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A Sample On
Logistic Operation management

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TABLE OF CONTENTS
1. Question 1 ................................................................................................................................. 4
Introduction..................................................................................................................................... 4
Forecasting..................................................................................................................................... 4
Methods of forecasting.................................................................................................................... 4
Qualitative methods.................................................................................................................... 5
Quantitative methods.................................................................................................................. 5
Types of forecasting time frames .................................................................................................... 6
Nestle's long term forecasting .................................................................................................... 7
Nestle's medium term forecasting............................................................................................... 7
Nestle's short term forecasting ................................................................................................... 7
Advantages of forecasting in operations management.................................................................... 8
Challenges in forecasting................................................................................................................ 8
Conclusion...................................................................................................................................... 9
2. Question 2 .................................................................................................................................. 9
Introduction..................................................................................................................................... 9
Background of the company and industry................................................................................. 10
Logistics and operations management practices ...................................................................... 10
Logistics and operations management challenges faced by BreadTalk .................................... 11
How well does BreadTalk respond to these challenges? .......................................................... 12
Changes in external environment ............................................................................................. 13
Changes in last 15 years in logistics and operational management.......................................... 14
Conclusion.................................................................................................................................... 14
3. Question 5 ................................................................................................................................ 14
Introduction .................................................................................................................................. 14
About Toyota ................................................................................................................................ 15
Lean principles ............................................................................................................................. 16
Application of lean principles in Toyota .................................................................................... 16
Just-in-time (JIT) and Kanban used in Toyta............................................................................. 18
Ways of improve current methods of planning and control....................................................... 19
Conclusion ................................................................................................................................... 20
References ................................................................................................................................... 21

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ILLUSTRATION INDEX
Illustration 1: Time series analysis................................................................................................... 6
Illustration 2: Logistic management............................................................................................... 10

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1. QUESTION 1
Consider ONE area of the module (forecasting / capacity / inventory / scheduling etc). What is
“Best Practice” in this area? Critique an area of an organization you are familiar with against this
best practice.
INTRODUCTION
Forecasting can be defined as the process of using historical information in determining the
direction of future trends. The present report is designed to provide deep knowledge about the use
of forecasting in logistic operations management of Nestle which is a Swiss multinational food and
beverage company headquartered in Vevey, Switzerland (Mentzer, Stank and Esper, 2008). This is
the largest food production company and major products of the company are: baby food, bottled
water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, etc. Various
kinds of methods and techniques of forecasting will be critically explained in this part of the
module.
FORECASTING
Forecasting is the important activity of the company that is related with the use of historic
data to determine the direction of future trends. In addition to this, it is utilized by companies to
determine how to allocate their budgets for an upcoming period of time (Stevenson and Sum,
2009). Nestle uses this in business planning and production, and hence, it can be said that this is
the major part of logistics and operations management. This is utilized for making effective
decisions and minimizing future uncertainties for ensuring resources that are readily available from
the supply and demand perspectives.
There is no perfect technique and method in the market which is 100%accurate. However,
best and suitable tool of forecasting can be selected in order to reduce uncertainties and making
effective planning for future logistics operation management of Nestle (Bowersox, Closs and
Cooper, 2002). Hence, it can be said that best practices can be defined by selecting best and
suitable techniques which have the ability to respond with the changes to minimise wastage in
terms of time, cost and materials and improve optimisation.

