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Understanding Operations, Logistics, and Supply Chain Management of Toyota Company

Toyota Company


Operation management (Heiser, Render, and Munson, 2017) is a process for the company to create better product or service for consumers. In this prosses including marketing to generate more demand, production, and operation to improve the already existing product or make a new one and also finance and accounting to see the company performance in the cash flow, financial profit, and loss sheet, etc. Logistics in simple explanation is humans and goods movements’ process. The supply chain is the process from point A to point Z. From the picture, in (see Appendix 1) it is showing (Slideshare, 2017) five steps till the product is ready to collect for the customer. The first step is to get the parts from the vendors. Vendors can be local and outside the country. Later parts are going to manufactory receiving, storing and last bit sending on the production line. Then the car is made sending to the dealer. Then the product is ready for customers to buy. Operation management is vital for every organization for making a better product, saving the company money, making quicker process, make sure health and safety working environment, better competition. Make sure business all the process working like one unit. Avoid any waste. For example, any damage, time wasting, stock overtaking and less making and much much more whats including in operation management process.

Introduction to the company

In this part, we critically analyze the strategic importance of location and the layout of the Toyota manufactory company. The main factories to choose the place (Heiser, Render, and Munson, 2017) there to operate for the companies like Toyota are company visions, cheap labor, environmental regulation, easy to reach all the materials and customers, government policies, beautiful region, land or constructions cheap coast. For the company like Toyota take the desitions for the manufactory it might be for the few decades if not longer. The issue for the expanding and looking new places can significantly reduce the fixed and variable costs. Later any changes are complicated and can cost a lot of money. In the map, in (see Appendix 2) it is showing ( World Economic Forum, 2017) the best countries to do business are from 1 to 10: Switzerland, United States, Singapore, Netherlands, Germany, Hong Kong, Sweden, United Kingdom, Japan, Finland.

The company management has a philosophy that keeps on evolving from the time the company was established in the 1940s by Taiichi Ohno and Shingo Shigeo. The philosophy has been reflected in term of “lean manufacturing” and “just in time production.” It was instrumental that is used for development. There are managerial values and business methods that are collectively known as Toyota way. In 2001 there was Toyota way that was established that expressed values and conduct guidelines which all Toyota company worker embraced. Under the two heading that is continuous improvement and respect for people, Toyota Company has summarized its values and conduct guideline with the following five principles. That are challenges, improvement (kaizen), respect and teamwork.

Base on the external observation Toyota way have four component, which are:

  • The process for the problem-solving.
  • Long-term thinking as the basis for management decision.
  • Recognizing that continue solving main problems drive the organizational learning in the company.
  • Adding values to the company by developing its employees.

Therefore Toyota way is used to incorporate the company production system.


Appendix 1

Appendix 2

Appendix 3

Old Layout of Toyota Motomachi Plant

Appendix 4

Current Layout of Toyota Motomachi Plant

Appendix 5

Appendix 6

Appendix 7

Sustainability solution Triple Bottom Line

Location and Layout

Toyota Company is among the companies that are constantly evolving with the objective of reducing waste in its productivity. Over the last twenty-five years, the company has changed its assembly line layout to improve its efficiency. The previous Toyota plant in 1994 is the represented in Appendix 3, where segment that was long was split into smaller parts, for example, the process starts with one trim, which is then split to two chassis and finally get to the final stage as shown in the Appendix 3.

New Toyota layout plant

There was the establishment of another layout in 2014 from the previous layout that was used since 1994. The layout contains more individual segments that are divided by small buffer stocks that are green boxes. The plant has eight line segments that are more than the previous plant layout which has six segments. In the appendix 4 below, it illustrates the current layout of the plant. Thus each small blue boxes represent one station along the line the line, and it is approximately operated by one worker (not putting into consideration of the team and their leaders). The exact number of the employees in line depending on the demand of the customer. This increase in demand increases the number of employee in the plant to satisfy the needs of the customers. One of the ways to adjust the result of the line is by removing and adding employees. The plant operation is very fast, for example, highly automated welding line is faster that is its ability to produce one chassis in just one minute. It is interesting that, rather than cramming the line that is filled with chassis (the western way), (Dudovskiy, 2012), Toyota Company uses a pull system. The chassis is release only at the velocity that assembly line can handle them. Therefore in some cases, there are idle stations without chassis in the welding line.

