Assignment Brief

MBA Supply Chain Management & Logistics

Academic Year 2018-19
Module Information:
Qualification: MBA Supply Chain Management & Logistics

Module Code & Title: MBASCML 110007 Financial Performance Evaluation in SCML

Assignment Title: Individual Report

Component Weighting: 50%

Date of Issue: 27th June 2019 Due date: 6th July 2019, 5 PM

To be filled by the student:

Student ID: 5505MBA18

Date of Submission: 6th July 2019

*All work must be submitted on or before the due date. If an extension of time to submit work is required, a Mitigating Circumstance
Form must be submitted.

Has an extension been approved? Yes No

If yes, please provide the new submission date ….…/.…./……., and affix appropriate evidence.

First Marker: Second Marker:

Agreed Mark: Refer: Yes / No

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 Statement of Originality and Student Declaration

I hereby, declare that I know what plagiarism entails, namely to use another’s work and to present it as my
own without attributing the sources in the correct way. I further understand what it means to copy another’s
work.
1. I know that plagiarism is a punishable offence because it constitutes theft.
2. I understand the plagiarism and copying policy of the University of the West of Scotland.
3. I know what the consequences will be if I plagiaries or copy another’s work in any of the
assignments for this program.
4. I declare therefore that all work presented by me for every aspect of my program, will be my own,
and where I have made use of another’s work, I will attribute the source in the correct way.
5. I acknowledge that the attachment of this document signed or not, constitutes my agreement on it.
6. I understand that my assignment will not be considered as submitted if this document is not
attached to the attached.

Student’s Signature: Date: 6th July 2019

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TASK

You are requested to prepare an assignment on “Select a company of your choice with global
operations using various sources (Newspaper, Magazines and Internet).Find out the location
of supply sources, the manufacturing facilities and the market where it sells the products.
Evaluate whether there is any need for the company to change its logistic network in the
future, considering the change in the supply and market environment”

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INTRODUCTION

The logistics network design is one of the most comprehensive strategic decision problems that
need to be optimized for long-term efficient operation of whole supply chain. It determines the
number, location, capacity and type of plants, warehouses and distribution centers (DCs) to be
used. It also establishes distribution channels, and the amount of materials and items to consume,
produce and ship from suppliers to customers. An important component in logistics network
design and analysis is the establishment of appropriate performance measures. A performance
measure, or a set of performance measures, is used to determine efficiency and or effectiveness
of an existing system, to compare alternative systems, and to design proposed systems.

LOGISTICS NETWORK

Network Design determines the physical configuration and infrastructure of the supply chain.
Key decisions are made on the number, locations, and size of manufacturing plants and
warehouses, the assignment of retail outlets to warehouses, etc. At this stage, major sourcing
decisions are also made. Long-term location, capacity, technology, and supplier selection
decisions have to be made under considerable uncertainty with respect to market development
and changing economic and legal conditions.

Network design is a strategic subject for businesses. It calls for in-depth study to orientate crucial
decisions such as:

•Siting, sizing the right number of factories, platforms and warehouses

•Defining the physical flows between the various links in the supply chain and distribution flows
specializing (or otherwise) factory production lines

•Stocking items in the right place for the best customer delivery terms

•Outsourcing certain activities such as distribution.

Developing a powerful logistics network is a competitive advantage in the current economic

context where competitive pressure is rife, the market volatile and globalized and raw materials
costs are rising. An optimized logistics network makes for lower costs, a grip on logistics flows
and providing excellent customers service.

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TOYOTA

Introduction

Toyota Motor Corporation is a Japanese-owned company engaged in the manufacture and sale of
motor vehicle. It is a global company with numerous manufacturing plants located not only in its
home country but world-wide. It started operations in 1937 and as of March 2009, it employed
almost 321,000 women and men from around the world. It is a highly acclaimed company, with
excellent products manufactured and distributed globally. Its corporate headquarters is located in
Tokyo, Japan, with regional offices in North America, Europe, Latin America, Australia, and
Southeast Asia.