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METHODS OF FORECASTING
Normally, there are two kinds of concepts in operations management forecasting such as
qualitative and quantitative. Qualitative approach is utilised in long term strategic planning while
quantitative techniques are applied for short term decision making and planning. Both the
approaches can be explained as below (Kleindorfer, Singhal and Wassenhove, 2005).
Qualitative methods
Panel approach: This is one of the famous forecasting concepts, in which focus group
allows all ideas from the business leaders to contribute freely and openly in forecasting and
business decision making . Furthermore, panel method is the iterative group procedure that allows
experts to make forecasts without meeting face to face (Schönsleben, 2007). This is the simple
process in which several experts come together in order to predict particular operation.
Delphi method: This is generally utilized formal tool to decrease individual influence,
deploys utilising questionnaires or emails to the business experts. A centralised board will
collectively crop, summarise, and response the data anonymously. This is one of the best and
effective methods of forecasting. Generally, it is simple and economical way of forecasting. Delphi
technique can be utilised by Nestle in order to estimate demand of products of Nestle, that will be
helpful in future operations planning and controlling (Bozarth and Handfield, 2008).
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Scenario planning method: This method is a different compared to Delphi method and
Panel concept. This is focus on the long term forecasting, which will advise a series of future
developments with adverse risks taken into consideration. This is very effective way of generating
priority list of future developments and it is also helpful in implementing the plans in the logistic
operations. Managerial team of Nestle can use this technique for estimating future growth and
developments, which will be helpful in achieving goals and objectives of the entity easily
(McFarlane and Sheffi, 2003).
Quantitative methods
Time series analysis: It is one of the most popular tools of forecasting, that examines the
pattern of the past behaviour of a single phenomenon over time taking into account reasons for
variation in the trend in order to forecast for future behaviour. It is the best and effective way of
estimating the future on the basis of time horizon, capability of analyst, forecasting budget capacity,
availability and accuracy of the data. Generally this is utilized for long term decision making and
planning (Leenders, Fearon and Johnson, 2001). However, it is based on past data, and in the
present high competitive era, future cannot be predicted on the basis of past information. There are
ranges of market factors that can influence the decisions of management such as attractive
promotions and sales activities, prices changes, competitive strategies etc. Finally, it can be said
that Nestle can use this approach only for short term operational decision making. For example,
Nestle has forecasted its price of coffee products for next month by using time series analysis. But
3 new competitors have been entered in this sector (Vissers and Beech, 2005). In this kind of
situation company must decide prices on the basis of strategies of competitors rather than time
series analysis. In addition to this, for better forecasting accuracy for time series evaluation, the
predicting technique may comprise of simple moving average which is easy and quick to calculate.

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(Source: Altay and Green, 2006)
Causal modelling technique: This method describes and evaluates the complex cause and
effect relationship between the key variables. In addition to this, it is an abstract model which
describes the causal mechanisms of a system. In technical language, it is the model that is based
on the assumption that future value of a variable is a mathematical function of the values of other
variables. This is utilized where sufficient historical information is available and the relationship or
correlation between the dependent variables to be forecasted and associated independent variable
is well known (Altay and Green, 2006). Furthermore, this tool is an assumption of a reason why a
product will be in demand in future. This technique is helpful in finding out the major factors that
can influence the demand and supply in the near future.
Simulation: It is the imitation of the operation of a real world process or system over time.
The action of simulating something first needs that a model be created and this model shows the
major characteristics or functions of the selected physical or abstract system or process. In the
logistic operations management of Nestle, simulation technique of forecasting plays very significant
role in developing the effective model (Slack, Chambers and Johnston, 2009). This is based on
various kinds of unique techniques, expertise and other technologies such as computers etc.
Finally, it can be said that this is the modern technique of forecasting.
Illustration 1: Time
series analysis

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TYPES OF FORECASTING TIME FRAMES
Generally, estimation which is subjective to type of goods are divided into three categories
such as short term – stock management like procurement and resource levelling, medium term –
capacity management purposes like quality control, sales and production planning and long term –
strategic management purposes like new facility, decision making etc (Pagell, 2004). All these
three types of forecasting can be explained as below in order to understand this concept easily.
Nestle's long term forecasting
Consumer satisfaction is one of Nestle's six strategic thrust and also consumer intimacy
and forging partnership as part of the eight core competencies. Nestle is one of the most emerging
and fastest growing entity of FMCG sector. The major vision of it is to become global FMCG entity
and food production group. The mission of the entity is to bring value to their consumers and
partners by delivering total integrated quality products and services (Kovács and Spens, 2007).
The management team of the business regularly understands the present requirements and future
plans of their consumers in order to deliver high levels of consumer satisfaction with the help of
value creation, quality of products and services. Nestle expects another challenging year that could
see it undershoot its long-term targets again, after pressure on prices in Europe and weaker
emerging market demand slowed sales growth to 4.6 percent in 2013 (Chandes and Paché, 2010).
Management

