Background Information
Toyota Motor Corporation is an automobile manufacturer and retailer specializing in automobile innovation, manufacturing, and sales. Kiichiro Toyoda began the company in 1937, and it has developed into a major automaker since then (Barron et al., 2017). Additionally, it combines this company with economic goods primarily focused on selling its commodities, including car and asset leasing. Although headquartered in Japan, this corporation has developed operations in several nations worldwide. In 1959, the company opened its first overseas branch in Brazil (Barron et al., 2017). Today, the firm has diversified its research, technology, and manufacturing operations in Japan, Europe and North America. At the moment, the company has employed approximately 3663,000 people (Barron et al., 2017). In addition, Toyota works with a diverse range of providers, including Tesla Motors, Impact Racing, and Goodridge Fluid Transfer Systems.
The Toyota Motor Company is the third-largest manufacturer of automobiles in the world. Its commodities are attributed in the market, which has elevated the corporation to a worldwide market leader. This corporation has been instrumental in reviving the automobile market during the last few decades. Toyota launched a production network in 1959, with the system focusing on inventory reduction and defect reduction in its plants and suppliers (Barron et al., 2017). This method performed admirably, and the corporation expanded operations to other places worldwide.
The organization has built a presence in twenty-five nations and regions worldwide, with its brands being sold in over 160 countries. Toyota, Daihatsu, Hino and Lexus are among the major brands (Barron et al., 2017). It produces compact automobiles and premium vehicles such as sedans, crossover cars and pickup trucks (Barron et al., 2017). North America has evolved to be Toyota’s largest major market, surpassing its home market in Japan. The company’s goal is to continue growing and developing in a way that helps society the overall ecosystem and contributes to global economic progress (Barron et al., 2017). Its objective is to prepare the stage for change in the automotive industry. The company has implemented an Ex-work transportation system that allows purchasers to pick up vehicles directly from the factory in terms of transportation costs (Barron et al., 2017). This is true for corporations with subsidiaries and factories in the nations they are importing. The corporation has subsidiaries and affiliates in other countries; this enables the company to save on shipping costs and is unaffected by fluctuating currency exchange rates.
Supply Chain Strategies
The Toyota Motor Company has adopted green chain supply as a critical component in implementing the sustainable development approach. Green logistics is a type of shipping that utilizes sophisticated logistics technology to organize and execute green shipping, green packaging, green collection, green processing, and green restoration (Frazelle, 2018). Its objective is to mitigate the environmental contamination and resource utilization associated with logistics activities (Frazelle, 2018). Green chains are significant in industrial growth, economic system transformation, and logistical growth level promotion, among other vital elements.
A common area in green logistics is reversed logistics, involving reverse movements of used commodities back to manufacturers. Several scholars have argued that all returned products should be remanufactured. Marketing is another important aspect of supply chain management in the Toyota Motor Company. Partnership with marketing science significantly expands the supply chain strategy. The three key aspects of this approach are promotion, pricing, and channel management. Pricing and marketing are critical aspects of sales promotion, even more so when the supply chain is considered. For example, in 2013, accurate supply information increased stock levels, undermining the seller’s possibility of charging a premium preorder price (Toma, S. G., & Naruo, 2017, p. 575). Therefore, early demand information may be detrimental to the seller’s profit margins due to its adverse preorder season.
How the Supply Chain Support the Organizations Strategic Goals
The supply chain strategies play an important role in fulfilling the goals set by the organization. Through its business operations, Toyota Industries endeavors to support regional living standards and social stability and aspires to produce environmentally friendly goods of high quality (Frazelle, 2018). For instance, the green logistic encompasses all efforts to quantify and mitigate the ecological effect of logistical operations (Frazelle, 2018). This process involves all actions associated with the upstream and reverse movement of goods and resources between their production points to where they are consumed. In addition, although many other manufacturers remain committed to gasoline-only vehicles and seldom venture into other fuels, Toyota has not only increased its production of hybrid automobiles but has also begun promoting alternative fuel cars.
How the Supply Chain Supports the United Nations’ 17 Goals of Sustainable Development
Toyota’s supply chain guarantees that used products are recycled back to the manufacturer. The United Nations’ goal number 12 calls for responsible consumption and production patterns (Pedersen, 2018). Worldwide usage and production — driving energy of the world enterprise — depend on the continued destruction of the earth’s natural surroundings. Sustainable consumption and supply include detaching economic development from ecological degradation, enhancing resource efficiency, and encouraging environmentally-friendly lifestyles (Pedersen, 2018). Consumption and sustainable manufacturing may also significantly help eradicate poverty and the change towards reduced carbon emission and green economies. Additionally, the green chain plays an important role in economic system change and logistics growth. The united nation sustainable goal number eight advocates for supporting inclusive and sustainable economic development, employment and good work for everyone (Pedersen, 2018). Economic development that is steady and inclusive can propel progress, generate good employment for everybody, and raise living standards.
