Toyota in Chain Supply Management

After the earthquake that occurred in the year 2011, Toyota faced myriad of issues which affected and disrupted the operations of the supply chain. Therefore, this compelled Toyota to come up with a redundant capacity to take care of disasters. On every goal, plants should be in a different location to successfully produce in different sections.
It is an approach that favours flexibility.
In consideration of the unequal growth of some places, it is recommendable the company utilizes a strategy that has the capacity to match the local supply alongside the local demand. Therefore, it would expand local capacity to rhyme with the local demands.
In general, Toyota Company needs to grow and develop its capacity planning through the application of a “think global act local” strategy. It is an approach that would offer global complementation, at the same moment adjusting for regional and local characteristic necessities (Liker, 2005).

In general, these particular plants should have the capacity to produce for all markets, although in this situation, they will be fundamentally providing satisfaction towards the market assigned on them.
Plants should be in regular operation in order to offer products and parts required at the local level. This is aimed at cutting the transportation costs, and be ready for market exports in situations where local markets tend to weaken.

The recommendable strategy is a co-location strategy which can help to lower the risk through having pant and customer under the same location:
This can happen through a huge pull factor that would increase the capacity in India, Brazil, China, Mexico, and Indonesia to cater to domestic demand.
Mature markets that favour the building of high-end models in the USA such as Lexus
Close plants in regions with low economies of scale such as Australia
Create a plant set up in areas with free trade agreements, key markets such as zero export duty, political and currency stability, low cost of the structure, and countries offering incentives especially on green cars such as Indonesia.

Flexibility and redundancy in the production and distribution systems have to be created within the system to allow some parts to be manufactured from any region or shipped to any part, even in situations where there are failures in the supply chain (Liker, 2005). Therefore, this will enable Toyota to counter extra costs and to maintain the service levels on the cars to be delivered.
Lower cost of the supply chain and high customer value could be achieved through planning for a more flexible distribution system that would assure an increased level of customer responsiveness at a more reasonable cost.
The system of distribution needs to be globally optimized using products, and skills standardization, a specific degree of redundancy. The flexibility needs to be developed regionally to achieve a more cost-effective distribution successfully.

The valuation of the flexible investment can be phrased as a kind of cost reduction by considering the emergency terms.
For example, whenever the existing supply is distributed after a plant goes down, what should be the cost rise to fulfil the demand? When the demand increases in a certain area, what should be the opportunity cost of the lost sales?
It can be done by use of the models of finance in order to calculate the NPV of the cash flow in various flexible supply chaincases.

In order to increase flexibility, there should be interchangeable parts between car models and markets. It can be designed on the cars by reusing some parts between designs and car frames with other models reusing the frame.
The recently acquired Toyota New Global Architecture (TINGA) goes hand in hand with the establishment of common spare parts. Other additions may include:
Combination of specialized facilities to ensure stable demand components, and more flexible manufacturing facilities for various car accessories
Incorporation of production flexibility level such as multipurpose machines
Infusion of a new product flexibility concept, by easily changing with new technology and demands, ability to produce varieties of product in a short period, and being able to operate profitability in different production levels.

References

Liker, J. K. (2005). The Toyota way and supply chain management. Presentation for OESA Lean to Survive Program, The University of Michigan.