There are benefits of splitting the line. One of the reason motivates the employees. In the company, the employees cannot stop the line also, should have skills and knowledge to solve the problem within short time. If the problem involves other workers, they cooperate and solve it without conflict. It assists in removing the feeling of guilt by interrupting another worker when one employee needs assistance from them to solve his machine problem. He solves the problem individually and continues working without interfering others.

Another benefit of this layout is the improvement of the productivity. If the problem can occur, it does not stop the entire line of production, but it stops the section of production that is a segment. Hence, the risk of the disruption is wide the productivity of the lines is increased.

The important aspect of knowing is that the layout of Toyota Company began to be changed in 1994 since its establishment. At this time is when they introduced the approach of breaking the line into the small segment in the production. This show that previous management led by Taiichi Ohno who was the main force behind Toyota production system was against the idea of dividing the lines of production. After the death of Taiichi, the changes change in the operation strategy of the company was introduced that aim to improve productivity and reduce wastage.

Toyota company operation management covers many sets of roles for the effective and efficient operation of the company. There are a wide set of strategies that are employed by the company for the decisions of the operation management, regional automotive and integrating local market condition. The company has several decision indicators in different areas of business operation that require strategic approaches. The company emphasizes on the productivity based on the following decision of operation management.

Design of the goods and services. Toyota Company addresses this area of operation management by employing advanced technology and quality in designing of the products. In this case, the company uses R&D investment to ensure advance features in its products production. They also integrate dealer’s personnel in designing sales services.

Quality management. Toyota production system is used to achieve the quality of the product manufactured by the company. The company emphasizes on the continuous improvement of the production quality that is covered in the Toyota way and other set management principles.

Location strategy. The company uses local, regional and global location strategies in its operations. In this case, the company emphasizes and aim at smooth flow of business in different areas.

Inventory management. In this area, the company has a strategy that minimizes the level of the inventory through the principle of just in time. This approach is covered in the Toyota production system.

Job design and human resource. Toyota Company applies TPS and Toyota way in this area of operation by emphasizing respect to all the employees and their idea contribution in production. The use of the Toyota way integrates human resource program and policies.

Scheduling. Toyota company follow lean manufacturing principles and layout in the scheduling of it productivity operations. The objective of the scheduling strategy on productivity is to reduce operating costs. The cost reduction is maintained by human resource and resource scheduling that normally changes according to market conditions.

Supply chain management. The company uses lean manufacturing for the supply chain management. Therefore the company uses the real-time automated system for adjustment in the supply chain activities. This assist Toyota Company to reduce the bullwhip effect in its supply chain.

Layout design and strategy. The layout design that is employed by Toyota Company is based on the application of lean manufacturing principle, which normally has the objective of maximizing the efficiency of workflow. However, the dealership layout design also satisfies the company layout standards but involve decision from the dealers.

Maintenance. Toyota Company has strategized it the operation network facility to support its global business. It has global human resource network which supports flexibility and business resilience. Therefore the company uses it global business reach make sure stable and optimal productivity is attained.

Just in time

It is philosophy in the Toyota Company for productivity improvement. It means that the process should make what is the need at the correct time needed and the correct amount needed. This enables the company to produce quality products through the complete elimination of inconsistencies, waste and unreasonable requirements on the production line. Therefore, to deliver the order of the customer faster, the vehicle is built efficiently within a short duration possible. For example the efficient production of large number vehicle, it important to establish production plan that includes parts procurement. Therefore just in time focuses on, “supplying what is needed, when it needed and the correct amount needed.” Hence this production plan used by Toyota to eliminate inconsistencies, waste and unreasonable results, the requirement in the improved productivity, (Hines, 2004).