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Nestle's medium term forecasting
The management team of the company must use medium term forecasting and need sales
and marketing, production planning and quality control sections to have an interaction to make
effective decisions based on forecasting data for future budgetary plans. The entity expected to
deliver the best quality food products to the society by using effective international supply chain
management. The entity will provide coffee products with the best sales and marketing strategies,
normally they will sale their products with lower prices in order to get competitive advantage
(Christopher, 2012). Production plan of the business is dependent on sales forecasting and
demand forecasting of the entity. For example, company is estimating low demand in the year
2013 and hence, the production and operations department of the business will perform according
to its demand and sales information.
Nestle's short term forecasting
There are ranges of elements in the company that need short term forecasting for refining
the existing plan based on the present situation and data such as production scheduling, workforce
levelling and procurement (Chase, Aquilano and Jacobs, 2001). This is very significant task of the
management in order to achieve long term aims and objectives easily. These inputs transforms
estimation to strategic decision in the complex production world to align and tailor the
manufacturing scheduling closer to the actual demand of society. Project management techniques
and backward planning can be utilized for starting off with ultimate goals and objectives. The short
term forecasting plays very significant role in order to achieve long term targets. Furthermore, it is
done on the basis of long term and medium term estimation (Stock and Lambert, 2001). On the
basis of forecasted sales data, production schedule will be created. On the other side, quality of
the products and services will be also managed on the basis of long term forecasting. There should
be accurate number of employees recruited in order to produce forecasted sales and fulfil demand.
ADVANTAGES OF FORECASTING IN OPERATIONS MANAGEMENT
Nestle have ranges of benefits of the forecasting and techniques of estimation as it is
helpful in making effective and optimum decisions for future with the valuable information. In
addition to this, it is also helpful in keeping the consumer satisfaction high by facilitating what they
desire and when they desire (Dornier, Ernst and Kouvelis, 2008). If company uses best and
effective forecasting tool, then mistakes of past does not transfer in the future and this kind of

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action will be helpful in reducing repetition of mistakes. Furthermore, this is helpful in looking
beyond the future to foresee present market changes and new market opportunities to attain
sustainability, saving employment costs to achieve maximum effectiveness and efficiency of
productivity level.
Risk of obsolescence can be reduced by decreasing cost of stocks by understanding the
resource level at the given time. On the other side, company can minimise operational losses by
understanding the seasonal trend in reducing sales (Roth and Menor, 2003). The regular
enhancement, expansion and growth of the business can be achieved with the help of effective
forecasting. This is helpful in estimating future opportunities and threats for the business and then
company can take right actions in order to reduce issues by making effective strategic decisions.
Finally, it can be said that there are ranges of advantages and benefits for Nestle, if this utilize
forecasting tools for their business (Langabeer, 2008).
CHALLENGES IN FORECASTING
The above task represents that there are ranges of benefits of forecasting for the business
entity. However, forecasting includes ranges of challenges also. The method shown above required
variety of experienced personnel in order to predict future. This kind of technique may be very
costly as it requires high level of investment. In addition to this, many methods are based on past
data and information and if the sources of information have disparity or inaccuracy, then it may
result in inappropriate planning (Makridakis, Wheelwright and Hyndman, 2008). Financial planning
and management is the major task of the business and there are ranges of organizations that
cannot invest high amount of money in forecasting and estimation.
There are ranges of external factors that may influence results of forecasting and
estimations. Customer perceptions and fashion are the major elements that may change in very
short time period in this innovative market. Hence, this will affect negatively on forecasting.
Furthermore, government policies and political changes may create big challenge for the
multinational companies like Nestle. For example, if government of any nation restrict company to
supply its products in particular area, then it will reduce demand of the entity and finally forecasting
will be failed. Another forecasting challenges is development of new product and technology from
competitors into market. It will affect the sustainability of the association (Hahn, Meyer-Nieberg and

