Supply Chain Management of

By,Annirudh

AnjuMinakshi

Sai GaneshShashankDebtanu

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

KEY FEATURES OF TOYOTA BUSINESS MODEL:• Integrated Low Cost• Differentiated StrategyIntegrated 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•Toyota steadily feeds cost improvements back into the product to raise their valueDifferentiated Strategy•Unique niche or strategy that separates them from the competition•Undertaken manufacturing revolution by integrating four areas: design, production engineering, procurement, and component supply

SUCCESS OF TOYOTA’S BUSINESS MODEL

Market share of 14% in the first four months of this year

2.3% jump from the previous year Toyota ranks fourth in United States sales

DRIVERS OF SUPPLY CHAIN•Facility: •Vehicles coming out of assembly line are moved into warehouse called “Marshaling yard” .•Fitting accessories, price tag and final quality assurance takes place here.

•Inventory:•Just-in – time based inventory method.• Pull based system and kanban methods are followed.

•Transport:Majority of transport of raw material through truck , since suppliers stay close to plant.Finished products transported through truck or rail for transport within the country and ships for export.Road transport is provided by third party logistic providers.•Information:Parts and master database is maintained for part name, supplier, lot size information.13 week forecasting is given to suppliers to provide them with guidance.

Supply chain overview

SuppliersParts

Assembly plant

Inbound logistics

Inspection

Dealers

Outbound

logistics

Toyota supply chain

production

customers

Suppliers : Suppliers provide thousands of parts and components that go into the

vehicle. Parts and components are received from Tier 1 suppliers through inbound

logistics. Supplier chain contains several levels –tier 1,tier 2,….and so on. Since Toyota relies on JIT it has fewer but reliable tier 1 suppliers. Eg : Denso, Bridgestone etc

Inbound Logistics : Company establish partnership with third party logistic providers Company organizes many of its suppliers into clusters based on

geographic location. Parts are picked up from those suppliers by trucks on a milk route and

delivered to regional cross dock.

At cross dock, parts are unloaded and staged for each assembly plant and then loaded to trucks which take parts directly to each plant.

After the parts are unloaded, the truck is reloaded with the corresponding empty returnable containers.

Returnable containers flow in reverse route

Inbound logistics planning –steps

Network design-to analyse

locations of suppliers

Determine which cross

dock is located nearest to suppliers

Transport to plants and containers travel in

reverse route

Transport parts to cross docs

and stage them for each

assembly

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.

Outbound logistics

Vehicles at marshaling

yard Accessories installation

Final quality assurance

Transport to dealers

Dealers :

•responsible for selling the vehicles produced by the manufacturer to the retail customers.•Toyota s sales model is designed so that a high percentage of vehicles is sold from arelatively low level of dealer stock

Toyota Distribution model

Distribution model

Local production model

Overseas production model

European distribution model

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 increasing the efficiency of supply chain..

Toyota takes responsibility for procuring parts from supplier which increases reliability on inbound logistics.

Concerns Toyota took its single source strategy to

risky extremes without proper risk management oversight, need closer observation on tier-2 and tier-3 suppliers.

Bigger expansion means working with unfamiliar suppliers who may not have proper understanding of Toyota culture.

Recommendation Benchmark Tier-2 and Tier-3 suppliers as

per Tier-1 suppliers Scope for improvement in Outbound

Logistics

THANK YOUFOR YOUR PATIENCE