Overview of the Company
Supply chain and logistics management are crucial aspects of an organization. It includes management of inputs, raw materials, suppliers and all other factors which are engaged in the function of producing finished goods. In this report, supply chain and logistics management of Toyota Corporation will be discussed and it has been evaluated that the supply chain management of Toyota Motor Corporation is considered as the vital element of organizational operation’s strategy. Toyota’s supply chain and logistics management strategy are truly based on the Toyota Production System (TPS) (Dudovskiy, 2012). This was developed by Shigeo Shingo and Taiichi Ohno in 1940. Under the TPS system, the primary focus has been imposed on the principle of lean manufacturing through which their logistics and supply chain management is considered as one of the best systems across the globe. In relation to this, various companies from different parts of the world have started following the supply chain management system of Toyota Corporation with the objective of gaining positive outcomes.
This report will include discussion in order to understand operations, logistics and supply chain management of Toyota. In relation to this, the first phase of the report will focus over the organizational background followed by describing some of the areas of the organizational supply chain and logistics management to analyse effectiveness and suitability according to the dynamic business environment. While the second phase of the report will focus on originating available solutions in order to meet with the challenges identified in the first phase of the report.
Toyota Motor Corporation is the multinational automotive corporation. The company’s headquarters is situated in Toyota, Aichi, Japan. Toyota Corporation was founded in 1937 and since then to the September 2018, organization has acquired the sixth position as the largest companies in terms of revenue (Toyota Motor Corporation, 2018a). As per the last year’s record, the organization was standing on the second position in the list of largest automotive manufacturers in the world and it has been evaluated that soon, the company will become the largest automotive manufacturer across the world. Apart from these achievements, the organization has got the title of manufacturing more than 10 million vehicles in 2012 and since then, the organization has continuously enhanced its production capacity. In 2014, the organization stands on the second position as the listed company in Japan in terms of market capitalisation and from then, company has reached very close to the number one position (Ludwig, 2013). Along with this, Toyota Motor Corporation is also known as the market leader of producing hybrid electric vehicles in the world. In relation to this, the organization has organised various programs to spread awareness amongst the people for using hybrid vehicles in order to eliminate the emission which generates from the usage of fuels based vehicles.
The organization is known for producing all variants of the vehicles and in order to manage their huge functionalities, Toyota Production System acts as the most effective tool. This tool not only helps the organization to boost up its productivity but it also helps in managing all the organizational functionalities to gain positive results. The main element of their supply chain and logistics management strategy is Just-in-Time Production (JIT) (SupplyChain247.com, 2018). This system organises the resource information flows and decision rules that enable the firm to consume the benefits of JIT principles. The elements of just in time process are being proactive in order to expose issues, total quality management; elimination of waste continues improvement, etc. Thus, the effectiveness and efficiency of the TPS have been considered as very high and thus, the system helps the organization to gain positive results across the all parts of the globe along with enhancing customer satisfaction. Major issues faced by the organization in terms of executing their supply chain and logistics management are globalisation, meeting with the demands and wants of the fast-changing markets, and maintaining the quality along with considering the compliance requirements. This holds true for Toyota Motor Corporation as the company operates in various markets across the globe and for the objective of matching up with the demands and wants of the target audience in different markets, organization needs to adopt certain sort of strategies to make rapid improvements in their strategies as well as to accomplish desired goals and objectives (Toyota Motor Corporation, 2018b).
Analysis
The key attraction of Toyota’s supply chain and logistics management is the approach of Just-in-Time manufacturing. This approach describes that the production will only be executed when the demand will originate in the market. This helps the organization to deliver effective vehicles in the market without leading towards waste generation and other issues. Along with this, this technique also helps the organisation to eliminate the extra cost incurred for storing extra units produced. Although, there are certain limitations of this technique, that it takes a bit more time in comparison to other companies to fulfil their target audience’s demands and wants (Uhlenberg, 2018). Apart from this, quick delivery is not possible with JIT technique, thus, chances for competitors arise to take over the market share of the organization in the situations where unexpected urgent demand for the vehicles generates.
