Toyota Company Supply Chain Management
Introduction
Supply chain involves the movement of finance, materials or information from the Supplier of raw materials to the manufacturing sector. From the manufacturing department to sales, from the wholesalers to the retailer and to the final consumer. The process of supply chain management involves integrating and coordinating this cycle outside and within the company. The main idea towards this management is to reduce the company’s inventory. In this study we are going to examine Toyota Company’s Supply Chain Management.
Background of Toyota Motor Corporation
Toyota borrows its name from the founder of Toyota named Kiichiro Toyoda. The idea came to mind when Toyoda visited automobile production plants in the United States in the year 1933. He established an automobile division when he returned in japan and by the year 1935 he had made the first prototype car. The company established the Toyoda Works (later Aichi Steel Works, Ltd.), the Toyoda Science Research Center (the nucleus of the Toyota Central Research and Development Laboratories, Inc. in the year 1939 to boost its operations. By 1950 the company started producing tools and auto parts in the Toyoda Machine Works, Ltd firm.
The company was highly hit by the world war two since it was hard to acquire materials for production. It adopted various cost cutting mechanisms to stay in the market. At some time the company used scrub from worn out vehicles and renewed them for production. The company was able to produce its first car in 1947. After the world war two.
It continued to strive with major developments in the 1980s and 1990s when the company experienced lots of growths and expansions. It went to markets in Europe, India and the United States producing more different car designs which would later conquer the market. The company entered the united Arabs emirates in the and the al-futtaim motors is their exclusive distributor in Dubai. It’s the leading distributors of Toyota products in the UAE region (Business reference, 2016).
The company’s industry
The company is involved in different industries the automobile manufacturing being one of them. Toyota produces light trucks, cars and passenger vehicles. The industry demands quality production, manufacturing efficiency and effective marketing. Toyota today is the world’s leading manufacturer of automobiles. It took the lead in the industry in the year 2012 when it hit the 200 million vehicle manufacturing per year. To add, The Company is also the leading manufacturer of hybrid vehicles in the globe.
It’s highly rated for manufacturing quality auto mobiles with the famous Toyota Corolla, which took the industry with a wave. The company has manufacturing plants in majority of the continents designing vehicles to suit the needs and the financial capability of every particular market.
The company is involved in the auto lending industry where it lends money to its customers to enable them acquires Toyota automobiles, vehicle purchases, machinery and leases. The demand of these services is influenced by customer confidence, interest rates and capital spending. The profitability of the company is influenced by the company’s ability to provide cheap capital, and debt collection procedures. The larger the company he greater the economies of scale. The company covers more than 30 regions and countries. 
This industry is managed by the Toyota financial services corporation (TFSC), and the Toyota motor corporation.(TMC). It offers leases, auto loans, dealer floor plan requirements and auto sales financing. The financial services that it provides to its esteemed customers include credit cards, insurance, retail sales of corporate bonds , and investment trusts.
Toyota is in the machinery manufacturing industry which involves machinery manufacturing. To be competitive in this sector you have to provide great expertise in engineering. This has been observed through their Takahama plant in japan which produces handling and lifting equipment and machinery. It also produces industrial cargo trucks with up to date equipment (Toyota industrial equipment, 2013)
Market positioning
Toyota has an outstanding market position across the globe. The reason to this is because of their strategy of low cost and differentiation. This strategy has given Toyota a competitive edge over its competitors in the industry. Toyota targets everyone in the market since its products are of high quality and cheap. It says that it has something for everyone because of their ability to produce highly luxurious cars to basic cars for middle income earners. Its current grand positions are offensive strategies and product development.
This is important for coming up with new ideas to offer quality and solutions for future customers. Its idea of product differentiation in terms of motor vehicle interior designs and quality creates an image which can only be associated with Toyota. This strategy has helped it in branding its products’ to associate them with durability,quality and low coast. The companies carefulcontrol and selection of its suppliers has enabled provide low servicing cost and effective and efficient distribution in all of its shops in Asia, Middle East, America, Europe and Africa.
The Company Environment
The Toyota Company operates in an extensive and diverse business environment. A business environment is a set of surrounding factors which affects the performance of the business internally or externally. These factors could be within the control of the business or beyond the control of the business. Those within the control of the business are referred to as internal factors while those above its control are external factors. The internal factors include aspects like research and development, quality control, production efficiency, human resource management while external factors include government regulations, climatic factors, technological factors or economic factors that affect the entire economy at large. However the external environment can be divided into two.
This will include the macro environment and the micro environment. The macro environment is factors beyond the control of the organization and the affect the other companies in the industry too. This includes economic factors, demographic factors, natural forces, political and legal factors, technological factors and social and cultural factors. The micro environment consists of factors outside the control of the organization, but they tend to affect the company itself in particular and not the whole companies in the industry.This includes the suppliers, competition, resellers, customers, and the general public (Oxford College of marketing, 2014).
