How Toyota used its Supply Chain Model to beat FORD & GM.

Toyota’s history of using its supply chain model to beat Ford and GM dates back to the early 1980s. At that time, Ford and GM were the dominant automakers in the United States, and Toyota was a relatively small player. However, Toyota was beginning to make inroads into the US market with its fuel-efficient and reliable vehicles.

One of the key factors in Toyota’s success was its superior supply chain management. Toyota’s supply chain model is based on the Toyota Production System (TPS), which focuses on producing only what is needed, when it is needed, and in the quantities needed. This eliminates waste and reduces costs.

One of the key elements of the TPS is the just-in-time (JIT) production system. JIT production means that Toyota only orders parts from its suppliers when they are needed for production. This reduces inventory costs and ensures that Toyota has the freshest possible parts.

Another key element of the TPS is the Kanban system. Kanban is a visual system that signals to suppliers when and how much to produce. Kanban cards are attached to parts and containers as they move through the production process. When a part is used up, the Kanban card is sent back to the supplier, signaling them to produce more. The Kanban system helps to ensure that production is synchronized with demand, which reduces waste and improves efficiency.

Toyota has also developed a strong network of suppliers who are committed to the TPS. Toyota works closely with its suppliers to help them implement the TPS and improve their own manufacturing processes. This helps to ensure that Toyota has a reliable supply of high-quality parts at competitive prices.

Toyota’s supply chain model has given it a number of advantages over Ford and GM. First, it allows Toyota to produce vehicles more efficiently and at a lower cost. Second, it helps Toyota to reduce inventory levels, which frees up cash and reduces costs. Third, it gives Toyota a more reliable supply of high-quality parts.

These advantages have helped Toyota to beat Ford and GM in recent years. In 2021, Toyota became the top-selling automaker in the United States for the first time in history.

Here are some specific examples of how Toyota has used its supply chain model to beat Ford and GM:

During the global semiconductor shortage in 2021, Toyota was able to produce more vehicles than Ford and GM. This is because Toyota had been working for years to diversify its supply chain and reduce its reliance on any one supplier.
Toyota has also been able to reduce its inventory levels to below those of Ford and GM. This frees up cash and reduces costs.
Toyota has a close relationship with its suppliers, which helps to ensure that it has a reliable supply of high-quality parts. This is important in times of supply chain disruptions.

Overall, Toyota’s supply chain model is a key factor in its success. It has helped the company to beat Ford and GM in recent years, and it is likely to continue to give Toyota an advantage in the future.