Following are some of the areas of organizational logistics and supply chain process of the organization:
Toyota Motor Corporation has majorly focused on the philosophy of customer and quality first in order to attain sustainable growth and overall development in the competitive and dynamic business environment. In relation to this, the organization has been rewarded with certain awards for maintaining the quality of their vehicles. In 1965, the organization won the Deming Application Prize, in 1970; organization won Japan Quality Control Award. Apart from this, the organization has been rewarded various times and every time, the organization has kept customers and the quality of their vehicles on the top.
The organization has introduced a feedback system in order to take feedbacks and suggestions from their existing and potential customers to eliminate the issues and challenges faced by them while using vehicles of Toyota. This has helped the organization to regularly update their vehicles along with making them as per the fast-changing demands and wants of the target audience (Christopher, 2016). Consumer behaviour gets affected by the cultural, social, psychological and personal factor and all these factors are changing rapidly as there is a rapid change in the technology and globalisation. Due to rapid changing consumer markets, organizations are not able to manage the quality of their products because the life cycle of the products have been decreased and till the time, challenges and issues come in front of the organization related to the product, till then, the lifecycle of the particular product gets ended due to introduction of new product in the market (Toyota Motor Corporation, 2012). In order to manage the quality of their cars and other sorts of vehicles, Toyota Motor Corporation has set up certain quality checks to maintain the quality of their vehicles. Apart from maintaining the quality, there is another pressure over the organization of being innovative and regularly introducing new features to retain the interest of the existing and potential customers along with availing the opportunities to grab the interest of other customer segments. The constant innovation necessitated by fast-changing markets also means Toyota Motor Corporation will constantly have to anticipate demand for new products. In this context, the enterprise has created an agile supply chain that can respond well to spikes and dips in demand and production needs (Mangan, Lalwani & Lalwani, 2016).
Toyota’s Production System is very effective and in terms of managing the quality of their vehicles, this system plays a vital role in capacity planning. This is a part of supply chain management of the company and with regards to this, this has made the organization capable enough to strive to eliminate unnecessary inventory. This has been adopted for the objective of continuous improvement and in terms of achieving this objective, organization has relied heavily in the pull system.
Management of people is another very effective task for the organizations in order to execute the operations of the supply chain and logistics management in an effective manner. Logistics and supply chain professionals are considered the most effective people. Thus, the professionals in the supply chain and logistics management are termed as the most effective (Swink, et. al., 2017). It depends on the size of the company that managers perform certain actions to manage day-to-day operations of the entire business and they could also be treated as the part of the business. In the context of Toyota Motor Corporation operations managers are held responsible for taking decisions on the designs, planning, production, staffing and managing workflow (Kattering University, 2018).
Every department requires managing their people in order to accomplish the tasks along with gaining positive outcomes. In the same manner, supply chain and logistics management department also requires to manage their people so that the desired goals could be attained in an effective manner. Toyota’s operations management mainly covers 10 decisions for effective and efficient operations. The organizational functionalities are huge and it operates in the global market and to manage their operations, the organization uses a wide set of strategies for managing the 10 decisions of the operations management (Sindi & Roe, 2017). These 10 decisions indicate the different areas of the business and all these require different strategic approaches. In relation to this, following are the 10 strategic decisions which help in managing people in operation and supply chains:
- Design of goods and services
- Quality management
- Process and capacity design
- Location strategy
- Layout design and strategy
- Job design and human resources
- Supply chain management
- Inventory management
- Scheduling
- Maintenance (Lombardo, 2017)
Apart from these strategic decisions, organization also uses productive measures to manage their operations as well as the people involved in the supply chain management process. These productive measures focus on a number of product units per time, revenues per dealership and number of batch cycles per time. Toyota’s supply chain and logistics management has various functionalities because the company not focuses on enhancing productivity but it also focuses on meeting customers’ needs, changing as per market trends and customers’ preferences, anticipating future demands along with eliminating waste, controlling cost of production and delivering the best quality in order to retain the existing customers as well as to attract other customer segments (Basu, 2014). In this context, organization faces certain challenges and issues such as conflicts amongst the employees and this ultimately affects the organizational performance. Workforce diversity is the primary reason for conflicts amongst the employees, thus, organization regularly conducts training and development sessions for their employees to bind them together as well as to originate respect amongst the employees for each other (Waters & Rinsler, 2014).
