Production Strategy - Global Sourcing Strategy

Production strategy

For instance, it may have to move some of its production closer to their new customers to reduce costs and improve efficiency. Moreover, it will need better inventory control and communication systems to integrate all their production. Coordination and control may prove troublesome too if they get involved in making too many products.

Global sourcing strategy

Even though rest of the industry is moving away from kanban but Toyota is still based on a kanban system and Toyota uses forecast based on kanban. But however other company like Mitsubishi and Honda forecast bases on demand of the product. As a result it leads to the fluctuation in demand of the products. Since DENSO relies on Toyota for 56 percent of its revenue. It needs to figure out how to diversify its revenue base more without losing the Toyota's business.

Finally, I think it will be difficult for DENSO to maintain the quality of its core competency, electrical auto parts, if they focus too much on diversification. It would be hard to satisfy all those different customers effectively. Although they cannot totally separate themselves from their co-dependent Toyota as yet, it may be a bit of a challenge to distinguish themselves as an independent company that is not one of Toyota's children.

The tree around the plant shows that DENSO cares about the employees and their mental well-being as well as their job satisfaction. It is much nicer to look at trees, knowing one's company is environmentally conscious, than it is to look at concrete factory buildings. DENSO is clearly committed to their employees not only through providing nice landscaping, but by offering lifetime employment, little wage gaps, bonuses, and its reluctance to layoff workers. They also provide training for employees switching to different jobs.