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Pickl, 2009).
CONCLUSION
On the basis of above critical evaluation of forecasting, it can be concluded that time series
analysis is one of the best and suitable techniques that can be utilized by Nestle for estimation.
This is helpful in logistics and operational management of the business (Bowersox, Closs and
Cooper, 2002). The major problem of this technique is that it is based on past data and in the
condition of incorrect past information, result will also be incorrect. On the other side, innovative
market and new technology development are also big challenges for the business (Prideaux, Laws
and Faulkner, 2003).
2. QUESTION 2
Explain the logistics and operations management challenges faced by companies operating either
in Singapore or in your home country. How well does your company respond to these challenges?
What changes have there been in the past 15 years that have changed the challenges in logistics
and operations management? What changes would you like to see in the external environment or
the company response?
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INTRODUCTION
BreadTalk produces foods and beverages products and it must deliver these goods on right
time to society in order to achieve objectives of this. It is the listed bakery based in Singapore
which was established in the year 2000. The present report is designed to identify the challenges
faced by the company in logistics and operations management activities. It also focus on the
question how does BreadTalk respond to these challenges. The internal and external factors that
influence the logistics and operations management of the business will be discussed in this study
(Zhang, 2004). Furthermore, there are ranges of way to reduce challenges, and these actions will
be identified in the present research report.
Background of the company and industry
BreadTalk Group Limited is most popular bakery company of Singapore. This was founded
in the year 2000. The association perform business in the most emerging industry called food and
beverages. It has ranges of stores in ranges of nations such as China, Thailand, Shilanka, Oman
etc. George Quek, Katherine lee are the founder of the association. The revenue of the business in
the year 2013 was SG$536.530 million. The bakery sector is one of the fast growing and emerging
sector in the world. This depended on the best and quick logistics and operational management
practices because weak logistics and operations management can increase the scrape of the
company.
Logistics and operations management practices
Logistics and operations management play very significant role in success of the entity. The
objective of both these activities is to produce the appropriate products and services in the right
quality and quantity and to distribute them to the right place at the right time, thereby making the
greatest contribution to the organisation (Alfares and Nazeeruddin, 2002). Furthermore, logistics
and operations management covers whole supply chain from the acquisition of raw materials,
through production, to the point of consumption. Hence, it can be said that this is one of the major
task of the business that decides future success or failure. Each and every sub tasks should be
managed effectively in order to reduce costs and improve profitability (Soman, Zareipour and
Mandal, 2010).

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(Source: Kleindorfer, Singhal and Wassenhove, 2005)
Logistics and operations management challenges faced by BreadTalk
Supply chain management is one of the best part of logistics and operations management.
The major problem facing the BreadTalk team and total logistics consultants was to develop a
meaningful model through which they can really understand the pros and cons of each option
which was available. This already complex situation was made even more challenging due to the
diverse and expansive nature of products range of BreadTalk and large number of end markets
(Weatherford and Kimes, 2003). There are ranges of problems for the company at the time of
delivery of goods and services to the society. They must buy the right product at right time in order
to supply finished good to the consumers at right time. Delay in this kind of situation will increases
the cost of the company and this may also influences prices of the association (Araújo and New,
2007).
In addition to this the association also used different technologies to service the
international export market, dispatch products to different areas in nation. Hence, it can be said
that the firm is facing various problems in logistics and operations management tasks (Araújo and
New, 2007). Transportation is one of the basic problem of logistics and operations management
because every activity of the business depends upon transportation facilities of the particular
Illustration 2: Logistic
management

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nation. Government policies and involvement in infrastructure and transportation play very
significant role in logistics and operations management. There may be the problem of getting raw
material on accurate time due to weak transportation facilities (Armstrong, 2006). This kind of delay
will influence production process and supply chain of the business. On the other hand, the
association is using trucks that do not have freezing and heating capacity. The entity is bakery firm
and it need best quality of cooling and warming facility in their trucks in order to provide fresh foods
to people.
Company cannot deliver bakery products on promised time frame due to low availability of
transportation services and infrastructure facilities. High traffic on roads, human traffic in urban
areas, road construction work etc. play very crucial role in getting raw materials on accurate time
and delivering finished good on decided time (Stock and Lambert, 2001). According to various
studies, it can be said that BreadTalk is facing these kind of problems in its logistics and operations
management activities. This will also affect other operations works such as production, inventory
management, sales and marketing, quality management, human resource management etc. For
example, if the entity is not getting raw material on accurate time, then it cannot produce best
quality product for the client on predefined time (Alfares and Nazeeruddin, 2002). Thus, it can be
said that this kind of delay will influence all the process of operation management and company
must increase additional costs.
Sample Report on Logistic Operation Management

