
which is in raw materials section or in the part of REM (Replacement Equipment Manufacturers) who have responsible for providing raw materials to manufacturers Tier 1 or being a manufacturer of automobile parts in order to sell in the spare parts markets or being a manufacturer who supports the production processes (or Equipment Supplier).

First, raw materials are sent to tier 3 suppliers and then are sent to tier 2 suppliers. After that, all raw materials are sent to tiers 1, who are direct suppliers and the producers of automobile.

Factors for choosing suppliers
For choosing suppliers, Toyota mostly considered these 3 factors: •Quality

Performance Measurement of Suppliers

Toyota use strategy called “Reward strategy”. This strategy works by giving the score to each supplier.

For example, at the beginning of the year, each supplier will be given a total of 100 score and this score will be deducted in case of failed quality or the products are not sent in time.

By collaborating, it is not only helps in sales forecasting but also assists the suppliers to have an effective production by providing the knowledge about Toyota Production System (TPS) to support them. The objective of TPS is to produce the products in the same amount as demand or changing demand in the market, to have short lead time in production processes, and to keep the lowest inventory as much as possible.

What Toyota Production System (TPS) is
Toyota Production System (TPS) is the system of Toyota that holds production’s principles by having no leftover products. By thinking of having stock is a cost, thus the objective of this principle is to produce in the same amount as what they can sell or only what is needed. This will provide higher quality of production and lower cost of products. Main methods that Toyota uses for the purpose of reaching their objective are Just-In-Time (JIT) and Jidoka (Surasak, 2005).

Just-In-Time is an inventory system where raw materials are delivered right before they are needed on the assembly line, and finished goods are manufactured just...
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