In order to understand how Toyota Company have improved its supply chain performance in terms of responsiveness and efficiency, we should examine four supply chain drivers: inventory, transportation, facilities and information. Above-mentioned drivers not only determine the supply chain's performance in terms of responsiveness and efficiency, they also determine whether strategic fit is achieved across the supply chain.
Consider this framework for Toyota Company as the objective of my analysis. Toyota's competitive strategy is to be reliable manufacturer of different models of quality cars. This strategy dictates that ideal supply chain for Toyota will concentrate in responsiveness but also should be efficient. Its supply chain consists of decentralized, but interlinked units that engage in local experimentation and actively pursue learning and resource transfer across units. Toyota effectively uses four supply chain drivers to show best performance. Later while analyzing each driver you will be able to see it.
One of the key goals of Toyota is to reduce inventory at the line side of the plant and throughout the supply chain. It does it with the help of crossdocking (which support all of Toyota's plants) in order to increase delivery frequency and reduce inventory.
Toyota reduces in-process inventory through Just in Time set of techniques. The process is driven by a series of signals, or Kanban that tell production processes to make the next part. Kanban are usually simple visual signals such as the presence or absence of a part on a shelf. JIT causes dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency.
For example involves picking up from one supplier and delivering to the cross dock, such as delivering kits to a plant. Toyota may divide four pallets into 12 to 14 smaller orders in order to minimize inventory at the plant,