SUPPLY CHAIN MANAGEMENT

OF TOYOTA MOTOR
CORPORATION

By:
Diksha
Anushka
Pragati
Ankit
Anish
Sai Krishna
 HISTORY
Founded in 1937, Toyota Motor Corporation is a Japanese company
that engages in the design, manufacture, assembly, and sale of
passenger cars, minivans, commercial vehicles, and related parts and
accessories primarily in Japan, North America, Europe, and Asia.

Current brands include Toyota, Lexus, Daihatsu and Hino. Toyota

Motor Corporation is the leading auto manufacturer and the eighth
largest company in the world.

As of March 31,2013, Toyota Motor Corporation’s annual revenue

was $213 billion and it employed 333,498 people.
 Business model
CONSISTS OF:
 Designing
Manufacturing
Selling automobiles
Calty Design Research
Toyota Racing Development

TYPICAL DIVISIONS WITHIN OPERATIONS:

• Engineering and manufacturing
• Research and Development
• Sales
• Financial services
Effect of supply chain on the company

 Considering suppliers and dealers as partners, sharing profits with them,

has helped to manage supply chain efficiently.
 By leveling out production (heijunka) and synchronizing with demand and
supply has helped to maintain stability in supply chain.
 By effective demand forecasting , production and supply chain activities are
managed effectively .
 Suppliers are categorized as clusters based on geographic location and
single truck picks up part from the cluster increasingthe efficiency of
supply chain..
 Toyota takes responsibility for procuring parts from
supplier which increases reliability on inbound logistics.
 KEY FEATURES OF TOYOTA BUSINESS
MODEL
Integrated Low Cost:-
•Heightened the value and fortifies the competitiveness of product
•Purchasing the world's best parts at the lowest cost with the
shortest lead times
•Higher quality at lower costs by creating standardized,
multipurpose components
•In 2000, Toyota launched a new cost effective strategy called CCC21
(Construction of Cost Competitiveness for the 21st century), for Low
Cost operational expenses
•Intensive coordination with its suppliers
•Finding the lowest operational cost

Differentiated Strategy
•Unique niche or strategy that separates them from the competition
V4L FRAMEWORK
The v4L framework helps the company to create a balance of the
main supply chain parameters which are:

 Variety
 Velocity
 Variability
 Visibility
 TOYOTA CORPORATE OVERVIEW

~$600M Parts Logistics Budget N. America.

~750+ Suppliers in US, Canada and Mx.
~2000+ Route runs, ~ 835,000 miles per day
11 Toyota Plant Customers in Network
5 Core Trucking Logistics Partners
2 Core Consolidation (Cross Dock) Logistics Partners
TEMA = Centralized Design for plants
 Toyota supply chain
Supply chain overview

Su pp liers
Parts
Inbound
logistics
Assembly
plant

production
Inspection

Outbound
logistics
Dealers

Customers
 List of Toyota vehicles

As of 2009, Toyota officially lists approximately 70 different models sold

under its namesake brand, including sedans, coupes, vans, trucks,
hybrids, and crossovers.
Many of these models are produced as passenger sedans, which range
from the subcompact Toyota Yaris, to compact Corolla, to mid-size Camry,
and full-size Avalon.
Vans include the Previa/Estima, Sienna, and others. Several small cars,
such as the xB and tC, are sold under the Scion brand.

 Toyota Cars / Commercials

 Toyota Vans / Utes
 Toyota 4WD / SUVs
 Company strategy
The Toyota Way

Toyota's management philosophy has evolved from the company's

origins and has been reflected in the terms "Lean Manufacturing" and
Just In Time Production, which it was instrumental in developing.
Toyota's managerial values and business methods are known
collectively as the Toyota Way.
 Company strategy
Under the two headings of Respect for People and Continuous
Improvement, Toyota summarizes its values and conduct guidelines
with these five principles:
 Challenge
 Kaizen (improvement)
 Genchigenbutsu (go and see)
 Respect
 Teamwork
According to external observers, the Toyota Way has four
components:
1.Long-term thinking as a basis for management decisions
2.A process for problem-solving
3.Adding value to the organization by developing its people
4.Recognizing that continuously solving root problems drives
organizational learning.