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How well does BreadTalk respond to these challenges?
BreadTalk is managing its logistics and operations management activities in very effective
ways in order to reduce various challenges. The financial management team of the business is
very effective which helps the entity in buying new trucks that will eliminate the frequent
breakdowns in transit and minimize delays. They also finding out best freezing and heating
technologies for these trucks in order to serve fresh products to the society. In addition to this, the
company is using variety of ICT tools and techniques such as vehicle trackers, satellite navigators
and mobile telephones which are helpful in tracking locations of vehicles (Wood and Lettenmaier,
2006). This type of task is helpful in reducing time of the transportation and cost of the
transportation. Furthermore, GPS system technology helps the entity in finding out various kinds of
safe and easy routes for transport (Chandes and Paché, 2010).
This will be helpful in reducing various kinds of issues such as delay in getting raw
materials, delays in delivering finished products, managing and controlling the level of inventory.
Hence, it can be said that this kind of actions will improve capability of logistics and operations
management of the entity. Furthermore, various kinds of modern technologies will be helpful in
improving efficiency within its transport network and more opportunities for load fill (Mentzer, Stank
and Esper, 2008). The entity is using very effective business strategy in order to overcome the
different challenges. The organisation believes in developing excellent relationship with its channel
members and logistics.
It is helpful in distributing the needed products in the required areas on predefined time.
BreadTalk's distribution set up is synced with its manufacturing system therefore company does not
have to manage the stock of goods for a longer period of time (Vissers and Beech, 2005). This
kind of strategy has saved the organization on financial side; moreover the association have been
able to provide the product to the market at demand. Another strategy utilized by BreadTalk for its
vendor management is Just In Time (JIT) concept (Stevenson and Sum, 2009). The managerial
team of the association utilizes JIT techniques in their raw material procurement and this kind of
tool will be helpful in managing other operations of the company such as production, human
resource management etc (Dornier, Ernst and Kouvelis, 2008).
The supplier of the entity believes in policies and process of the organisation and entity also
believes in its suppliers, and this will help in managing effective relationship with them which will be
helpful in getting inputs on accurate time (Bowersox, Closs and Cooper, 2002). In addition to this,

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company is using various modern and innovative information technologies that are helpful in
sharing and evaluating significant data regarding logistics and operations management. There are
ranges of software that are used by the association in order to manage tasks related to production,
sales, distribution etc. This kind of action will be helpful in providing quick information, and then
right action can be taken of right time. In order to improve infrastructure facilities, the association is
paying sufficient amount of tax to the government. It also have good relationship with various
departments of the government and politicians which will be helpful in infrastructure services in the
nation (Kleindorfer, Singhal and Wassenhove, 2005).
The company is also able in developing and creating better road and bridge in the most
visited areas in order to reduce challenges such as delays, weak transportations etc. The external
environment of BreadTalk also play very significant role in logistics and operations management
activities. The entity is the popular organization and performing business in ranges of regions of
nation. This must manage its external environment in order to become successful in this high
competitive and rapidly changing economy of the world (Bowersox, Closs and Cooper, 2002).
Presently, ranges of new competitors are coming in food production sector that are creating high
level of competition for the association. For example, there are limited number of suppliers of raw
material in the market and if new participants will be coming in this market, then competition will be
increased in terms of suppliers (Makridakis, Wheelwright and Hyndman, 2000).
This will lead in reducing availability of raw material for BreadTalk and then logistic and
operation section of the company will face big issues. In addition to this, different nation has
different kinds of infrastructure facilities which influence business operations of BreadTalk. For
example, the entity can deliver their products to consumer quickly in nation that have good
infrastructure such as China but they can not deliver it in the area which has weak transportation
facilities such as Srilanka (Kleindorfer, Singhal and Wassenhove, 2005).
Changes in last 15 years in logistics and operational management
We have seen the high level of changes in logistics and operational management in last
fifteen year. In the last few year, there was not trucks with cooling and heating facilities, and this
reduced the quality of the products and improved the scrap of the entity. Food and beverage entity
like BreadTalk must utilize the best and accurate technology in order to reduce scrap. They can
use vehicles with cooling and heating facilities in order to serve fresh products (Alfares and

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Nazeeruddin, 2002). In addition to this economical development of the world is improving with high
rate in the last few years. This kind of development is helpful in improving infrastructure facilities.
Furthermore, new technology development is the major activity that have been improved in last 15
years.
Changes in external environment
Various legal, government, environment, physical environment of different nation also
create big challenges for the association. For example, if company desires to deliver products to
hill stations, then it must face various issues in transportations and other services. These types of
problems can be reduced with best modern technologies. The company can utilize the ship that
have freezing capacity. It will help in providing fresh and best quality products to the international
market. Entity can also utilize this kind of technology in its trucks and other vehicles in order to
maintain quality of food products. Government of the nation also play very significant role in
logistics and operations management. It provides various kind of standards for transportation that
must follow by the entity. For example, license for drivers, papers of vehicles, insurance policies
etc. play very significant role in logistics and operation of business. In the condition of lack of legal
formalities, police can catch the vehicle, and then material will be reached delay at site.
Management