Global Strategy

Toyota is ranked among five best companies of automobile industry with total 500 companies.
Toyota has made success in global strategies. It has a clear agenda to distribute the channels,
production, marketing and supply chain aspects. Toyota’s best production system and continuous
improvements are the essential pieces of its global strategy. Concept of Kaizen (continuous
improvement) has empowered the company to think about the new strategies and methods no
matter in any area of the company. TPS (Toyota Production System) makes a link between the
global automaker to manage the supply chain system, inventory management, production
capabilities and planning methods. This TPS has empowered the Toyota to dominate the global
automobile industry. Actually the Toyota is based in Japan but it has established itself
throughout the world. No doubt the Toyota is most well known automobile brand of the world.
Toyota’s market is based upon the mission: Stable long-term growth, while striving for harmony
with people, society and the environment” (Toyota Motor Corporation Home Page). Toyota is
providing thousands of jobs in America. Cultural, economic and social issues have allowed the
Toyota to move beyond the brand equity and shaped an international marketing place for Toyota
and achieved the success as a global corporation.

Relations with suppliers

Toyota has established good relations with its suppliers to build a harmonious and mutual
society. As the business of Toyota has been expanded on a global scale the Toyota is stressing
more on close relationships to achieve the customer’s satisfaction. Toyota does respect of its

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suppliers throughout the world to promote the development and mutual growth. Toyota believes
in CSR activities and issued a guideline for the suppliers in 2009. Toyota is focusing to make
joint manufacturing activities with suppliers to improve the working practices. To promote the
sale of cars in next five years on the basic principle of “Customer first, dealer second, third
manufacture” Toyota is acting on the policy to benefit their dealers. Toyota has more than 170
distributers and 8000 dealers located in overseas countries. In this way Toyota engages its
partners in many ways.

SUPPLIERS

Toyota organized its suppliers into functional tiers. The first tier suppliers worked together in a
product development team and the second tier suppliers made individual parts. The first tier
suppliers were highly co-operative. There is a high degree of co-operation and information
exchange between them. This greatly reduces the lead time in new product development as it
avoids “Re-inventing the wheel”. Toyota also believes in having an overall technological
development throughout their suppliers as well. It sends personnel to suppliers to compensate for
greater working load. Besides that it also transfers senior working managers for top positions at
their suppliers. This not only gives the suppliers greater insights to Toyotas management
practices but is also a move to make the suppliers master “Lean production practices” initiated
by Toyota.

Related to flexibility, the following can be said. Since Toyota strives for a long-term relationship
with its suppliers and also pursues a single-sourcing strategy for their strategic components, it
does leave the OEM vulnerable for disruptions. But, the single-sourcing strategy is also a means
to establish a long-term and flexible relationship with a supplier. Since each supplier shares its
destiny with other suppliers and Toyota, the level of collaboration horizontally and vertically is
higher. Therefore, a singly sourcing strategy itself is considered to be as hazardous, the
relationship itself is far more flexible then a more economic-oriented relationship between a
buyer-and-supplier.

The concept of minimal production cost is so well practice that the vendor pricing is also done
on “Market Price Minus” concept rather than “Supplier Cost Plus” This is basically a value

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analysis to the end user. By this particular move they try to provide the necessary value to the
end product at minimal manufacturing cost. Besides that the “production smoothening” concept
enables the suppliers to maintain a constant business volumes. Overall the intention of the
company is to maintain long term relationships with co-operation and team work.

PROCUREMENT

Toyota does not partner with its suppliers just functionally but in operation terms as well.
Suppliers are integral elements of Toyota. They are geographically located within 56 miles
radius. A security of guaranteed order is given which enables them to produce the best quality
raw materials at cheapest cost achieving economies of scale. Toyota does not believe in choosing
supplier as a lowest bidder. But it believes in gradual mutual improvement. It believes in “vendor
creation and development”. As an initiative in this direction it trains its suppliers as per required.