Toyota production system has control method that is known as Kanban system that plays an integral role in the system. Sometimes the Kanban system was referred as supermarket method because it was derived from the idea of the supermarket. There is mass merchandising store that uses product control cards where product related information are kept like product name, storage location, and code. Toyota Company employed Kanban sign to use in its production processes. In the company, the process refers to the proceeding process to retrieve parts, through Kanban it communicates which part that has been used.

The Toyota Company apply the concept of just in time illustrating the stock on the supermarket. That is, supermarket stock good that is in demand of the customer and when they are needed, and the quality required. Therefore they have all these items available all time. The company quoted the customer, and the supermarket and the process follow each other respectively. The next process (customer), the following process (supermarket), the company uses this to retrieve the necessary part when they are needed and in the required amount. By use of just in time, the company was able to improve upon the inefficient production system. Even if the proceeding process is making excess parts, the parts are then delivered to the following process, (Ambe, 2014). The concept of Kanban system in the Just in time assist the company in manage of parts, Appendix 5 illustrates how this operates.

Lean manufacturing

It is systematic manufacturing strategy used by the Toyota Company that works to reduce waste within the production process. The strategy takes into account waste created through overburden and waste created when there is unevenness in the workloads. The strategy work base from the perspective of the customer who uses the products. Therefore there is more consideration of the quality of the product manufactured, (Jackson, 2003). The idea of adding value that is to use lean is based on the Toyota production system. The system reduces the original waste to improve overall customer values which have made Toyota company to grow local company to worldwide company

The lean manufacturing has tools which assist in identifying and steadily eliminating waste. As the wastes are eliminated the quality of the products are improved while production cost and time are reduced. The tools used in lean production are value stream mapping, pull system, total productivity maintenance, rank order, cluster, control chart and other.

Toyota Company uses Toyota way to focus on improving the smooth flow of it operation and steadily eliminating unevenness through the system. The techniques employed by the company includes pulling production and production leveling. Therefore the main objective of the lean is to enhance productivity by simplifying the operation structure of the Toyota Company enough to perform, manage and comprehend work environment. To achieve this objective Toyota Company have a methodology that is used to foster lean thinking through the structure of the company. It also has a mentoring process that encourages company organization and teams to seek for the third party professional that can provide for coaching and advice in case of the problem. The structure of lean manufacturing system is illustrated in below appendix 6.

Triple bottom line

The triple bottom line is the system used to assess the business profit making through sustainability solution. It is a method that requires the management of the company to look beyond the tradition bottom line of the company to the profit that company makes environmentally, economically and socially. The triple bottom line is illustrated in Appendix 7.

There is acknowledges the efforts of the Toyota company material handling in Europe in the report they establish that “together we make the difference and share measurable progress.” The company’s stakeholders and partner come together to meet the target and improve sustainability performance. For example, Eco Vadis the provider of the sustainability rating of the supply chain have ranked Toyota company material handling to be among top companies in the world. This show that Toyota Company have demonstrated transparency and also have achieved advance CSR engagements.

The Toyota material handling aims to eradicate accidents and have succeeded in decreasing lost day in the company by 67% for the last two years. Toyota Company is an official partner of the European Agency for Safety and Health at Work and is among the active partner in this network. Toyota Company is committed to improving safety standards in the provision of training of the forklift operators and managers of the warehouse. Also, Toyota Company is among the top global suppliers for its employees’ practices that dedicate to cultivating talent and promotes responsible culture without the company and suppliers base, (Jackson, 2003).

The focus of the company is increasing its revenue while lowering the emission, by smarter fleets, and manufacturing process. It has dual impact strategy, which assists the customers to achieve significant energy savings. Quality products produced by the Toyota Company have a significant impact on the triple bottom line. The company strives to remain number one in customer satisfaction. Thus the company is proud to have universal design expert and customers labels for its products that is the BT movie N-series and S-series that is care equipped for mobility support range.


Toyota Company is among top suppliers of the vehicle in the world. However, I recommend base on manipulation of their operation strategies the company to remain at the top of the automobile market. The strategy should include the public apology, offering the prepaid maintenance plan and the implementation of the new emergency protocol.

Toyota Company should be willing apologies to the general public in case its operation has failed, or the problem arises on the product they distributed to the customers. And find conducive way rectify the problem. This will increase the relationship between the customer and the company that will improve its sale.