Triple bottom line is another crucial and significant aspect of the logistics and supply chain management of Toyota Motor Corporation. The concept of the triple bottom line is mainly considered as the accounting framework which focuses on three parts i.e. environmental, social and financial. This framework has been adopted by some of the organizations in order to evaluate their performance in a broader perspective in terms of creating greater value for the business. With the help of a triple bottom line approach, Toyota Motor Corporation analyses the degree of its social responsibility, the impact of environmental factors on organizational performance and its economic value (Investopedia.com, 2018).
Toyota Motor Corporation has implemented a triple bottom line approach in their logistics and supply chain management in order to attain the goals and objective defined as per the triple bottom line approach. The company has also included its fundamental principles of customer and quality first with respect to the objective of enhancing organizational performance along with developing and maintaining an effective brand image in the customers’ mind-sets. In this context, organization has also evolved their corporate social responsibility practices on the basis of triple bottom line concept (Wisner, Tan & Leong, 2014).
In order to attain sustainable growth and overall development goals, Toyota Motor Corporation has evolved their functionalities and introduced hybrid vehicles. The company is known as the largest in terms of encouraging mass-market to adopt hybrid vehicles in the world. The main objective behind spreading awareness for adaptation of hybrid vehicles is to reduce emission which generates from the fuels based vehicles. In relation to this, Toyota has become the market leader in hydrogen fuel-cell vehicles.
Thus, Toyota has marked its effective image and the organization has attained a leading position in terms of producing environmentally friendly vehicles. This helps the organization to attain its triple bottom line goals and this has also helped the organization to become one of the most effective and largest companies in the global automotive market. Company’s CSR policies and strategies act as the crucial components of bottom line i.e. people, profit and planet. In terms of value and market capitalisation, the organization stands on the second position in the world and very soon, it will be able to acquire the leading position along with enhancing its financial performance with the effect of updated CSR policies. This has created a positive impact on the organizational financial growth and it has also helped the organization to maximise its productivity in its supply chain and economic performance in the world automotive industry (Beckford, 2016).
Conclusion
With respect to the above discussion, it can be concluded that Toyota Motor Corporation is one of the largest and effective companies across the globe in terms of revenue, productivity as well as the market capitalisation. The organization supply chain management system is considered as the efficient across the globe as it has the capability to suit all types of environmental and business conditions. Toyota’s supply chain and logistics management strategy are truly based on the Toyota Production System (TPS) and this system has been considered as the most effective and positive result generator for the organization. This report has concluded the main aspects of the supply chain management of Toyota Motor Corporation along with describing the primary issues faced by the organization. In addition to these components, the report has also concluded the applicability of a triple bottom line approach in the organizational supply chain and logistics management.
In order to meet the challenges faced by the organization in their supply chain logistics management, it is required to adopt better data management and integration approach. Data management and integration act as the key approaches for resolving challenges like quality, compliance control. These techniques are also essential in managing the connection between the manufacturer’s supply chain management and suppliers’ and partners’ supply chain management. It will also help the organization to perform the functionalities such as procurement, storage, manufacturing and logistics in an effective manner (Gimenez, et. al., 2018).
Sometimes, the organization receives raw information from their partners, suppliers and even customers and in those situations, it becomes complicated for the organization to consume, evaluate as well as to generate insights from the disjointed parts information. With the help of data management and integration techniques, the organization would be able to transform the raw information into effective information which is required for enhancing the effectiveness of the existing supply chain and logistics management. Thus, it could be said that data management and integration handles the issues in the supply chain and logistics management at the initial level only and through which the functionalities could be executed in an effective manner. On the other side, these tools provide visibility not only to the manufacturers but also to the partners and suppliers which improves trust and long term relationships with them (Wilson, 2015).
References
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