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CONCLUSION
On the basis of above evaluation it can be concluded that there are ranges of problems
facing by the bakery company in its logistics and operations management. Company must utilize
some innovative and modern technologies in order to solve the ranges of issues related to logistics
and operational management. They can use GPS system, best and modern trucks, best
transportation facilities etc.
3. QUESTION 5
The module discussed the principles of lean operations and demonstrated the use of Kanban
control. To what extent can lean principles be used in your organisation / an organisation you are
familiar with? Is there a place for MRP / ERP to be used in the organisation? Are there changes
you could recommend to improve current methods of operations planning and control?
INTRODUCTION
Lean philosophy was firstly implemented by Japanese automotive companies which has
positivity affected their performance. The principles of lean philosophy focuses towards creating
value satisfaction to the customers which increases operational efficiency. Further, the organization
can have empowered employees by providing them tools that they need. The organization can
become more cost and time efficient as the consumer can be provided with goods and better
services which may leads to profitable enterprise results (Mentzer, DeWitt and Keebler, 2001).
Nowadays, Lean philosophy has gained attention of many companies with the intention to create
impressive performance. The task herewith presents the principles of lean philosophy and their use
in the organization. The manufacturing industry has become more competitive therefore
companies needs to adopt techniques that can help in creating superior customer value. The
customers of automotive industry are looking for the best quality products available at reasonable
prices (Alfares and Nazeeruddin, 2002). The present study focuses on identifying the initiatives
taken by Toyota well-known automotive company for providing value for money to the customers.
It also demonstrate how Toyota uses a lean approach in business operations so that customers
can be offered with quality products at competitive prices. At present there are number of lean tools
and techniques but the study focuses towards two lean techniques: Just in Time and Kanban.

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ABOUT TOYOTA
Toyota is well known Australia's leading automotive company which deals in manufacturing
and distributing of vehicles. It has captured 18 percent of market share in automotive industry. It is
fully owned subsidiary of Toyota Motor Corporation which was established in 1937. Further, it is
considered as one of the world's largest vehicle manufacturer. The operations of business entity
are in more than 26 countries and regions and it deals with 50 foreign manufacturing companies.
The vehicles designed by Toyota are soled in more than 170 countries. The brands in which
organization deals are Lexus, Daihatsu and Hino etc. The head of organization is in Port
Melbourne, Victoria. Toyota employs approximately 317,716 people worldwide and it leads the
automotive industry due to effective environmental technologies. The main parts of its success is
its Prius and Camry Hybrid technology. In addition to that organization is making effective
developments in fuel cell vehicles. Toyota Motor Asia Pacific Engineering and Manufacturing
Company Limited supports entity in manufacturing and renders operational assistance to Toyota.
The competitive pricing strategies of Toyota, distinguished it from other competitors. This is due to
excellence in manufacturing units. In . The operational efficiency of business entity enable it for
providing good quality products at competitive rates (Bozarth and Handfield, 2008). The corporate
entity is efficient in providing the best services to customers as there is effective relationship
between inputs and outputs. The major aim of operational efficiency is to reduce cost in all areas of
business. Toyota has minimised the cost through saving time, space, activity and energy
(Langabeer, 2008). The business entity uses principles of lean thinking that enables company to
achieve operational efficiency. The use of principle of lean management have enabled organization
to cut the cost of production and providing low cost products (Kovács and Spens, 2007). The saved
money is invested in projects to achieve growth in business. The organization has adopted lean
thinking as a continuous process so that business objectives can be achieved. The organization
have impressive logistics services due to its innovative implemented of lean management.
LEAN PRINCIPLES
The principles of lean management provides various opportunities for business to improves
the operational process(Skiff, 2009). This philosophy emphasizes on creating more value for
customers while using limited resources (Blackburn and Scudder, 2009). Following points explains
the principles that are involved in implementing lean process improvement:

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Satisfaction of customers: The ultimate goal of lean management is to provide value
satisfaction to the customers. The operations of business entity have to focus towards customers
as it has to offer the prices and services as per requirements of customers (Anderson, 2006). The
organization can provide it through offering quality of services at competitive prices (Langabeer,
2008).
Identify the ways to get work done: The second principle of lean management focused
towards figuring out the best way to conduct operational activities. Before stating the work, the
management needs to identify the efficient way to perform the activities so that organizational
goals can be achieved (Chiang, 2012).
Eliminate inefficiencies and waste: The principle of lean management is to reduce the
wastage of resources so that efficiencies can be achieved. It helps in creating direct value for the
customers and will help in retaining them in business. The major task of lean management is to
manage and improve the process to eliminate non-value-added activities. The organization has to
reduce the time so that it can achieve customer satisfaction (Makridakis, Wheelwright and
Hyndman, 2008).
Management

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Empowering people for operating process: Further, the principles of lean management
lies on evaluating the process of value creation. The organization has to eliminate the wastage of
resources and focus on continuous improvement in value. The employees who are involved in the
process of value creation need to be efficient in their tasks. The major principle of lean
management is to empower the people involved in operational activities. Furthermore, the
management needs to ensure that improvement are made (Dekker, Fleischmann and et.al., 2004).
Continuous improvement: The ultimate principle of lean management says that
organisation should implement change where it needs. The demanded changes in the process are
to be introduced so that continuous improvements can be made. Further, it has to become able to
replicate the process of improvements for a long-term to gain sustainable value (Kök and Xu,
2011).
Application of lean principles in Toyota
Lean production is adopted by Toyota company in which the organization focuses on
acquiring more profits from limited resources (Mentzer, Stank and Esper, 2008). The major
purpose of using lean management is to reduce the wastage of resources and providing value
satisfaction to the customers. Meanwhile, it is focused towards creating operational efficiency
(Chase, Aquilano and Jacobs, 2001). Using this approach, management can reduce the waste and
can use less labour, materials and time for better outcomes. Overall, it helps in reducing the cost
of production. Lean production not only helps Toyota in reducing cost of operations but also it
supports company in providing satisfaction to customers. The lean production of Toyota is based
on following concepts :
 Just-In-Time production – It based on operational efficiency in which the materials are
received at the time when they are needed. This approach helps in eliminating requirement
of maintaining large inventory levels.
 Total Quality Management (TQM) – It is based on total quality concept in which the
employees of Toyota are accountable for getting the task right for the first time. The
organization is focused towards managing quality in all area of business operations
(Kleindorfer, Singhal and Wassenhove, 2005).
 Effective management – The lean production concept of Toyota is focused towards
reducing the time wasted on the operational activities of business. For this, the company

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has appointed multi skilled and talented workforce (Kovács and Spens, 2007). It helps in
completing the task and time and providing the service to customers at desired time.
 Continuous improvement – Using lean production approach, the organization has
developed the quality working place in which all the employees are committed for making
improvements to quality (Makridakis, Wheelwright and Hyndman, 2008).
However, it has been seen the lean production concept is mostly used by manufacturing
companies but now they are applied in service organisations. Being a manufacturing company
Toyota has applied all the principles of lean production in all the areas of business. This approach
is stated with logistics and supply chain management of the organization (Pagell, 2004). In addition
to that, employees of Toyota are provided with effective trainings for time management. This
enables organisation to reduce wastage of resources and cost. The trainings provided to the staff
help them in performing various task in manufacturing process (Schönsleben, 2007). It also helps
management in managing the requirements of staff. The workforce can get knowledge pertaining
to task of fields and will improve their skills to provide higher level of customer service. In addition
to that, organization can reduce the cost of human resources as fewer staff will be required to
perform various duties (Martie ,2013).
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The time based management approach is applied tin the organization. It has implemented
lean manufacturing at each stage. The use of lean enables Toyota to do more with less – less
human efforts, less time, less instrumentation, and less space. In addition to that it has
implemented just in time manufacturing approach rather than a traditional one. The technique
focuses on achieving smooth flow of production. It has been identified that Just in time and
Kanban techniques can be used to a certain extant because of distinct nature if business and
limitations of supply chain management,. The demand of products need to be meet out at time. It
is focused towards supplying the products as per market demand as it produces the products as
per the market demand. It is mandatory to forecast the the suppliers encounter at time otherwise
delay in production can be arose which will lead to dissatisfaction of customers. On the other hand
to adopt Kanban control technique the organization requires to have discipline and high skilled
employees. Using both the techniques economies of scale have been achieved by the
organization. Having such economies of scale, it can reduce the cost of production. Being cost
effective, Toyota can offer the product and services at competitive prices to its customers. To
display the product, the company needs to have smaller place hence the size of stores can be
reduced. (Vissers and Beech, 2005).
Just-in-time (JIT) and Kanban used in Toyta
Just-in-time (JIT) approach is used by Toyota to manage the operations at manufacturing
units. The particular approach is used to hold the inventory that is needed by the organization. It
has been identified that the organization is dealing in expensive stock. Hence, it is needed to have
the stock that is required to conduct the activities. The stock is purchased by the organization at
any given time (Prideaux, Laws and Faulkner, 2003). In case, the organization reduces the stock
levels then it will help in improving working capital. From the analysis, it can be said that Toyota is
not focused towards investment in stocks but it is focused towards holding it for as short time to
reduce the cost. It represents that organization reduced its warehousing costing by investing less
on maintenance of warehouses. In this way, the payment made to staff for monitoring the
warehouse is to be reduced (Wood and Lettenmaier, 2006). As the stock arrived in the store, the
management of company focused towards reducing the cost of holding and managing the stock. It
can be referred to as an efficient way of managing the large volume of products in a quicker and
easier way. Toyota is using TQM approach that helps in increasing quality in the organization. The