The Toyota Way incorporates the Toyota Production System.

 Production
•Vehicles are produced at the final assembly plant from the parts provided by hundreds
of suppliers.

•The plant is subdivided into shops. The vehicle is born in the body shop where the
frame and body are formed.

•The body parts are stamped in the stamping shop by presses.

•The body shop is where numerous robots are used to weld the body parts together.

•After body being assembled, it moves to paint shop

•After painting ,it moves to final line where supplier parts are installed to make finished
vehicle.

•Final Inspection is done and moved to yard.

 Pull System Manufacturing
Central to the idea of lean manufacturing and JIT inventory controls
is a “pull” system of manufacturing.
 This is contrasted from the other manufacturing system, which is a
“push” system. There are situations when either situation is optimal;
however, Toyota has made great progress by using a predominantly
“pull” approach.
Use of a “kanban”, or marker, card, or tag, is done to indicate that
more parts are needed and should be produced. This limits the
amount of inventory in the system and reduces the factory’s
vulnerability to fluctuating demand.
Toyota Production System
 MANUFACTURING
Toyota Production System
1. Best Quality
2. Lower Cost
3. Shortest Lead Time
4. Best Safety
The final processes necessary to complete the picture of the comprehensive supply
chain are performed one to three years prior to actual production. These processes
are as follows

1.Product planning and design

2.Plant design for capacity and flexibility

3.Package design for logistics

4.Purchasing

5.Annual sales and operations planning

Cont....
Continuous Improvement
1. JIT
2. People and Teamwork
3. Judoka – quality (make problem visible)
4. Waste reduction
5. Labelled Production
6. Kanban – flow of correct information
 DRIVERS OF SUPPLY CHAIN
Facility
1. Vehicles coming out of assembly line are moved into house
called “Marshaling yard”.
2. Fitting accessories, tags and final quality assurance takes
place here.

 Inventory
1. JUST In Time based inventory method
2. Pull based system and kanban method are followed
Cont....
Information
1. Parts and master database is maintained for partname, supplier ,
lotsize information.
2. 13 weeks forecasting is given to supplier to provide them with
guidance.
Transport
1. Majority of transport of Raw material through truck, since suppliers
stays close to plant.
2. Finished products transporTed through truck or rail for transport
within the country and shifts for export
3. Road transport is provided by 3rd party logistics provider
 DISTRIBUTION
Toyota’s sales and marketing work is divided into four distribution
channels
1. Toyota (large cars)
2. Toyopet (medium size)
3. Toyota Corolla (compact)
4. Netz Toyota (compact)

Toyota dealers as whole have approximately 5000 outlets

worldwide.
 TOYOTA DISTRIBUTION MODEL
DISTRIBUTION MODEL
1. Local production model
2. Overseas production model
3. European production model

Toyota applies “Toyota Way” to manage dealers, based on 3 basic principles:

1. Making dealers proactive
2. Mutual benefit between Toyota and Dealers to prosper jointly.
3. Accept competition to improve.
 Vehicles at
Accessories Transport to
marshaling
installation dealers
yard

Toyota markets cars in about 170 countries through its overseas

network consisting of more than 160 importers/ distributors and
numerous dealers.

Local production model

Distribution Overseas production

model model

European distribution
model
 Marketing
Toyota also operated a commercial dealership called Toyota Diesel
Shop from 1957 until 1988, that sold various commercial platform
trucks, buses, and forklifts, such as the Toyota Dyna and the Toyota
Coaster.
Hino products were sold at specific Hino locations, and shared at
Toyota Diesel Store locations after Toyota acquired the company in
1967.
Starting in 1980, the Diesel Shop also sold the Starlet,Corolla,Vista
and Crown with diesel engines.
When the Toyota Diesel Store was disbanded, commercial products
were divided between Toyota
 Suppliers
Organized suppliers into functional tiers
First-tier suppliers: worked together in a product-
development team
Second-tier: made individual parts
-Encouraged cooperation and communication among first-tier
suppliers
-Cross- sharing of personnel through
Toyota sending personnel to suppliers to compensate for greater
workload
Toyota transferring senior managers to suppliers
 SWOT Analysis
Strengths: New investment by Toyota in factories in the US and China saw profits rise, against the

