2016-12-29 来源: 51Due教员组 类别: Essay范文
This report is made with the purpose of proposing supply chain plans for Toyota. As the third largest automaker in the world, Toyota aims to improve its supply chain management so as to gain competitive advantages over rivals such as Ford and General Motor. Supply chain entails the activities from procurement of raw material to the distribution of products. Therefore, it is safe to say that the survival and prosperity of a corporation lie in its supply chain management. In the whole process of the supply chain many elements such as suppliers of material, employees, technology, logistics and customers have to be considered so that the products of high quality can reach customers at a rapid speed. All companies attach great importance to supply chain management; they try to improve their efficiency, apply sophisticated technology, promote the skill of employees, ensure the supply of fund and material and meet the particular needs of customers. In the case of Toyota, it confronts some problems in its supply chain, and measures have to be taken to address those problems.
1． Introduction This essay is concerned with the problems in the supply chain management of Toyota and recommendations to address those problems. As said in the summary, supply chain involves all activities from the procurement of material to the consumption of products, bad performance in each stage will affect the ultimate benefits of the company, thus, measures should be taken to ensure the sound performance of all elements in the whole process such as suppliers, employees, technology, logistics and customers. Toyota is one of the first to apply the just-in-time manufacturing practice and the originator of the kanban method. These two methods performed well, but there are also some problems in its supply chain management, thus, this report aims to spot those problems and propose some recommendations.
2 key issues and challenges
2.1 concepts of some manufacturing practicesBefore pointing out the problems threatening the performance of Toyota, it is essential to get to know the concepts of its manufacturing practices. Just-in-time is a manufacturing notion which aims to reduce wastes and improve efficiency at all stages of production(Hiroyuki＆Furuya,2006). It deems inventory as a waste of resources instead of storing value, thus in-process inventory is unacceptable. According to its concept, products should be manufactured according to the demand of customers. To achieve this goal, kanban , a visual signal between different points in the process of production, was applied first by Toyota to decide when to produce the next part. Accordingly, to reduce inventory and make products better meet the needs of customers, pull strategy is a wise choice which is based on actual and consumed demand(Harrison＆Lee ＆Neale,2003). In pull system, customers demand the product and pull it through the delivery channel. Through this method, company can reduce its inventory and costs, the quality of products can also be improved.
In the case of Toyota, it adopted lean manufacturing in production which aims to reduce wastes and improve quality and efficiency(Krafcik＆John,1988 ). It is consistent with just-in-time approach. All these practices such as just-in-time, kanban, pull strategy and lean manufacturing conducted by Toyota contribute to the huge success of this automaker, major companies began to follow its suit. However, it is not safe to say that Toyota’s situation is perfect without any defects. The following part will numerate the shortcomings in its management.
Inventory is a method adopted by most companies for many reasons: inventory is maintained as a buffer to handle the uncertainties in demand, supply of goods so that products are always available and flow smoothly to end customers. Inventory can help to shorten the lead time and ensures the constant benefits (R. S. SAXENA, 2009). Inventory can be a save of cost, “one unit at a time at one place by a customer” is a huge waste of money in terms of logistics, inventory is kept for bulk buying and delivery of products, thus, it helps to achieve economies of scale. For most companies, products have to be kept for some time so that products gain the desired value and meet the needs of customers, for example, alcohol, the longer it is kept, the better it tastes.
However, there are also some defects of inventory. It hides problems just like water in lake hides rocks. To be specific, products stocked in warehouse can hide many problems because they can not receive tests from customers, who will spot the defects in designs immediately so that producer can improve their products promptly. In this sense, inventory is a waste of time, resources and the desired profits can not be made. If the market is plagued by economic recession, inventory will be a disaster to companies. In the case of Toyota, it was hit seriously in the global financial crisis in 2008; it suffered a negative growth never seen in its long history since 1936. In January 2009, Toyota was forced to close all its plants for 11 days to reduce production and the stock of unsold vehicles (Fackler, Martin, 2009).
Therefore, inventory is not a wise choice in today’s volatile market. For one thing, economy regularly run into recession, customers’ purchasing power and enthusiasm will be weakened. For another thing, many competitors are sparing no effort in upgrading and regenerating their designs, inventory can make a company’s products lag behind rivals. At last but not least, inventory makes company play a passive role in demand and supply relationship, if customers don’t favor its products, the inventory will be reduced to a pile of wastes. Therefore, products should always cater to the particular needs of customers; inventory is unacceptable in today’s market.
2.3 defect in designs
Toyota suffered huge loss from vehicle recalls and its reputation was also stained by its defective designs which had claimed the lives of 37 people(Healey＆James,2010). The reasons contribute to the poor quality of products, in the words of Akio Toyoda, president and CEO of Toyota, are that Toyota expanded its business too quickly in the last few years in order to occupy larger market share in the world, therefore, it focused more on speed rather than on the quality of products, which enjoyed its top priority in the past years. To expand more quickly, Toyota can not spare time to make improvements as it did before, their enthusiasm to make user-friendly products have been weakened (Lichtblau, Eric, 2010).
