Impact of Toyota Business System on Supply Chain Management: Flexible or Not?
In the automotive industry, supply chains are extensive and include elements of producing based on several forecasting techniques. The amount of money invested is large and fixed. Key trend in the automotive industry is the increase of the variant numbers on individual models and standardization of components in the supply chain. This means that models can be adjusted to the individual tastes of customers and new models are developed and produced continuously in order to meet the changing market demand. The uncertainty in the market place is translated into mix flexibility and volume flexibility in order to be competitive in the market place. Generally the parts that customer doesn’t touch and see are the ones that are standardized; other ones are left to differentiate different models and fine-tuned to their taste. For example in US, Toyota’s minivan is built on the same platform as their Highlander Sports Utility Vehicle. This communization of basic architecture -
Saves Toyota money by reducing required investment,
Increases increasing volumes to get lower pricing, and
reduces training required for different models
Toyota can be considered as the first automobile brand that introduced a clear need for flexibility in its entire business system. Toyota’s ‘lean philosophy’ is not only restricted to its manufacturing system: it describes a philosophy that incorporates a collection of tools and techniques into the business processes to optimize time, human resources, assets, and productivity while improving the quality level of products and services to their customers. Currently, several automobile brands clearly recognize the strength of ‘lean thinking’ in relation to increase flexibility in their supply chain activities. In the dyadic relationship between a buyer and supplier, emphasis is put on how the work can be done smoothly in order to improve quality and reduce...
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