Strengths of the Supply Chain
Toyota Company has a strong label image and economic stability to contend with other automobile manufacturers in the domestic and international markets by utilizing its fundamental marketing strategies. According to Toyota’s 2011 yearly survey, its present major financial parameters include operating income, total sales revenue, net income, and total assets (Frazelle, 2018). Additionally, Toyota Motor has an adequate labor force as it employs over 325,900 competent, talented, and dynamic personnel who work together to produce high-quality products, manage the firm effectively in adverse financial conditions and remain a market leader during economic downturns (Ōba, 2020). Moreover, all staff members are highly qualified, talented, and skilled in their respective fields to provide consumers with the best service or advanced products.
Weaknesses of the Supply Chain
While Toyota Motor has shown formidable strengths that have contributed to its success, it also has several weaknesses that need addressing. Toyota has several weak points, including its numerous subsidiaries that manufacture vehicles for the market using their resources and designs (Frazelle, 2018). As a result, testing and assessing the design and operational efficiency must be considered to minimize any risk associated with the production and working system (Frazelle, 2018). Toyota also depends on suppliers located globally; therefore, they must rely on their success. Thus, this results in an output that is a little sluggish.
Metrics Utilized by the Organization for the Supply Chain
Quality
Quality is defined as compliance to a standard or appropriateness for a particular purpose. According to Hong and Najmi (2020), all actors in the distribution network have responsibility for maintaining production efficiency. Quality management in the production process entails integrating the vendor’s excellence attitude, the vantage point company’s internal mechanism, and the performance the client requires. For example, Toyota Motors Company uses a comprehensive quality management paradigm that checks constant improvement, condition monitoring, and inbound quality control for its performance measures (Hong & Najmi, 2020). Additionally, Hong and Najmi (2020) argued that the quality of a product specification is related to the choices and activities performed about the architecture and adherence to the concept. Commitment to model quality and consistency ensures that the product satisfies the client’s goals.
Cost
Cost is a critical measure of procurement effectiveness and success. Supply chain expenditures include all expenses connected with the distribution chain’s operation, including the price of items and the overall cost of logistics (Han et al., 2020). In addition, prediction, management, distribution, stock control, production, customer experience, and vendor relationship management incur supply chain expenses (Han et al., 2020). Due to the vital nature of cost performance, it is monitored more meticulously and completely than any other facet of competitive advantage (Han et al., 2020). Toyota Motors Company has continued thriving due to its cost management and cost-cutting skills built into its architecture, procedures, culture, and technological base.
Innovation
Supply chain creativity guarantees that current techniques and those in research are constantly at risk of being displaced by innovations. Toyota evaluates its technology’s technical and commercial potential by assessing its associated automobile models regarding the primary advancements used, latest developments, and future advancements (Frazelle, 2018). Innovation entails research and development and is mostly driven by suppliers. The majority of improvements emerge as extra features on new automobiles. Annual expenditure in research and development, the proportion of automated systems and the quantity of new products or services introduced are a few of the performance metrics and measures for creativity.
Freight Flows
Current Freight Flows
Outbound and incoming logistics are involved in the current passage of automobiles. An inbound supply chain is essentially focused on an institution’s raw material sourcing. Vendors also impact Toyota’s distribution network since their components must be collected before manufacturing (Hannah, 2017). Because this matrix of distributors is geographically dispersed, the parts provided arrive at variable intervals; this variance might result in significant time consumption and inefficiencies. Toyota Motor Corporation has developed planning and decision-making systems to streamline this process and ensure effective vehicle distribution.
Outbound logistics is concerned with moving completed commodities from manufacturers to markets. It is more costly since it involves the end product, which is often more valuable than raw material. Toyota uses this technique to transport the completed automobile from the plant to the distributor (Hannah, 2017). Before transportation, the automobiles are stacked in vast warehouses. Then, the automobile is parked at a boxcar or a truck storage facility based on the method of conveyance being employed. As a result, this is likewise separated into portions based on the vessel’s location.
Future Freight Flows
The advancements in procurement have benefited both businesses and consumers substantially. Transporting raw materials, suppliers, and completed items reliably and effectively results in substantial economic advantages. Supply chain movements are evident throughout the system’s operations. At Toyota, management and system visibility are determined by performance. The outcomes get 50% of the weighting, while the procedures receive 50% of the weighting (Barron et al., 2017, p. 190). Short-term accomplishment is recognized while guaranteeing that procedures are adhered to appropriately through this performance measure. The firm has effectively responded quickly to concerns, made thoughtful improvements, and maintained pace (Barron et al., 2017). Therefore, this may be enhanced further by matching variation to demand while allowing for continual learning and evaluation. When market mechanisms impact procedure effectiveness, an enterprise becomes more in tune with market reality and performs and grows more effectively.