Almost all types of Toyota vehicles were charged with defects in floor mat and accelerator pedals and other problems, some vehicles have several problems. From the end of 2009 to the start of 2010, Toyota launched three recalls altogether because some vehicles experienced unintended acceleration. The large-scale recall caused huge loss to Toyota and its reputation in the world was also seriously affected. The following is a table about the number of recalled vehicles from different regions. (unit: m)
Region America world Europe and ChinaJapan Canada and America
Number of vehicles 10.5093m 0.727m 1.8m 0.0045m 1.13m
ReasonsFloor mat, faulty accelerator pedals, brake tube problems, defective front drive shafts and possible corrosion of spare tire carrier cable
This only accounts for a small proportion of recalled vehicles. Toyota is caught in the mire of defective products from 2007 onward. Its sales volume dropped sharply and its rivals take this opportunity to seize more market share, customers’ confidence in Toyota vehicles was shrinking. Blind expansion and rejection of lean manufacturing which it had long been boasting of contribute to its failure.
Customers are key ingredient of supply chain. It decides the fate of companies. There is no use to further emphasize the importance of customers to companies. Companies should attach extreme importance to customers, their particular needs provide business opportunities to economic participants and catering to their needs can better the situation of company in the market. Toyota does a good job in this aspect, but there are still some defects in its dealing with customers.
This part is directly related to the former one. Toyota vehicles had been popular with customers around the world. However, its defective products frustrate customers’ confidence. Toyota’s priority had been: first; safety, second; quality, and third; volume. But now, Toyota gives its top priority to volume, its volume expands at the cost of safety and quality. It is reported that 37 people altogether had been killed by the unintended acceleration(Ken＆Ralph,2009). However, despite the severe consequences caused by its problematic vehicles, Toyota didn’t show any initiatives in dealing with the problem, it reluctantly take its responsibility and withhold information from the public. It insisted that it is drivers who caused those crashes due to their improper operation (winter, 2011). What’s worse, it adopted a negative discrimination against Chinese customers. All these practice exaggerates the crisis; both its profits and market share are shrinking.
Toyota’s situation in the world is worsening, for one thing, the competition in the global market is ever intensifying; for another thing, Toyota’s scandal leave more opportunities to its rivals who take this chance to expand their market share in the world(Sheehan＆Tim, 2010). In 2005, Toyota has the large market share in America second only to GM and a small share in Europe. It is a market leader in Australia and boasts a significant share in Asia. But now, its market share is shrinking. Take its share in America for example:
Market share in America in February,2012(unit: ％)Brand Market share
Ford 17.5Toyota 13.4
Toyota had the second largest market share in America, but now the second position was firmly holds by Ford. In china, Toyota dropped the top-ten mobiles list for the first time. It can be said that the situation confronting Toyota is not so encouraging. It calls for immediate action to reverse the declining trend.
The above section gives a detailed introduction to the problems in its supply chain. Inventory hides the problem of defective designs, which brought a disaster to Toyota. Those defective products are the outcome of Toyota’s blind expansion and less concern with the quality and safety of vehicles. Customers’ confidence in Toyota was also sapped. Therefore, to change this situation, measures should be taken without hesitation. The following are some recommendations for its supply chain management.
Attaching great importance to quality which is the pillar of a profit-making organization. To design user-friendly products and provide customer-oriented services, pull strategy is a wise choice, products should be made according to the particular needs of customers, and production starts only at the demand of customers. Just-in-time strategy ensures the smooth flow of products and avoids unnecessary cost in the process of production.Reducing inventory. Inventory can hide problems; delayed solution of those problems can bring disaster to companies. Toyota’s recall was partially due to the hidden problems. Customers’ demand is ever mounting, large stock of former products hardly meets the changing needs of consumers, it only reduces to a pile of wastes. Therefore, inventory can be a waste of resources; Toyota should not keep a large stock.
To adopt its practice of leaning manufacturing again, eliminating waste at each stage of production so as to reduce cost. However, one thing should be fully realized, that is, to some extent, cost guarantees the quality of products, reducing costs does not mean jerry-building. Kanban should be used to avoid over-production.
Suppliers of spare parts should be strictly supervised. The defective floor mat, accelerator pedals, brake tube and front drive shafts are all provided by suppliers. It is safe to say that the tragedy can caused partially by suppliers. Therefore, Toyota should be serious about the quality of components provided by suppliers.
To develop a strong sense of urgency and sensitiveness to the possible problems. Constantly improving the ability in handling crisis and taking initiatives to address problems, all these are essential to meet challenges. Toyota at first tried to deny its responsibilities to car crashes and reluctantly took measures to deal with the problems; isolated case gradually evolves into a global issue.
Supply chain entails all activities of a company, almost all problems emerged are at different stages of the supply chain. Therefore, supply chain management should be placed on the top of company’s agenda. A company should ensure the quality of components provided by suppliers; eliminate wastes so as to reduce costs; adopt a pull strategy with the purpose of meeting particular needs of customers, reducing inventory and eliminating waste; spare no effort to improve the quality of products.
Toyota should regain its lean manufacturing and be serious about activities at each stage of production; quality should always be its top priority. Quality has been and will be the crucial element; it decides the fate of companies. Toyota’s recall is a solid evidence of this argument!