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Toyota & Ford supply chain management

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saranya Govender

on 27 April 2015

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Transcript of Toyota & Ford supply chain management

Procurement and sourcing
Inventory management
Order Fulfillment
Customer Service
Warehousing systems
Supply Chain Model For Toyota & Ford merged Company
Background
Toyota
Ford
Warehousing and distribution channels
Distribution channels
Warehousing in Toyota and Ford

Online website
Toyota & Ford
Syuhaidah, Saranya, Shivani, Danielle & Du
Ford uses the SAP’s Service Parts Management (SPM)
Toyota uses “T-WINS LS”
Ford Transportation and Freight
Which model is more efficient & effective...
Production and operations
Toyota Transportion and feight
Customer Service

Toyota Supply Chain Model

• Inbound consists of domestic and international suppliers

• “Supermarket” system is applied to eliminate lead time between suppliers and the production process

• Tier 2 combines suppliers

• Tier 1 involves the raw materials and suppliers combining parts to make essential engine pieces

• Manufactures then produce vehicles

• Sent to dealerships globally


• Approximately 200,000 parts go into automobiles from various suppliers

• Bottom tiers (3,4,5) combine smaller parts

• Tier 1 is essential parts such as engine

• Car manufacturer combines all parts

• Distributor sends to various dealerships and consumers

OVERALL SUPPLY CHAIN MODEL
• Evolved from strong Just in Time focus
• Original supply chain model could only produce one generic vehicle
• Current supply chain model consists of many tiers.


Ford Supply Chain Model
FORD MOTOR COMPANY:
Demand Management
• Works closely in conjunction with all Ford Dealerships
• Use dealership information including current inventory kept on hand, sales and what is currently in demand to determine production
• Ford motor company is then able to analyze what inventory needs to be kept on hand to meet demand. This ensures optimal customer service and minimum inventory levels.

TOYOTA MOTOR COMPANY

• High demand for overseas fulfillment meeting demand with supply can prove difficult
• Allocation to dealers is done on a monthly basis and is dependent on previous purchasing trends, can be altered as required
• new products that don’t have demand history vehicles are distributed in a fair manor
• Dealer trading
• Future planning is done 3 – 10 years in advance to involve future investment, capacity and equipment. Production planning is done on an annual or monthly basis.
• Plans may be revisited on a half yearly basis and be altered as per demand.



• Just in time inventory control requires a dominant partner or third party to control the timing and delivery of all suppliers.

• Close work with ford dealerships to ensure inventory meets customer demand and is kept at a minimum to ensure there is minimal resting stock.

• Economic order quantity is used to assess quality levels to ensure minimal inventory costs whilst still maintaining high quality levels.

• EOQ requires knowledge of the manufacturing processes, delivery times, transport times, date of delivery and the amount of time required to process and store inventory.

FORD MOTOR COMPANY
• Just in time inventory control is used to ensure only inventory required at the time it’s required is stored.

• The Kanban system plays a vital role in Toyotas Inventory control. (see figure below). Commonly known as the supermarket method.

• Required items for production are stored with barcodes to have up to date inventory data in optimal quantities and at times of need.

• Constant inventory management is essential for eliminating waste and reducing lead times

Toyota MotorCompany
References
http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html

https://prezi.com/lgunsbqcokv7/demand-management/

http://team2-jeremy.blogspot.com.au/2008/09/inventory-management.html
https://sts2354group1.files.wordpress.com/2010/04/toyota-demad-chain-mgt.pdf

http://www.investopedia.com/terms/i/inventory-management.asp

http://www.clresearch.com/research/detail.cfm?
guid=FD187879-3048-79ED-99F3-84453A12E767

https://deepakkamath.wordpress.com

https://cee.mit.edu/onbalance/2013/november

http://www.penskelogistics.com/solutions/warehouse-management.html

http://www.usanfranonline.com/resources/supply-chain-management/six-sigma-helps-drive-ford-motor-companys-supply-chain-management/#.VTcBlyGeDGc

http://www.slideshare.net/Fordlovers/ford-motor-companys-finished-vehicle-distribution-system

http://www.scribd.com/doc/39955476/Toyota-Motors-Information-System#scribd

Ford’s procurement process has been evolved a lot. Traditionally, the procurement process is rather closetful and asks highly of the paper resources. But it evolves itself to the creation of the “partnership” relations with suppliers by information sharing, high quality commitment, reducing cost and joint problem solving.

