LI5101 Supply Chain Management Thinking And Practice


Assume that you are the supply-chain manager for a manufacturer you are familiar with.

Analyze the effectiveness and efficiency of the four key flow points (in the supply cycle), the make process, the supply chain forecasting, and the distribution chain.

Based on your analysis and the concepts you have learned about supply chain management, make recommendations for improvements.



Each organization has to evaluate their current resources to ensure they can achieve their goals and objectives.

This paper will focus on the supply chain management at Toyota Automobile Manufacturing Company.

This company has successfully managed its supply chain and logistic management activities, which has helped it grow its business.

The paper focuses on the understanding of information flow effectiveness within Toyota, the company’s product flow, cash flow, and return flow.

The paper’s second section discusses cash flow. Here, production planning and its effectiveness are discussed. Also, how to plan material requirement using supply chain theories is covered.

The final section of the report examines the models, with Toyota being the most effective.

About The Organization

KiichiroToyoda, the founder of Toyota Motor Corporation, founded it in 1937.

Toyota Aichi is its headquarters. It is an automobile manufacturing and selling firm that has been around for 75 years.

Global, the company is a multinational corporation that employs more than 3.5 Lakh people around the world. A report shows it was 13th in terms revenue in 2016.

Toyota was the first automaker to produce over 10 million vehicles each year.

Toyota is home to many well-known brands, including Lexus and Alphard. Harrier and Dyna are also among them.

It is considered the largest multinational manufacturer and seller in all of the world.

Supply Chain Key Flows

There are three types key flows in the supply chain: Product flow; Information flow; and Money flow and Revenue flow.

The supply chain management activities’ key flow is connected to the supply of goods and the improvement of overall outcomes.

This is in addition to the support provided by the outbound and inbound activities, based upon the logistic supply chain management plan.

The product flow describes the product’s flow from the initial stage of production to the finished product the customer receives at the showroom.

However, the information flow is both in the direction of the suppliers and the customers.

Money flow is, however, the flow of money from the customers to their manufacturers and then from them to their suppliers.

Toyota’s Product Flow

Due to the product’s nature and security, the supply chain can be more complex than in other industries like clothing.

The parts or raw material are obtained from the supplier. They are then sent to assembly using inbound logistics.

The assembly plant can be found in the factory where the vehicle is to be sent. There, the body and parts are made and then transported to the paint workshop area. Finally, the product goes for inspection and assembly.

Once the product is ready to go on the market, it’s sent to outbound logistics to be shipped to the dealer.

The following chart illustrates the Toyota Company’s outbound and inbound activities, and how it managed its business value chain efficiently.

Information Flow

The continuous flow of information must occur from suppliers to the manufacturers to customers, and then from them to the suppliers throughout the vehicle’s development.

A value stream mapping is used to track the flow.

The set functional program and business activities are key factors in the information flow.

Cyber computing and information-based technologies are the foundation of information flow in business.

It makes it possible for companies to easily flow information within their business activities.

The flow chart is used to interpret the information flow of the corporation.

The flow chart helps customers respond quickly by minimizing the lead times.

These processes are interconnected to ensure a continuous flow (Christopher 2016).

Customer requirements must be met promptly. This is why it is necessary to have a simplified information flow that gives customers a clear understanding of the quantity, volume, and product mix (Stadtler 2015).

This efficient flow of information improves business results and can also be used to enhance the business management (Hugos 2018, 2018).

The company stockholders are the main beneficiaries of the money flow.

These stockholders are the true owners and investors of the company, who invest capital to keep the business running.

The company stockholders are responsible for the funds flowing to directors on board and company owners (Coyle, et al. 2016).

The funds are then transferred to the treasurer or controller, who oversee the money allocation and supervision of all employees.

It was evident from the review that Toyota has an efficient supply chain management system.

The resolution passed and consent granted at the meeting are the basis for the inflow or outflow of cash from the company (Cooper 2017).

The Process

The make process refers to the operational process used to ensure effective and efficient supply chain management.

These are two major parts of the process.

Each month, a production team reviews the orders. The next months’ sales are forecasted based on these orders.

Every vehicle is assigned a sequence and a production plan.

Toyota follows Heijunka for production scheduling.

This schedule is distributed over a month as each part weighs. The engine production, for instance, has less weight than the color.