The company should offer a prepaid maintenance plan for the vehicle for a stipulated moment. When all the vehicles which were recalled are reinstated to owners, those driving vehicle will be nervous about what the company is doing. Base on the CNNMoney .com the company have recalled about five million vehicles. With the prepaid servicing plan, Toyota company owners can take their vehicle to an auto shop and get repaired. This will keep away customers inconvenience, (Jackson, 2003).

There should exist new emergency protocol that will assist the customers and company in case of a large recall. The company should have strategy will enable communication with car owner either through phone, or letter to inform them the update that they should now.


Therefore, based on the current operation strategies and the culture of the Toyota Company, its progressing well on the automobile market that makes it have a stable position in the market. The management of the company should invent that should continue expanding the company to areas that have not reached by competitors to increase its sales. It is important for the Toyota Company to do more research on the market to identify the opportunity improve quality of their products and market share, (Lambert, 2004). If Toyota Company stops researching on a new way to improve its products, there is stiff competition on the market that may outdo it from the top position. Other companies like general motors, ford, Nissan and other are key competitors of the Toyota Company on the market. Therefore Toyota Company should analyze the market, identify the threats and weakness and use them to improve its productivity.


Toyota Company supply chain management is the element of Toyota operation strategy that is based on the Toyota production system. The company success it gains worldwide as it’s followed by other companies’ interest in the Toyota production system that has a principle that expresses in term of lean manufacturing. According to (Liker, 2005), he listed components of Toyota supplier partnering hierarch, which are: interlocking structures, mutual comprehending and trust, compatible capabilities, control system, joint improvement actions, information sharing, learning, and kaizen. Just in time system in the company assist in the organization of the flow of the information and decision rules, which enable the company to realize the advantage of the JIT principles.

The element of just in time system is pro-active in exposing issues, total quality management, production base in Kanban eliminate waste, continuous improvement, reducing inventory by company involving in the suppliers planning process, focusing on cooperation and improving machinery. Base on Kanban each part or the container that is used for transportation have a card. The new stock of the part is required if the current stock is used and the card is removed by use of the signal of restocking the parts. Kanban is well integrated into Toyota production system. It so because Toyota Company has limited number of parts which have stable demand on the market. The product mix of the Toyota product is low, and exchange is not frequently.

Capacity planning every company it is the function of the supply chain management for that company. Toyota Company has Toyota way philosophy that handles capacity planning where it strives to eliminate inventory. To achieve this objective, the company rely on pull system that enables the company to manufacture a vehicle that is already ordered. The main objective of the Toyota Company capacity planning is continuous improvement.

The pioneered operational excelled that adopted by the total company is one of the important strategies that is used by the company in its operation. It leads to the use of the lean concept which has the objective of providing superior care to the customer and eliminating all wastes in the manufacturing operations. The lean concept is based on the pull system which has the main aim of eliminating wastes in the manufacturing process. Inventory management of just in time enables the total company to get a competitive advantage over other vehicle companies because it does not have a large amount of inventory in the warehouses. Toyota Company only creates inventory at the time there is an order from the customer. This strategy assists the company to reduce storage expanse thus reduce operation cost of the company. Also, the Toyota Company does not maintain it standard stock. The company order for the new stock after the current stock is exhausted to avoid accumulation of inventory in the warehouse, thus reduce operating expenses.

Current Toyota Company faces stiff competition on the global market that force it to seek for other opportunities to develop competitive edge from its competitors to widen its shares on the market the company can survive. Supply chain management its aspect of Toyota Company to focus properly and identify ways to improve its operation. Improved supply chain management result to reduction of production cost and increase the efficiency. Therefore Toyota Company requires implementation of a strategic approach that will lead to improvement of the supply chain.

Toyota company is currently is among the modern companies in the world that have a history of conducting successful business practice. Every section of the company is well strategized that make them have successful progress in its operation. The success of the Toyota Company is the base principle of Kanban, just in time, lean manufacturing, kaizen, company philosophy and others which give the company competitive advantage over its competitors.


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