Managing the Supply Chains

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Supply Chain Management at Toyota

Toyota essentially follows a very simple supply chain management policy. While ensuring a reasonable level of quality, delivery time and satisfaction of customers, Toyota attempts to reduce costs in its supply chain.

Producing the right product for the market at the right price that can be affordable for the customers are the primary objectives of the supply chain management policy at Toyota at the right time. In order to maximize profits, the company follows a policy of targeting the right customer group at the right time (Liu & Brookfield, 2006).

A pictorial representation of the supply chain management policy of Toyota is listed in the appendix. The company segregates its supply chain and the suppliers. It considers the suppliers as a very integral part of the supply chain. Apart from supplying raw materials for automobile production, the suppliers are also suppliers of technology for the various systems that are incorporated in the automobiles. Based on what functions the suppliers perform, they are segregated in to several tiers (Iyer, Seshadri & Vasher, 2009).

Suppliers engaged in the product development at the company are placed in the first tier. Companies that are engaged in the development of computer software for the vehicles and the various intelligent systems that are incorporated in the state-of-the-art luxury cars that are produced by the company and the companies that directly take part in research and development with the company are considered in this tier. The suppliers of individual parts of the automobiles is in the second tier such as the ones who regularly supply electrical, sound or navigation system or parts of the engine.

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Encouraging cross supplier communication, supply chain management at Toyota aims to enhance the quality and range of products that the company gets. The supply chain management also involves the cross sharing of personnel with the company as well as between the suppliers. With the aim of compensating for greater workloads when it is needed by the company Toyota often sends its employees to the suppliers. This helps in delivery of parts and raw materials in time which in turn ensures that the customers get their delivery in time (Kubota, 2015).

Senior managers and experts in production are sometimes sent by the company to the suppliers with the aim to encourage corporate managing of the business of the suppliers. The Toyota employees are mostly placed at top positions in the supplier companies. The aim is to streamline the supplier company in line with the high standards of company management at Toyota which ensures product quality and on time delivery of products.

Toyota follows the "market price minus" system instead of the general popular "supplier cost plus" system of pricing for the supply chain. This entails that the price quoted for a supplier is based on the….....

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