In Ford, the procurement partners are selected upon the focuses quality, technology, delivery and cost. The original procurement system is replaced by a new system called Oracle Corp’s software.

In Toyota, the procurement process is conducted based on fair principles with an aim of seeking fair business opportunities and also achieve the mutual benefits with the supplier.

Toyota highly regards good quality, the low price and low cost and most importantly efficiency It just seeks a long term relationship with the suppliers.

The procurement policy in Toyota is open door policy to welcome fair and equal competition. It also pays attention to the environment protection.
Ford’s procurement process has been evolved a lot. Traditionally, the procurement process is rather closetful and asks highly of the paper resources. But it evolves itself to the creation of the “partnership” relations with suppliers by information sharing, high quality commitment, reducing cost and joint problem solving.
In Ford, the procurement partners are selected upon the focuses quality, technology, delivery and cost. The original procurement system is replaced by a new system called Oracle Corp’s software.
In Toyota, the procurement process is conducted based on fair principles with an aim of seeking fair business opportunities and also achieve the mutual benefits with the supplier.
Toyota highly regards good quality, the low price and low cost and most importantly efficiency It just seeks a long term relationship with the suppliers.
The procurement policy in Toyota is open door policy to welcome fair and equal competition. It also pays attention to the environment protection.
Fords has two types of distribution channels.
The Ford website allows you to purchase cars online straight from the producer allowing you to have full independent access
The other channel is where a customer would go into the dealership and search for their desired car and then sign a contract with the dealer, which is the same as Toyota.
At Toyota, the distribution channels are different for various regions around the world.
There are many variations in the distribution channel within the automotive industry.
In the North American flow, the vehicles are released from the assembly plant and transported to the marshalling yard.
In Europe, there is no more processing in the marshalling yard. Instead, vehicles are transported directly to the staging area for shipment via truck to the regional hub.
Ford uses SAP’s Service Parts Management (SPM) solution, which Ford helped develop, and has been implementing in phases since 2007. Management solutions for multiple industries sales, planning, warehousing and coordination.

The new SAP system implemented at ford had the following expected benefits forecasting, inventory planning, distribution resource planning, parts deployment and procurement.


Toyota uses “T-WINS LS” which provides comprehensive management for warehouses and logistics centres of the entire process from the time goods are received, to stocking and location management, to delivery.

People, goods, and information are managed (waste, unevenness, overburden) are eliminated, and daily improvements are supported.

The toyota model is more efficient and effevtive because of the following reasons:

Demand management,
Ford relies heavily on current sales to determine what models need to go for production while Toyota plans months in advance in order to be prepared for peak periods.

Inventory
, Toyota and Ford both are using the Just In Time management process.

Order fulfilment
, Toyota has more structured plan, which includes four options of how they can influence a customer and how they meet customer demand; keeping this in mind we can say that Toyota is more efficient with their order fulfilment.

Customer service,
Toyota and Ford they both come under a low ranking and classified terrible in every aspect of customer service but Toyota is ranked above Ford.

Distribution channel,
Toyota and Ford use similar channel but the difference is that Ford uses two and Toyota uses only one. The advantage that Ford gets is, it will have more exposure than Toyota.

Warehousing
, Toyota and Ford have their own warehousing system. Ford uses the SAP system which is a well-known high quality system that provides high quality results while Toyota is using the T-WINS-LS. Both systems carry the same functions but SAP has a low development cost.

Transportations
, Ford is working with LLP (Lead Logistics Provider) to utilize their inbound logistics network while Toyota takes complete control of their inbound logistics. They both have their own advantages where Ford could minimize the logistics cost while Toyota could have a better control and more secure logistic networks.

Toyota and ford both focus on minimising costs, quality and be more effective and efficient. Ford seems to have a better procurement system as it’s more efficient by using technology and advanced procurement systems.

Ford and Toyota both have high end production and are efficient but Toyota can produce high end products with the sacrifice of high costs and Toyota can also produce quality goods with lower costs.

Thank you :)
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