Exploring Toyota's Distribution Resource Planning - Free Paper Sample

Introduction

Distribution resource planning (DRP) refers to the method of planning orders and materials in a supply chain (Martin, 1992). The complexity of DRP varies in every organization and is proportional to the size of the organization. The DRP for a supply chain of a company like Toyota is complex and requires numerous touchpoints to it for adequate coverage. The role of DRP, techniques used for DRP, and inventory management for Toyota are discussed in this essay.

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Distribution Resource Planning at Toyota

Toyota is a multinational corporation that is headquartered in Japan and its focus is on the manufacture and production of automobiles. The company makes a variety of automotive models in different forms with high manufacturing and production efficiencies. The process and methodology of making vehicles is dictated by the Toyota Production System (TPS) which operates on the philosophies and principles of Toyota. The TPS is integrated into the supply chain and gets continuous improvements and refinements as part of quality management. There is a need for a comprehensive DRP plan and methodologies for the efficient management of resources and the optimal running of manufacturing plants.

The Role of DRP in Toyota

Toyota's DRP and techniques are relatively similar to the TPS. The role of the DRP is to:

DRP Techniques Used by Toyota

The techniques used for DRP by Toyota are aligned with the principles and philosophy of TPS. Push and pull, and other techniques are used for different purposes on the supply chain. Pull is used for upward movements in resource acquisition and inventory management, while push is used for downward movement. Jidoka, just-in-time, kaizen, and empowerment of people are the core elements of the techniques used by Toyota in DRP. The empowerment of people is integrated into the other three through people management practices for customers and employers. Lateral thinking and pattern thinking are the main techniques used by Toyota in Distribution resource planning.

Pattern thinking is mostly associated with analytics. Computer systems are used in the evaluation of demand and supply of resources throughout the entire corporation and determine optimal strategies for delivery. Most of the pattern thinking for the corporation in DRP is done from big data generated by the company from past transactions. Data is modeled and mined to extract and/or establish patterns that may provide useful insights for the ideal management of distribution resource planning. This technique is best used in the quality improvement and refinement of business processes at the company.

Lateral thinking involves the use of thoughts. This technique can be used independently or alongside pattern thinking as a complementary technique to improve outcomes. Lateral thinking involves the use of solving the problems that are highlighted by pattern thinking. The use of thought is a way of invoking creativity to help design creative solutions. Knowledge, experience, and creativity are the core concepts of this technique (De Bono, 2010). It can also be integrated into other processes and activities in DRP.

Inventory Management

Inventory management at Toyota is crucial as it is interconnected with other important business processes. Sales and marketing, as well as other post-production activities, rely on inventory management. In the current interconnected digital world, Toyota has positioned itself as a big player in the adoption of technology in inventory management.

Post-Production Inventory Management Principles/Systems

Inventory management practices were adopted by Toyota in the second half of the 20th century. It was done under the principles and controls established by JIT. JIT is Just-In-Time, which is geared towards efficient management of time in inventory management to ensure that products are disseminated at the right time without any slack or delays. JIT controls have now been adopted into Jidoka and the new TPS model (Monden, 2011).

Inventory management cuts across the entire corporation and can be classified into three main parts; pre-production, production, and post-production. Inventory management for vehicles that have been manufactured and assembled is mainly geared towards efficiencies in distribution and logistics. Computer systems are used to monitor capacity and the movement of goods in and out of storage facilities. There are smaller systems used to control the various post-production elements like logistics and market reach. This is key in the tracking of products tom identify rich markets and demand characteristics of markets.

Even in post-production, Toyota's principles of efficiency and Jidoka are used (Chiarini, Baccarani & Mascherpa, 2018). Kaizen is also adopted in inventory management as it is a key principle for the entire company, which aims to improve to optimal state at all times. Jidoka is a principle that involves autonomy and automation in which humans are also integrated to become a part of the automation in what is referred to as autonomation.

Inventory Management Systems

Toyota has its warehouses and storage solutions located strategically around the world in areas closer to the markets or logistics solutions like transportation. JIT and kaizen are critical philosophies for the company's inventory management and, consequently, the TPS. Cutting-edge technology is used in the collection of data and adding trackers to the inventory of finished products. The aim is to track how the company's inventory moves from production to the customers. This data is made available by the entities Toyota has partnered with and the dealers that trade the company's vehicles. The system consists of not only in-house inventory management systems but also those of its affiliates and business partners.

The company has invested heavily in technology to help in many different things in inventory management. One of those things is in the forecasting of sales and demand in different markets around the globe. The role of inventory management systems is to collect information from storage facilities on how inventory is managed as well as to analyze data. Data analysis is geared towards the assessment of performance and mining to extract vital patterns and models that can provide useful insights for business.

Data on how Toyota products move is analyzed to predict patterns and use them to make forecasts on demand and sales in the future. Outcomes can be used to improve existing projections for sales and demand to help finished supply products appropriately to the market. Toyota's location required the effective use of prediction to help cut costs associated with transportation and payments to 3PLs that Toyota worked with (Sheffi, 1990). Currently, the automaker relies on an in-house solution and model for logistics and inventory management. The networks and data collected over time since operations commenced have been useful in designing optimal solutions, and now the company can rely on existing data and solutions.

References

Chiarini, A., Baccarani, C., & Mascherpa, V. (2018). Lean production, Toyota production system, and kaizen philosophy. The TQM Journal.De Bono, E. (2010). Lateral thinking: a textbook of creativity. Penguin UK.

Martin, A. J. (1992). DRP: distribution resource planning: the gateway to true quick response and continuous replenishment. John Wiley & Sons.Monden, Y. (2011). Toyota production system: an integrated approach to just-in-time. CRC Press.

Sheffi, Y. (1990). Third-party logistics: present and future prospects. Journal of Business Logistics, 11(2), 27.