Supply Chain Management in Toyota Motor Corporation

Supply chain management in Toyota Motor Corporation

Supply-chain management at Toyota is an element of company's operations strategy which is thoroughly based on the Toyota Production System (TPS). It was developed in the 1940's by Shigeo Shingo and Taiichi Ohno. As Toyota's success gained world-wide coverage, at was followed by interest by other companies in TPS, the principles of which is expressed by the term of "lean manufacturing"

Liker (2005, p.16) lists following components of Toyota Supplier Partnering Hierarchy: mutual understanding and trust, interlocking structures, control systems, compatible capabilities, information sharing, joint improvement activities, and Kaizen and learning.

"JIT system - a system that organizes the resources information flows and decision rules that enable a firm to realise the benefits of JIT principles". (Krajewski, Ritzman & Malhotra p.349)

The elements of just-in-time system are being pro-active in exposing problems, pull production based in Kanban, Total Quality Management, elimination of waste, reducing inventory through involving suppliers in planning process, continuous improvement, improving machinery and focusing on co-operation.

According to Kanban each part travels with a card. New stock will only be required when that part has been used, the card is removed, using signals to re-stock this part. Kanban is well integrated in Toyota's production system, because in Toyota there are limited number of parts with stable demand for them. Also, product mix is low and exchanges are infrequent.

Capacity planning in any company is part of a supply-chain management for that specific company. Toyota's way to capacity planning is that it strives to eliminate inventory. In achieving this objective Toyota relies heavily in pull system. Generally, the main objective is continuous improvement.

Another operational excellence pioneered in Toyota and later adopted by other companies worldwide is a "Lean Concept".