Toyota allows for 53 weeks production. Once production is complete the schedule dates are sent to dealers. These include the tentative build date.

The dates are then available for consumers to place orders. The dealers will provide the same schedules to the production and assembly plant (Stadtler (2015)).

The materials are designed locally or internationally depending on what is needed.

However, local materials are assembled based on availability. For overseas, the assembly depends on shipping time, frequency, and lot size.

Toyota has 16 work hours, with overtime depending on the requirements.

Takt time is not only important, it is the time taken for the vehicle to get from one station into another. This is sixty seconds.

The delay can affect the overall production (Bozarth & Handfield (2016)).

Toyota is known for producing high-quality automobiles. Therefore, workers are empowered to stop production in the assembly line when they find any problem (Brandenburg, et al. 2014).

A fixed number is used to calculate the total work hour for each day and hour vehicle.

For each model, the ratio of production can be calculated using the model volume and the ratio.

Toyota Company has a strong value-chain that allows all activities to be undertaken, and the company’s production value is increased.

Toyota Company’s process shows equilibrium among all its activities. It also strengthens business processes which ultimately leads to better business outcomes (Brandenburg et al.

Forecasting of the Supply Chain

Failure to predict the future will result in the company not being able to meet customers’ expectations. This can lead to a loss of customer service.

Forecasting is a crucial tool in keeping pace with the market (Fawcett Ellram & Ogden (2014)).

To forecast supply chain, a company should follow a few principles such as regionalization and connections with strategies.

The organization’s business activities will be used as a basis for its supply chain forecasting.

This has led to improved overall outcomes and the establishment of globalized work functions (Christopher 2016).

Globalization and regionalization of supply chains: Brands have moved to all parts of the world. It is important for them that they acquire regional skills to be successful in their regional markets. Toyota has a supply system in every region. This gives them an advantage over other companies by having local supply chains to fulfill local requirements (Monczka, et al. 2015).

The program of regionalization in supply chain activities shows how well companies can manage their business and set up a forward logistics work chain (Stadtler (2015)).

The Supply Chain Methods are Available in Two Options

Optimization: The supply chain is optimized by combining production and inventory plans.

Simulation technique: This technique allows you to execute management plans by using four period demand history.

These are the techniques Toyota Company uses in order to improve its business and increase its profits (Hugos 2018).

Multinationals tend to shift production units to cheaper locations in order for workers and manufacturing costs to be lower (Schonsleben 2016).

Companies try to build their supply chains in places with high inputs to take advantage of the lower production costs (Stadtler (2015)).

Simulation is used to find the supply chain that has the lowest lead time.

Toyota has successfully increased its production by including the supply chain system in its strategy.

But it’s not only about the procurement. The talent that is procured is equally important. Accordingly to Christopher (2016), the company has people with great problem solving skills and vast global experience.

Toyota follows the pull strategy rather than the push strategy. Based on the demand from the consumers, the KANBAN system efficiently manages and handles all aspects of the supply chain.

KANBAN is a system that uses less words and more visuals.

Workers use cards as signals to order the vehicle, or start a new project. It saves time and confusion, and helps avoid miscommunications.

The suppliers track the signals in order to be able understand the exact requirements (Wisner Tan & Leong (2014)).

Electronic signals replace traditional cards and can be sent from customers to dealers to suppliers and to the production units automatically.

These strategies help Toyota Company to build core competencies in product differentiation and cost-leadership, as well as create a long-lasting brand image (Christopher 2016).


The literature review provides an explanation of Toyota Motor Corporation’s efficient supply chain management. It uses KANBAN and pull strategies.

The study also reviews the models that can be used to forecast demand and make process.

The company will need an enterprise resource plan at an advanced level to compete with the international brands in the international market.

Toyota’s simulation strategy is most suitable to generate the highest returns.

Even though the pull strategy works, workers require training in order to reduce production losses and improve their time management skills.

Other supply chain options are better suited to the needs.

The case study and details of the supply chain management activities at Toyota Company can be used to draw conclusions about the need for a strong process chain that manages all the activities and completed work.

Every aspect of the company’s supply chain is interconnected and managed in order to enhance overall business results.

Chatbot of Company uses cognitive technologies to improve its customer support and business outcomes.


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