Toyota SCM


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This presentation briefly tries to explain the supply chain management in Toyota Automobiles. The presentation is co-developed by Shashank M.A, Saiganesh N.P. & Anju Pillai.

Aniruddh Tiwari
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Toyota SCM

  1. 1. By, Annirudh Anju MinakshiSai Ganesh Shashank Debtanu
  2. 2. CONSISTS OF:  Designing  Manufacturing  Selling automobiles  Calty Design Research  Toyota Racing DevelopmentTYPICAL DIVISIONS WITHIN OPERATIONS:• Engineering and manufacturing• Research and Development• Sales• Financial services
  3. 3. KEY FEATURES OF TOYOTA BUSINESS MODEL:• Integrated Low Cost• Differentiated StrategyIntegrated Low Cost:-•Heightened the value and fortifies the competitiveness of product•Purchasing the worlds best parts at the lowest cost with the shortest leadtimes•Higher quality at lower costs by creating standardized, multipurposecomponents•In 2000, Toyota launched a new cost effective strategy called CCC21(Construction of Cost Competitiveness for the 21st century), for Low Costoperational expenses•Intensive coordination with its suppliers•Finding the lowest operational cost•Toyota steadily feeds cost improvements back into the product to raise theirvalueDifferentiated Strategy•Unique niche or strategy that separates them from the competition•Undertaken manufacturing revolution by integrating four areas: design, productionengineering, procurement, and component supply
  4. 4.  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
  5. 5. •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 toplant.Finished products transported through truck or rail for transport within thecountry 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 sizeinformation.13 week forecasting is given to suppliers to provide them with guidance.
  6. 6. Toyota supply chainSupply chain overview Suppliers Parts Inbound logistics Assembly plant production Inspection Outboun d logistics Dealers customers
  7. 7. 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 etcInbound 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
  8. 8. Inbound logistics planning –steps Network design- Determine which Transport parts Transport to to analyse cross dock is to cross docs and plants and locations of located nearest to stage them for containers travel suppliers suppliers each assembly in reverse routeProduction• Vehicles are produced at the final assembly plant from the parts provided by hundredsof 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 finishedvehicle.•Final Inspection is done and moved to yard.
  9. 9. Outbound logistics Vehicles at Accessories Final quality Transport to marshaling installation assurance dealers yardDealers :•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 stockToyota Distribution model Local production model Distribution Overseas production model model European distribution model
  10. 10.  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.
  11. 11.  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.
  12. 12.  Benchmark Tier-2 and Tier-3 suppliers as per Tier-1 suppliers Scope for improvement in Outbound Logistics