worldwide motor industry trend which was
suffering heavy losses.
In 2003 Toyota knocked its rivals Ford into third spot, to become the World's
second largest carmaker with 6.78 million units. The company is still behind rivals General Motors
with 8.59 million units in the same period.
Weaknesses: Toyota had quite a few large-scale vehicle recalls over the
 past few years. The
company recalled 9 million vehicles in 2009-2010 and
7.43 million cars in 2012.
Toyota markets most of its products in the US, Europe and in Japan. Therefore it is exposed to fluctuating
economic and political conditions those
markets. Emerging economies as China or India make only a small percentage of all Toyota’s sales.
Opportunities: Lexus and Toyota now have a reputation for manufacturing environmentally

friendly vehicles.
Toyota is to target the 'urban youth' market. The company has launched its new Aygo, which is targeted
at the streetwise youth market. The vehicle is a unique convertible with inbuilt sub woofers.
Toyota is expanding its market share and operations in emerging economies like India and China.
 Logistic operation
Inbound Logistics: Toyota obtains raw materials, they do not
process their own, or create their own, they use a third party, they
hand out the small parts, such as leather seats, steering wheel, tire,
to local companies, but to the nature of strategic importance, like a
machine, they import from Japan, all to maintain the quality
standard that was created by Toyota.
 Network Logistics
Route Planning: The creation of a logistics route plan to transport
parts from hundreds of suppliers to multiple manufacturing plants is
like the making of an airline schedule.
Pipeline Management: The “parts pipeline” is defined as all parts
that have been ordered from a supplier and have not been unloaded
at the receiving plant. Toyota uses a variety of methods to track
parts throughout the pipeline. The process starts with the parts order
that is sent via Electronic Data Interchange (EDI), along with the
kanban bar code label that the suppliers affix to the parts shipping
container.
Mutual Benefits from a Partnership
The company is a logistics provider in India that formed a joint venture with Toyota
to deliver parts to Toyota, both imported (from the port) and sourced from more
than 70 local sup- pliers. Initially, TCI learned how to better manage the delivery of
auto parts from Toyota; since then, it has carried the best practices over to other
manufacturers

Outbound Logistics
Outbound logistics is also known as product distribution, because the function of
outbound logistics is to distribute the finished products from the OEM plants to the
retailer
 Key to logistic performance
Packaging : mixed box size, small pallet size Dedicated
transportation service
Consistent daily route, period route revision Good timing at all

connection points
Order fluctuation allowance built into route capacity plans
 Managing Suppliers
Links to TOYOTA processes :
It Strives to reduce variability to ensure stable operations by
systematic planning.
Toyota Limits the variety of choices to customers and instead
guarantees superior product quality on available choices. Which will
increase the product value for customer.
Suppliers play a major role in providing superior quality as the value
creation starts from the suppliers.
Toyota suppliers must be flexible to respond to daily order changes.
Toyota supplier selection :
Goal of supplier is to maintain Deliver performance, High quality,
Productivity improvements over the life of the model.
Key Features of choosing Suppliers are :
Quality Assurance (Production facilities)
Timely Delivery
Long term relationships
R&D capabilities
Excessive Information sharing.
Pressure on suppliers and relationship with supplier
 Maintained by staggered system of Model changes and thereby
staggered system of Negotiations.
 Absence of desired performance after winning the contract will
jeopardize chances to win a contract for other models of same
supplier.
 Upto Six levels of Relationship exits between Toyota & Supplier.
• Provides drawings and detailed manufacturing Instructions.
• As it provides drawings supplier designs the manufacturing process.
• Toyota purchases a product out of catalog, commodity off-the-shelf
items.
Assisting a supplier :
 JISHUKEN is gathering of middle level production technologists
from stable group of companies who jointly develop better designs.
 Each company chooses specific theme but works within the policy
set by Toyota OM Consulting division.
 The study sessions consists of concrete performance targets such
as productivity, cost reduction, inventory turns.
 KAIZEN ideas are generated in every two months and implemented
after successful study.
With its efficient supply chain in place, Toyota expects to
remain one of the world’s most profitable car
manufacturers in the foreseeable future.
THANK
YOU!