Packaging is also given a great importance with respect to transportation efficiency. Packaging is
done in medium box size and small pallets. There is a dedicated transport service. Consistent
daily route and periodic route revision is provided so as to cater to even smaller requirements.

MANUFACTURING

Toyota believes in continuous development by adopting lean production process and is a

pioneered in TPS known as (Toyota Production System). The system is designed on “Pull
strategy” and customer is at the prime focus in the entire production facility. It implements lean
production facility which has features like Cellular layouts and could be set up in small time. It
has pull scheduling emphasizing decreased wastes. Loss aversion is one of the basic feature of
lean. Besides that Toyota also assures six sigma qualities. The overall result of this policy being
excellent quality at low costs combined with fast response abilities. Exhibit 3 shows some key
principles of Lean manufacturing by Toyota.

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PESTEL ANALYSIS

Being one of the most used frameworks for environmental analysis of companies, PESTEL gives
an in-depth view of the most important factors, which can affect Toyota both externally and
internally, from the outside to the inside of the company.

Political: The supply chain is highly important for Toyota, because it has plants all over the
world, manufacturing and delivering globally. When having this pricing strategy (for example,
Toyota manufactures most of the cars in Japan because of the low costs involved), there are
political factors which must be taken into account. Political instabilities may affect the supply
process, especially the distribution. Also, political decisions such as increasing taxes, inflation,
regulations affect the company and its chain of distribution worldwide.

Economic: According to Hirotaka et. Al (2008), Toyota has an ‘unorthodox’ manufacturing

system. Namely, low cost production in Japanese plants enables the company to develop and
grow new technologies quickly.

Socio-cultural: This factor has a significant influence over the company and its marketing
strategy. Specifically, all Toyota’s marketing campaigns focus on the brand’s commitment to
quality and it uses soft selling in order to create a strong connection between the brand and the
audience watching the adverts.

Technological: Research and investment on innovation – as seen on their website (Toyota 2010),
they rely on the innovative aspect and use it for marketing purposes as well. Also, according to
Jim Lentz, president and chief operating officer of Toyota Motor Sales, U.S.A., the company’s
main headquarter is in Japan because it gives its researchers the chance to review all
technologies (Taylor 2010).

Environmental: According to Toyota,the company is an environmental leader and produces

innovative products, with low fuel consumption, which fulfil the current environmental trends.
An example of a product launched by the company that fulfils this fashion is the hybrid car

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Toyota Prius. The company also develops other products according to this trend, such as Camry
Hybrid and Highlander Hybrid.

Legal: Headquartered in Japan but expanded worldwide, Toyota needs to take into account laws
and regulations for each country. The company and its success can be affected by legal aspects,
such as government taxes, vehicle safety and emission levels regulations. Also, other regulations
such as employment policies or health and safety are highly important. In order to create a
positive image, the legal factors must be closely analysed. By not accomplishing this, the
company risks to create a negative image among the customers, fact which is likely to decrease
its sales.

CONCLUSION

Analysis of logistical operations and distributions policies of Toyota concludes that the
company, being an independent entity, follows the Arm’s length carrier relationship
management. The Toyota company follows this management for the all the branches worldwide.
The ways of improving the Toyota Company with its carrier servicers has been discussed and
also the ways of communicating has been discussed. The carrier of the goods requires a lot much
information regarding the goods from the company for the accurate delivery of the goods. This
information is to be given to the goods carrier companies by Toyota. Toyota employs several
logistical service patterns in several locations and even though the automobile manufacturer has
succeeded in providing high end and environmentally friendly products to its end users, it
requires several changes to be made in terms of international carrier policies. The responsibility
parameters require being changed in terms of economic variables and accessibility factor. Also,
the distribution facilities is robust in certain markets like the US, India, and Canada, while it’s
marketed in the Middle East and Central Africa, are underdeveloped compared to industry
benchmarks. While Toyota has been able to sustain robust deliverance in top markets, it has
failed inadequate carrier selection in markets requiring compact cars and low-end vehicles.

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