In the year 2000 the automobile business and global car manufacturing processes were changing. The company reacted to the change producing the first hybrid car in the global to take advantage of the market. The Toyota motor vehicle environment can be scanned using the SWOT analysis.
Strengths
This includes those advantages or resources at the disposal of a company that makes it more competitive than its peers. The company has high distribution and production base. The Company through its network of manufacturing plants worldwide commands a large production and distribution ability over its competitors, Toyota Company has more than50 manufacturing companies world one making it the largest car manufacture in the globe. It ability to cut across majority of regions in different parts in the world gives it an advantage in creating an efficient distribution network and reducing risk.
The company possesses a well-financed and motivated research and development team. This team ensures that the company produces high quality products, environmentally compatible and safe products, and that the company creates an improved functional product portfolio. The research and development team has enabled the company to stay at the top in situations of technological advancement, development of new products and improvement of the existing products.
The company strong brand recognition and market positioning is a great strength to the company over its competitors. The company has a market share in Middle East, Africa, Europe, japan, Asia, china and North America. This makes it very competitive to its competitorsin terms of sales both locally and internationally (Arvedinson, 2016).
Weaknesses
This refers to the setbacks within the company that makes it less competitive when it’s compared to the other companies in the same industry. The Toyota motor company suffers from poor allocation of resources. The company’s return on assets and return on equity is quite low as compared to its competitors. This indicates that the shareholders money is not having a high return which might scare away potential investors from investing in the company.
The Toyota brand is at risk of losing customer confidence due to the numerous product recalls exercised by the company. There has been notable recalls of products like Lexus and the hybrid Prius due to abnormal noise,risk of potential shutdown, oil leakage among other factors. These kinds of faults are making the customers to start losing faith in Toyota brands which could affect its sales.There has been declining number of sales in some key areas like in Asia, America, Europe and other regions which are its strong holds. This decline in sales has reduced the revenuesof the company.
Opportunities
The increasing campaign for a green economy focuses on an environment with less pollution from vehicles. This has led to call of use if hybrid vehicles. The ToyotaCompany has innovated cheaper hybrid cars which have attracted much attention from the youths in Asia. Through this the company stands at a better position to dominate the hybrid market in future. The company signed an article of association with the BMW to come together and engage in coming up with ways through which they can create sports cars which use less fuel and also develop technologies for their products. This will improve the company’s product portfolio as well as cutting cost.
Threats
Japan where the company primarily operates faces the worst natural disasters in the world. This range from floods and earthquakes. This presence of calamities affect the units produced as manufacturing plants are shut down for a while and others closed hence forth. The changing value of the yen against its counter parts including the euro and the dollar has effect in the coast of acquiring raw materials and also in terms of sales.
The company also faces increased competition by its major competitors in terms of quality, pricing, technology, innovation and safety. There are other companies are emerging in the market selling cheaper products which could give the company pressure to reduce the prize of their products which could have a negative financial effects on the company(Rosevear, 2016
Strategic view
The company through its managers has analyzed its strength and weaknesses and has come up with a desired path through which the company should take in order to remain competitive and relevant in the market. The company seeks to maintain the world’s dominance in mass production .this is boost by opening new production units and creating distribution partners. The company also seeks to capture most of the middle income earners by producing cheaper cars. The company also aims to produceeco-friendly cars and materials which have been started by producing hybrid cars.
Toyota Motor Company Supply Chain
Conclusion
Toyota motor industry has dominated the industry for a period of time besides the challenges it faces. The reason for its success is the strong research and development team and its strong brand and differentiation in the market. Its breakthrough in technology in production of hybrid cars enables it to remain at par with emerging technologies and production of the car of the future. Through its dedication and commitment to conquer all markets inn production of quality affordable cars, the company has the potential to continue dominating the market.
References
Arvedinson, E. (2016). Toyota Differentiation Strategy. Retrieved from http://www.ehow.com/facts_7957025_toyota-differentiation-strategy.html
Business reference. (2016). Toyota Motor Corporation – Company Profile, Information, Business Description, History, Background Information on Toyota Motor Corporation. Retrieved from http://www.referenceforbusiness.com/history2/63/Toyota-Motor-Corporation.html
Oxford College of marketing. (2014, 4). Micro and Macro Environment Factors | Oxford College of Marketing Blog. Retrieved from http://blog.oxfordcollegeofmarketing.com/2014/11/04/the-impact-of-micro-and-macro-environment-factors-on-marketing/
Rosevear, J. (2016, April 18). Toyota Shuts Down Its Japanese Factories: What It Means — The Motley Fool. Retrieved from http://www.fool.com/investing/general/2016/04/18/toyota-shuts-down-its-japan-factories-what-it-mean.aspx
Toyota industrial equipment. (2013). Toyota Forklift Manufacturing Plant. Retrieved from http://www.forklift.kz/news/show/id/4.eng