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Toyota's Overstretched Supply Chain

Toyota's Overstretched Supply Chain

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Published by: zr3_4 on Sep 13, 2010
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School of Business and LawUniversity of GloucestershireBaba Onotu0798FKFK1109
International Business
Bernadette Warner
Toyota's Overstretched SupplyChain
Lawrence Baba Onotu0798fkfk1109This report will focus on Toyota’s competiveness in the international automobilesector using supply chain and its lean production system.
Toyota, one of the largest automobile in the world was founded in 1937 launching itsfirst small cars in 10 years later. An important philosophy was introduced in 1950,giving the company the management and labour system and also helped Toyota togain success in overseas markets as well as mutual growth in its domestic market. The production system picked up becoming the major factor used in decreasinginventories and faults in Toyota plants and the suppliers (www.toyota.co.uk/history).The production system of Toyota is built on pillars of two, they are the leanmanufacturing or just in time which focus on detailed planning, a high efficient production and low inventory. While the second pillar is the Kanban System, it letsgoods to be “pulled” based on need and also for the communicating through thesupply chain the need for particular parts (Page, 2010).Toyota unbelievable consistency in performance is a direct product of operationalexcellence, transforming the excellence into a strategic weapon. The methodsintroduce based on quality improvement and operational excellence helped spawn thetechnique lean production or lean manufacturing, the methods are one-piece-flow,heijunka, just in time and kaizen. Toyota’s success grew over time using thesemethods, the methods are based on the understanding of human and peoplemotivation, on the ability to cultivate culture, leadership and teams to devise astrategy, as well as to preserve a learning organisation and to build supplier relationship (Liker, 2004).Supply chain management on the other hand is closely related with just in time, evenas many argued that Henry Ford’s company invented just in time technique, it wasoriginally linked to the managers of Toyota, such managers as Mr. Taiichi Ohno withhis system which includes the continuous problem solving towards eliminating waste(Wisner 
et al 
, 2008).
Lean manufacturing is primarily focused on the design of a responsive and consistentrobust production operation. The manufacturing operation is created, focusing on acontinuous improvement through a work force which is self directed and driven byoutput based measures united with customer performance criteria. A work force isdeveloped with the capability of utilizing lean techniques and tools which arenecessary for safety (Feld, 2000).Lean thinking originated from the shop floors of manufacturers in Japan, specificallyat Toyota Motor Corporation. Lack of resources and a strong domestic competition in2
Lawrence Baba Onotu0798fkfk1109the Japanese automobile market which includes just in time, Kanban method andrespect for workers and high levels of worker problem solving or automated error  proofing resulted into the lean innovations (Ohno, 1988).According to the Womack 
et al 
(1996) After the 1990’s came a gradual expandingcentred away from the shop floor, the extension process was speed up the successfulwestern case promotion by businesses in various sectors that had become accustomedto the production systems which includes a new type of design that is based on lean principles. These principles are the management of value stream, the identification of customer value, the mechanism of “pull” that supports the flow of materials at limitedoperations and the development of flow production capability. Toyota’stransformation the U.S factory for parts distribution system is illustrated in the figure below. It shows the dramatic improvements of Toyota’s lean process.Lean OrderingLean logisticsFigure 1: The downstream lean value stream
et al 
, 1996
Supply chain management is a combination of Kierestsu strategy by Toyota, EliyahuGoldratt’s theory of constraints, and M. E. Porter’s value chain strategy. Supply chainmanagement organizes the downstream and upstream organization in a global andchain quality, timing, quantities for all processes and cost, ranging from partssuppliers to the sales outlets. Supply chain has over the years been defined in similar ways by different scholars. According to Lambert
et al 
(1998), they argued andreferred to supply chain as the alignment of organisations that brings services or  products to the market.Supply chain covers all the firms and activities associated with the transformation andflow of products from raw materials to the end users and the information flows. Theinformation flow and the material, go up and the down the supply chain. Supply chainmanagement is referred to as the management and integration of supply chainactivities and firms through effective business processes, cooperative organisationalrelationships and the sharing of information at high levels to create high performingvalue system, this will provide the firms a suitable competitive advantage (Robert
et al 
, 2002). 3

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