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organization has created strong business relationships with suppliers. Through managing effective
relations with the suppliers, company has improved its product offerings (Weatherford and Kimes,
2003). The use of such approach enables organization of meet international quality standard. It
has been seen that Toyota has adopted distinguished approaches related to retailing business. The
operations of business entity are focused towards providing quality products to the customers so
that they can be availed with value for money (Zhang, 2004). The operational efficiency of
business entity is showing its core values of simplicity, consistency and responsibility. The use of
such lean principles will enable Toyota to manage purchasing all of the parts needed for effective
flow of the material and work in progress. JIT is the technique enable organization to use cheaper
and efficient supply department and use of computer software to manage manage the whole flow
of material and work-in-process. It is also helpful in changing the Mass Production system into a
One Piece Flow system. In addition to that Kanban is beneficial for managing human resources at
manufacturing plants.
At the end, it can said that Toyota could use above lean principles and techniques for
making smoothness in production. Just In Time will help in scheduling simpler product structures
with high parts commonality and can make the process easier. JIT system can be used in Toyota
as shop floor execution of plan in which ERP and MRP can be used to control and plan the
needed materials. These will be helpful in demand forecasting so that sufficient materials can be
placed for manufacturing at specific time. It will help in completing manufacturing in given deadline.
Hence it can be said that Kanban to facilitate JIT delivery in the organization for making operations
smooth.
Ways of improve current methods of planning and control
In addition to that, organization needs to improve its practices and for this, it can use
Electronic data interchange , JIT II , and CPFR approach. It will help in determining the processes
production quantities. This assists in conducting JIT production and ordering systems so that cost
can be reduced against the volume of stock. The organization needs to improve the JIT technique
while using kanban's "pull" system (Soman, Zareipour and Mandal, 2010). It creates greater
flexibility in the production that is based on estimated number of expected sales. JIT/kanban
systems will help in eliminating problem associated with overproduction (Weatherford and Kimes,
2003). JIT/ kanban systems supports Toyota for reducing amount of necessary in-process and

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post-process inventory so that the damages in the products can be reduced at the time of handling
and storing. It also facilitates worker-lead process improvements so that they can be motivated for
making improvements in products; then there will not be any excess inventory that is to be sold. It
will be a cost effective way for the business entity through which the organization can reduce the
increased energy use that is associated to transport and reorganize unsold inventory. Further it can
use SPC method of quality control. It is a kind of statistical method used for monitoring and
determining whether the output of a process is as per pre-decided design. It will also help in
identifying the variation so that corrective actions can be taken.
CONCLUSION
Principles of lean philosophy focuses towards creating value satisfaction for customers.
The above task explains the principles of lean philosophy its use in Toyota. It has been identified
that manufacturing companies need to adopt techniques that can help in creating superior
customer value. In conclusion, organization is suggested to use Electronic data interchange , JIT II
, and CPFR approach along with SPC method of quality control.
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REFERENCES
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Araújo, M. B. and New, M., 2007. Ensemble forecasting of species distributions. Trends in ecology
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Kleindorfer, P. R., Singhal, K. and Wassenhove, L. N., 2005. Sustainable operations management.
Production and operations management. 14(4).pp. 482-492.
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International Journal of Physical Distribution & Logistics Management. 37(2).pp. 99-114.
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Management

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