Posted: May 25th, 2022

Capacity planning, leading to continuous improvement.

Toyota has a number of key business drivers that contribute to its longstanding global success. One of those key drivers is its supply-chain management. Developed by Taiichi Ohno and Shigeo Shingo in the 1940’s, its lean manufacturing style gained the interest of competitors worldwide. The main components that make such a supply-chain management successful for Toyota was interlocking structures, compatible capabilities, joint improvement activities, mutual trust and understanding, learning and Kaizen. When Toyota expanded to international waters, some of this process weakened as seen in their 2009 recalls (Takeuchi, 2008, p. 1). Regardless of their setbacks, their efficient using the JIT system, led to customers and competitors remarking on their efficiency and ability to produce quickly. By using parts until they are gone and then ordering more, it helps to eliminate unnecessary inventory and allows Toyota develop capacity planning, leading to continuous improvement.


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Toyota is an automotive manufacturer or Japanese origin with headquarters in Toyota, Aichi, Japan. As of 2014, the company boasts an international employee population of 338, 875. They take the 11th place in the world for producing the most revenue and stood as the biggest automobile manufacturer by production in 2012, beating out their competitors, General Motors and Volkswagen Group (WU, BLOS, WEE & CHEN, 2010, p. 12). That same year, Toyota made its 200-millionth car. Along its career of firsts, it became the first to manufacture annually, ten million vehicles. Founded in 1937 by Kiichiro Toyoda as a spinoff of his own father’s business, Toyota Industries.

Toyota’s method of manufacturing is called the “lean manufacturing system” with the Toyota Production System or TPS, developed to improve productivity and quality. The company’s objective and desire was to make vehicles that are ordered, in the most efficient and quickest way to meet the demands and requirement of their customers. That is why TPS took from past innovations such as the automatic loom, developed by Sakichi Toyoda and the chain conveyer in assembly lines (Kiichiro Toyoda), in order to deliver their promise of fast and well built cars (Iyer, Seshadri & Vasher, 2009, p. 46). Quality and speed are what Toyota had to offer in order to compete with Volkswagen and General Motors who supplied vehicles, but a slower pace.

In order to implement faster manufacturing, Toyota had to devise a supply chain management that would help meet the demands of the company. The first was locating local parts, importing parts, receiving goods, storing, them, producing the vehicles, transporting goods to dealerships, and customers buying the cars. The inbound logistics of Toyota in relation to obtaining raw materials meant procuring them from a third party, usually importing from Japan, and then placing these raw materials in the assembly line for production (Drake, 2012, p. 32). The processes of storage and transportation provided Toyota with the means with which to deliver the product to their customer base, usually in trucks and barges.

TPS has two main pillars. One of them is “Just in Time,” which means efficiency in the system by using what is needed when it is required and in the quantity asked for in the system. The second is “Jidoka” or the capacity to halt production by means of machine or man, in essence describing equipment malfunctioning (Magee, 2007, p. 120). When efficiency and speed are emphasized in a company, it gives them the competitive advantage of producing products quickly without any squandered resources.

The outbound logistics of the manufacturing management system in Toyota involves collecting finished vehicles, storing them, and then distributing them to buyers. From here the product is marketed, thus providing an incentive and means with which to permit customers to buy the product. Toyota applied the use of indirect channels to distribute their product. By making their customer number one, meeting the needs of the customer and making it a priority to continually improve services, Toyota set themselves up for another competitive advantage, customer loyalty. However, there are always drawbacks.

A key issue the company faces is the design of its international manufacturing and distribution network. By Toyota redesigning its plants to have the ability to export to stronger markets versus solely to local markets, issues of management occurred for example the 2009 recalls. In the 2009 recalls, poorly placed floor mats led to uncontrolled accelerated in several models, leading to the recall of 3.8 million cars in the United States.

Toyota has approximately forty-five international plants. Their initial philosophy of efficiency and speed disintegrates when faced with managing so many companies globally. That is why the company invested in information systems and continue to, even developing projects funding advancement of AI technology, in order to not just maintain a competitive advantage through innovation, but also communicate between all the various international plants. Effectively communicating and controlling production through assessments and implementation of standards and uniformity allows Toyota to continue delivering their quality product at a fast pace.


Toyota began expanding out into the global market in the 1970’s. They met the needs of customers through the technology of the day. While this worked for them for several decades, in recent times, they needed to meet the needs for the additional expansions in order to support growth and continue producing quality products. While there was a need for new IT systems, Toyota lacked a master organization-wide plan to generate and deliver them. This meant the company began going against its efficiency-based philosophy.

The company faced increasing maintenance expenses and duplicate infrastructure. They then began incorporating a Yard Management System that allowed for the use of wireless technology within their huge properties, parts allocation and automated printing functions and an administrative console for system set-up, planning, and reporting, among other features (Software, 2015). This allowed vehicles arriving to connect with its RFID tag to transmit that the vehicle was received as it is then inspected and moved to its first rest point. By applying technology to update their supply management chain, they were able to continue delivering excellence in performance, similar to the progress of other companies discussed in class.


I learned that management of resources is key in delivery quality and efficient performance in relation to manufacturing. I also realized the need to upgrade communication systems as a way to improve company performance when expanding globally. Efficiency not only delivers a faster performance and higher productivity, but it also leads to a decrease in wasted resources. By ordering parts when needed, it avoids having to store and transport unnecessary parts that may damage with age.

The case study also taught me to establish connections with my fellow workers and company. People often say there is a need to create trust and communication in relationships, this is especially true in business. When Toyota had to recall their cars in 2009, that prompted them to reassess how their product is manufactured. Simple errors such as an incorrect place mat could have disastrous consequences.

Assessing conditions and processes within a business on a continual basis by investing in monitoring and communication technology will allow business like Toyota to avoid such grave errors in manufacturing. It also taught me the importance of continual evaluation and assessment. If I do not discuss and communicate expectations and goals, it may lead to potential problems in the future. I also learned that technology is useful in closing the gaps of supervision and communication. By investing in developing a strong information system, it can lead to better outcomes for any business in the future.


Drake, M. (2012). Global supply chain management. [New York, N.Y.]: Business Expert Press.

Iyer, A., Seshadri, S., & Vasher, R. (2009). Toyota supply chain management. New York: McGraw-Hill.

Magee, D. (2007). How Toyota became #1. New York: Portfolio.

Software, R. (2015). Supply Chain Case Study Toyota — Data Collection Retrieved 15 December 2015, from

Takeuchi, H. (2008). The contradictions that drive Toyota-s success. Strategic Direction, 25(1).

WU, S., BLOS, M., WEE, H., & CHEN, Y. (2010). CAN THE TOYOTA WAY OVERCOME THE RECENT TOYOTA SETBACK? — A STUDY BASED ON THE THEORY OF CONSTRAINTS. Journal Of Advanced Manufacturing Systems, 09(02), 145-156.


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