Transportation improvement plan development and implementation

Transportation Improvement Plan (TIP): Toyota's supply chain

The Toyota Corporation is located in an extremely competitive industrial sector: that of the automotive industry. Although Toyota is a Japanese company, with Japanese management and a managerial style considered to be very characteristic of that nation, it is also an international company. "The Toyodas appear to have a say in most key decisions, but it isn't clear why they exert power. The company's presidents came mostly from the family's ranks for decades, and although three nonfamily executives have been president over the past 13 years, there's speculation that the next president will once again be a Toyoda" (Takeuchi, H., Osono, E, & Norihiko 2008). However, Toyota has an international presence and a reputation far wider than that of its home nation.

Toyota is an industry leader in the non-luxury car market, despite challenges from American automotive firms in the past. Although not the cheapest of all the major car labels, it has founded its reputation upon quality and reliability. As well as a familial, insular culture, Toyota also has held true to its famously unique supply chain philosophy, which is critical to its 'Just In Time' (JIT) manufacturing system. Toyota orders very little in the way of excess inventory, which reduces build-up of possibly unnecessary products. The hallmark of the JIT philosophy of supplying "what is needed, when it is needed, and in the amount needed" and "can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity" ("JIT," 2015). This requires close relationships with Toyota's suppliers, who need to be able to provide compartment parts for a product at a moment's notice.

The JIT system allows a company to be flexible, increasing and decreasing inventory when necessary. Even when it cannot find the absolutely cheapest part because of a preexisting supplier arrangement, this is offset by the lack of build-up of obsolete inventory. Also, when there are close relationships with suppliers, it can be easier to monitor and ensure quality control. However, Toyota has recently had problems regarding its reputation for quality assurance and had to reconfigure its supply chain.

For example, after many years of automatizing more and more of its production system with robotics, Toyota is now 'dialing back' on this mechanization. The company believes that "workers can develop new skills and figure out ways to improve production lines and the car-building process….learning how to make car parts from scratch gives younger workers insights they otherwise wouldn't get from just picking parts from bins and conveyor belts, or pressing buttons on robotic machines…. workers twist, turn and hammer metal into crankshafts instead of using the typically automated process"("Concern about losing craftsmanship," 2014). Thanks to this innovation, workers have been able to offer their personal, learned observations to improve both craftsmanship and reduce waste. "Experiences there have led to innovations in reducing levels of scrap. Toyota has eliminated about 10% of material-related waste from building crankshafts" ("Concern about losing craftsmanship," 2014). Ironically, doing away with some (although not all) robotic automation and injecting more human intelligence back into the supply chain has yielded improvements for the company.