Toyota’s Global Supply Chain Management Strategy

Toyota’s Global Supply Chain Management Strategy

MGT 323: Principles of Supply Chain Management

Toyota’s global supply management strategy encompasses shared principles and collaboration with suppliers and dealers to provide quality products and services through interlocking structures, control systems, information sharing, and compatible capabilities. They implement fair business practices and respect the laws, traditions, culture, and customs in the communities in which they operate. Their production activities pursue providing clean, safe, and outstanding products that fulfill the needs of consumers around the world. The established corporate culture encourages creativity and values teamwork that also honors mutual trust and respect with labor, management, and business partners. They work in close proximity with stakeholders, colleagues, and peers to achieve stable and long-term growth that benefits all while continuing to develop and cultivate new relationships.

Toyota’s production system incorporates the characteristics of a lean manufacturing or just-in-time system and the philosophy of jidoka or “automation with a human touch” (Toyota, 2018). Their strategy focuses on the complete elimination of unnecessary steps and inefficiencies in the production and supply chain processes. The just-in-time (JIT) concept involves building the vehicle in the fastest and most efficient way possible. The necessary parts arrive at the specific time needed to assemble the automobile which keeps the factory floor uncluttered and production running at a smooth pace. The production facility does not wait for the parts and does not stock extra parts to reduce costs and keep storage facilities to a minimum. As the parts arrive, their packaging is kept to a minimum and they are organized as the are needed to help reduce errors and mistakes. This JIT pull production parts process is further demonstrated through Kanban. Kanban utilizes a card system that goes along with each individual part. New stock is only required when that specific part has been used, the card is then removed and then the part is replenished. The relationships that suppliers have with Toyota contribute to the JIT process by constructing their manufacturing plants next to Toyota’s shop to further reduce transportation costs, maximize efficiency, and promote organization. Jidoka operates on the premise that quality is assembled in the operation process and anyone has the ability and power to stop the process at any time to address a specific problem and provide improvements. Employees are encouraged to engage in their positions and to offer solutions to expand and elevate activities within the company.

The principles of lean manufacturing include cutting lead time and any steps that do not add value. The production line stops immediately to address any problems. People are trained to follow the rules and established standards like they are second nature. Cultivate and develop people so they can continue to contribute new and unique ideas. Benchmark prices and costs to further promote savings. Address defects as they occur to further contribute to having only the required number of employees and to continue to ask why about the way things are done. Other elements of the JIT system are proactivity in revealing problems, quality management, waste elimination, and the reduction of inventory through involvement of suppliers in the planning process.

People and employee development are a cornerstone of Toyota’s long-term respect for human rights, compliance, and satisfaction. Employees are faithful and responsible to their duties which contribute to the company and overall good. They are encouraged to stay ahead of the curve by continuously learning and studying. To build an encouraging, warm, and friendly atmosphere that is respectful of the different customs, practices, and people within the organization and the surrounding communities.

Natural disasters can have dramatic negative and costly effects on the ability of a lean manufacturing system. The earthquake that struck Japan in 2011 adversely impacted and exposed their vulnerabilities in supply chain operations. This disruption prompted Toyota to transform and refine their procedures to recover faster and accommodate customer demand. To become a more forward thinking and flexible organization that anticipated problems. They developed several general principles that involve supply chain strategy in relation to company direction, leadership and talent, technological advancements, and increased regionalization markets.

“In today’s highly competitive global marketplace companies are forced to seek opportunities to create competitive edge for them not only to broaden their share of market, but also to survive at all. Supply chain management is an aspect for any business to be looked at properly to identify ways to improve it. Improvement in supply chain management can reduce costs for a company and increase the efficiency and requires a strategic approach to be implemented towards it” (Dudovskiy, 2012).


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