Ineak Blog

Interview on August 15, 2008, with Achim Paechtner, Former Senior Manager at Toyota of Europe
The purpose of the interview was to understand the differences of the automobile supply chain in Europe versus North America. Achim Paechtner identified four major differences in Europe:

With retailers, the major challenge Toyota faces is the heterogeneous environment: 27 [...]

Interview on September 23, 2008, with Jeffrey Smith,Vice President and General Manager, Toyota Business Unit, Johnson Controls
The purpose of the interview was to discuss how Toyota and suppliers work together as partners.
Jeffrey Smith described the forecasts shared by Toyota with Johnson Controls Inc. (JCI), a primary seat supplier, to enable stable orders and [...]

Interview on August 20, 2008, with Gary Dodd, Former President of Tire & Wheel Assembly and Former Executive with Toyota
The purpose of the interview was to discuss how Toyota suppliers interact with Toyota and to understand Toyota’s supply chain management from the supplier’s viewpoint.
Gary was one of the first general managers hired by [...]

Interview on September 3, 2008, with Steve Gates,Toyota Dealer
The purpose of the interview was to discuss how Toyota dealers interact with Toyota and to better understand the dealer’s role in the supply chain.
Steve Gates started by explaining the Toyota car allocation system to dealers. The allocation follows a “turn and earn” model where [...]

Phone Interview on September 25, 2008, with Mike Botkin, General Manager of Logistics,Toyota
The purpose of the interview was to discuss the logistics operation at Toyota in North America.
Mike Botkin is general manager of the North American Logistics division. The two departments that comprise this division are Logistics and Parts Distribution. Logistics, is responsible [...]

Interview on August 21, 2008, with David Burbidge,Vice President of Production Control,Toyota
The purpose of the interview was to discuss the role of production control regarding production planning and scheduling.
David Burbidge described how the production plans are adjusted to accommodate both minor hiccups in the production process as well as a major shift in [...]

Interview on August 21, 2008, with Jamey Lykins, Toyota Purchasing General Manager
The purpose of the interview was to understand how Toyota selects and develops suppliers.
Jamey Lykins says that Toyota’s view of procurement is to “cultivate the market and farm it” rather than “hunt for suppliers and use.” He also says that Toyota’s view [...]

Interview on August 21, 2008, with Gene Tabor, General Manager, Purchasing-Supplier Relations, Supplier Diversity, and Risk Management
The purpose of the interview was to discuss how Toyota works with its suppliers and to better understand Toyota’s working relationship with suppliers.
Gene Tabor believes that Toyota starts with a foundation that assumes that supplier relationships focus [...]

The beer game was introduced as an exercise in industrial dynamics in 1960. And what has beer to do with automobiles? The beer game is used as a fun way to illustrate some of the pitfalls of operating a supply chain. Certainly, beer gets the attention of students. Even though the product used in the [...]

The underlying principles associated with managing variety, velocity, and variability across the supply chain—the focus of Toyota’s supply chain leadership and management process—are found in many different industrial contexts. We provide several examples from service industries such as health care, insurance, banking, credit processing, and retailing. Products and services covered include apparel, wine, brake linings, [...]

Going back 20 years, the national bestseller The Machine that Changed the World: The Story of Lean Productionby Womack, Jones, and Roos devotes three chapters to supply chain coordination, dealing with customers, and managing the lean enterprise. The main ideas in these chapters have been translated into action in the Toyota supply chain setting. It [...]

Learning requires optimism and the spirit to take up challenges. The Toyota Way document states that: “We accept the challenges with a creative spirit and the courage to realize our own dreams without losing drive or energy. We approach our work vigorously, with optimism and a sincere belief in the value of our contribution.” It [...]

A classic problem studied by researchers from many fields is how firms allocate resources to the exploration of new possibilities versus the exploitation of known certainties. The returns of exploration are more long term, uncertain, and therefore risky. As March22 puts it: what is good in the long term is not always good in the [...]

How does continuous improvement take place in a supply chain? In our view, continuous improvement is learning and implementing the lessons learned; thus, much of what has been written about continuous improvement can be subsumed into the broader context of organizational learning. As we shall demonstrate, many of the methods used by Toyota in its [...]

At a very broad level, Toyota believes that continuous improvement and respect for people are at the core of its philosophy. Careful reading of the Toyota Way guidelines reveals what is meant by respect: respect for customers, respect for society, respect for suppliers and dealers, and respect for employees. The Toyota Way document puts it [...]