Transportation Improvement Plan Implemented for Its Operations
Near-term (1-2 years)
For the logistics side of any firm to perform properly with the lowest expenses, it needs to interact effectively with the distribution network. Therefore, change projects should commence with readily achievable improvements to the most advanced ones. Toyota Motors has considered restricting the number of breaks en route, and as a consequence, its near-term performance will be favorably affected. When this short-term achievement is assessed and regarded economical, a prolonged change may be included in the strategic plan.
Mid-term (3-5 years)
Currently, the greatest distribution method at Toyota Motors is the three-level vehicles that, if packed effectively, can move more automobiles. So packing is optimized to guarantee that one trip produces more than expected, which will decrease expenses. In addition, Toyota may choose the places that recorded the largest sales quantities and transfer their operations to those locations. Nonetheless, the majority of clients are still serviced through the distributors. Therefore, it would be acceptable if those clients purchase the automobiles via the agents rather than have their automobiles sent straight from the factories. Thus, this will save them effort and gain them credit. Consequently, their overall satisfaction will be considerable, which is a strong indicator that the firm will favor their competitors.
Long-term (6-10 years)
The direct shipment will also decrease the activities centered on the terminals and the carloads for the items sent to the dealers. Consequently, streamlining the duties required reduces time consumption and expenses. In addition, the corporation is to transport its items straight to the customer, proving cost-efficient, particularly if the end consumer receives items in huge numbers. Therefore, a firm must identify its greatest clients who often purchase things in significant amounts. Those consumers may be offered a unique approach to immediately transporting their things to them.
Recommendations to Improve Operations of the Supply Chain in Support of the 17 Goals
Toyota is a multinational corporation with manufacturing facilities located across the world. It must monitor economic trends in these places to capitalize on them. The primary emphasis is on the infrastructure that may give routing options. If this is done consistently, its customer efficiency will increase, allowing it to remain ahead of the competition. Thus, this may be further enhanced by advancing sourcing strategies in all active personnel and stakeholders supporting the industry, innovation, and sustainable infrastructure goal. If all partners take the initiative, they may collaborate to develop behaviors that result in lower energy use and low stock levels.
Toyota can successfully collaborate with distributors and retailers to guarantee that all bookings and shipments are handled in a single transaction. Imposition surcharges may apply on additional deliveries that should be included in the first order. Thus, this ensures that dealers and suppliers stick to the established timetables. This assists in avoiding nonessential travel and facilitates quick responsiveness to customer demands. When routing is coupled with software, it is possible to optimize loaded miles while avoiding empty miles. By interacting effectively with suppliers, Toyota strives to support the sustainable goal of peace and justice among entities.
Packing is another area where big savings may be made. Therefore, this is mainly relevant to Toyota’s transfer of components from warehouses to manufacturing facilities, thus enhancing responsible production and consumption. If vehicles are optimized to transport the maximum amount of stuff feasible, the volume of traffic and petroleum consumed is likely to be significantly reduced. Packaging executives should collaborate with competent experts to review, evaluate, and design cost-cutting adjustments. Parts are subjected to many moves throughout the different phases of manufacture in inbound logistics.
Finally, Toyota has a sustainable policy that requires all vessels to be recycled, ensuring that nothing is discarded like trash. Components must be properly placed to maximize space in shipping containers; interlocking components must be carried together. Containers used to carry components should be stackable. Stacking allows for the mobility of additional components while minimizing the danger of damage caused by frequent movement. They might be combined with less regular lots for frequently used components to optimize their transit.
References
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Frazelle, E. H. (2018). Supply chain strategy: Unleash the power of business integration to maximize financial, service, and operations performance. McGraw-Hill Education.
Han, Y., Chong, W. K., & Li, D. (2020). A systematic literature review of the capabilities and performance metrics of supply chain resilience. International Journal of Production Research, 58(15), 4541-4566. Web.
Hannah, L. (2017). The business history discipline. In The International Business Archives Handbook (pp. 428-445). Routledge.
Hong, S. J., & Najmi, H. (2020). The relationships between supply chain capability and shareholder value using financial performance indicators. Sustainability, 12(8), 1-16. Web.
Ōba, T. (2020). “Versatility” of Yōseikō in Post-War Japan: A Case Study of the Toyota Motor. Japanese Research in Business History, 37, 37-60. Web.
Pedersen, C. S. (2018). The UN sustainable development goals (SDGs) are a great gift to business!. Procedia Cirp, 69, 21-24. Web.
Toma, S. G., & Naruo, S. (2017). Total quality management and business excellence: The best practices at Toyota Motor Corporation. Amfiteatru Economic Journal, 19(45), 566-580. Web.