Supply Chain Management

The term "supply chain" is synonymous with Toyota's management of it. It's complex understanding sets the company apart from the rest of the flock in the automaker industry. The basic network of Toyota's supply effectiveness stems from its: supplier association (hosjin kanri), knowledge sharing network, and 4vL framework.

Toyota's Supplier Support Center (TSSC) allows for the "hoskin kanri" to assert itself throughout the supply chain management by allowing a cross functional process management and the Toyota Production System (TPS) to be integrated with their direct suppliers. The effects of the knowledge sharing network aide to the coordination and supply chain/product customization by having suppliers identify themselves as part of an interdependent economic network.

The 4Vl principles of learning are homogenous throughout the Toyota supply chain management processes to create a sort of "balance. These principles consist of: variety, velocity, variability and visibility. Variety allows a balance between market demands and operational efficiency. Velocity of supply chain flows is the next key and it works through all facets of the supply chain demonstrating the efficiency and speed at which processes in the chain are achieved. Variability affects individual processes and allows the supply chains to flow with low levels of inventory which vice versa (high levels of inventory) can mask waste. Finally Visibility can be considered the dock to which the other principles are tied to, without visibility no measurement of success and compliance can be determined or rewarded.

Toyota has employed these principles from bottom to top in their supply chain with the use of the Toyota Production System (TPS). The Toyota production system is a technology of comprehensive production management the Japanese invented a hundred years after opening up to the modern world. The basic idea of this system is to maintain a continuous flow of products in factories in order to flexibly adapt to demand changes. The realization of such

production flow is called Just-in-time production, which means producing only necessary units in a necessary quantity at a necessary time. As a result, the excess inventories and the excess work-force will be naturally diminished, thereby achieving the purposes of increased productivity and cost reduction.

The basic principle of Just-in-time production simply means the Toyota production system has been developed by steadily pursuing the conformed way of production management. With the realization of this concept, unnecessary intermediate and finished product inventories would be eliminated. Although, cost reduction is the system's most important goal, it must achieve three other sub-goals in order to achieve its primary objective. They include: quantity control, quality assurance, respect-for-humanity. Automation ("Jidoka" in Japanese) may be loosely interpreted as autonomous defects control. It supports Just-in-time by never allowing defective units from the preceding process to flow into and disrupt a subsequent process. These tools allow Toyota to create a strong house for practical theories since they have been tested and are successful for not only automakers but other venues as well.