When inventories accumulate in a supply chain at different stages, they make demand less visible and the reaction to changes slower than if there were less inventory. (This topic is covered in detail in Beer Game and the Toyota Supply Chain.) Inventory might indicate a slow-moving product, defective items, problems with transportation, picking and packing [...]

Most firms have realized the importance of standardizing tasks; however, the degree of standardization often stops at the tasks that directly relate to producing a product or, to a lesser extent, service. For example, how to machine a part is often documented at length simply because an industrial engineer and a stopwatch can achieve the [...]

The virtues of stopping to fix problems are well known. In a supply chain, that method might not work the best. In the seat example above, it is not possible to stop the line to fix the problem each time a defective seat is noticed. Doing so will take too long and be too costly. [...]

Heijunka—the leveling of the workload—serves many purposes. First, it is a prerequisite to having continuous flow and pull production. Second, at the supply chain level, it reduces artificial demand fluctuations, or the bullwhip effect. Third, it provides visibility into systematic changes such as shift in product mix or slowing of demand, and allows the planner [...]

By making the flow in the supply chain at the global level even and uniform to the most practical extent, the designers of the supply chain are able to detect systematic variations quickly. This detection is based on managing random variations using well-designed systems and processes that adjust to the random variations with small and [...]

The ingredients of the Toyota Way are unique and effective. To sequence their description, this chapter’s layout follows Liker’s approach. Examples specific to how Toyota applies these principles to managing its supply chain are drawn from previous chapters in this book. The trade-offs that are implicit in making these decisions are also illustrated.
Long-Term Philosophy [...]

The Toyota Way is made up of four major elements: long-term philosophy, right process, development of people, and continuous solving of root problems. Taken together, they are the secret recipe for continuous improvement, for creating value, and for developing people that will continue the mission of creating value into the future. In the paragraphs that [...]

Why would Toyota need to be concerned about crisis management when it has implemented processes throughout the supply chain that are synchronized and integrated to function like a fine Swiss clock? The reality is that Toyota is not immune to disruption of its operations because of natural disasters, strikes, fires, bankruptcies, and the like. Because [...]

Dealers use a number of different processes to fulfill retail customer demand. This chapter will explore the major ones; it will be subdivided into three areas: vehicle allocation, demand fulfillment options, and dealer operations.
Vehicle Allocation
At Toyota, vehicle allocation in North America is a two-step process. In the first step, the national sales company [...]

Logistics is an extremely important component of the supply chain. It has two roles: (1) inbound logistics, which is responsible for transporting parts and materials from the tier 1 suppliers to the OEM plants; (2) outbound logistics, which is responsible for the distribution of vehicles from the assembly plants to the dealers. In this article [...]

Imagine you are a supplier to Toyota. What is your role in the Toyota supply chain? What is your expected productivity improvement over time? How would your experience as a part of Toyota’s supply chain differ from your experience supplying other auto original equipment manufacturers? How would your processes have to operate to synchronize with [...]

Toyota adopts different planning methods depending on which types of parts are involved. Some of the planning processes are unique to Toyota and so are worth contrasting with general practice. There are many parts ordering processes for the different categories of parts. The four broad part categories are local parts, long lead time parts, in-house [...]

Production scheduling requires close coordination between sales and plant operations. In Toyota Learning, we will explain how the production schedule is used to provide consistent and continuous flow of materials and vehicles throughout the supply chain. In Sales and Operations Planning we described how information is gathered, both top-down and bottom-up, to create a three-month [...]

Sales and operations planning (S&OP) is a critical component of the supply chain planning process. It is linked upstream to the mix planning process and downstream to the production scheduling process. The goal of S&OP is to generate a production plan that balances demand and supply in a profitable way. The end point of this [...]

Mix planning is an important process for companies that manufacture and distribute products to retailers in multiple market areas. For vehicle manufacturers, this decision is extremely important because of the complexity of a vehicle. This complexity creates millions of possible vehicle build combinations or variants. The objective of mix planning is to reduce the variants [...]

The Toyota Production System (TPS) is the benchmark used throughout the world as the foundation for “lean” thinking. At Toyota, the TPS practices and principles extend well beyond the factory walls to include the extended supply chain and require some crucial choices to ensure supply chain efficiency. This chapter explains how Toyota plans and operates [...]