Supply Chain Management

Introduction

Supply Chain Management is an increasingly important aspect in Operations Management. Supply Chain Management generally refers to connecting different organizations to ensure smooth flow of materials and information from upstream to downstream (Christopher. M, 2005). In this essay, Toyota’s supply chain will be explored by first identifying the organizations involved and the relevant flow of material and information. Subsequent discussion of risk management will be carried out and possible improvement measures would be proposed.

Toyota’s background

Toyota was once recognized as one of the best car manufacturing companies in the world; it was known for its excellent operations management and product quality, until 2009. Major recalls of Toyota’s vehicles in the United States shocked the car manufacturing industry and break the fantasy of consumers. And along with its declining profit, the long held legendary image of Toyota was gone.

Toyota’s Production System (TPS)

Toyota used to engage in long-term partnership relationship with only one supplier for each component. This brings huge benefits from economies of scale and facilities implementation of Just In Time approach. It allows the company to keep minimal inventory without sacrificing on production speed. Economies of scales help lowering production cost as well.

Organizations involved in Toyota’s Supply Chain

Figure 1-Toyota’s Supply Chain

Basic Material Flow

Toyota does not make all the parts in house. A lot of parts are bought in from the tier one suppliers. Tier 2 or 3 suppliers are raw material providers. They provide individual parts or assembled components to Tier one suppliers, the intermediate products manufacturers. They would then turn these materials to big integrated systems and sell them to Toyota. These systems would be assembled together with some of Toyota’s in-house production into vehicles. Finished products would then delivered to car dealers and ultimately reach the hand of consumers.

Information Flow (Planning and integration)

To ensure minimal interrupt along the supply chain, good communication between Toyota and its suppliers is essential. Information flow in the opposing direction of material flow; for the lower stream to upper stream of supply chain. Customers and market feedback would provide information for Toyota about what products is desired or would be popular in market. Engineers in Toyota would then draft out designs for car models and finalizing them by setting detail specifications and quality standards for each particular components. These must be understood and achieved by those suppliers. If problem in the car