\"Supply Chain Management: Strategy, Planning, and Operation, 5th Edition\" 1. W
ID: 2746496 • Letter: #
Question
"Supply Chain Management: Strategy, Planning, and Operation, 5th Edition"
1. Where should the plants be located and what degree of flexibility should be built into each? What capacity should each plant have?
2. Should plants be able to produce for all markets or only specific contingency markets?
3. How should markets be allocated to plants and how frequently should this allocation be revised?
4. What kind of flexibility should be built into the distribution system?
6. What actions may be taken during product design to facilitate this flexibility?
Explanation / Answer
1. Where should the plants be located and what degree of flexibility should be built into each? What capacity should each plant have?
Answer: Toyota has adopted the strategy of global complementation which ensures that the specialised local factories can export to non local markets in case of slump in nthe slaes in the local markets. For parts plants to operate only locally mayhave prohibitively high costs, while parts plants that operate only globally may reduce relevancein local markets. Logically, Toyota should apply its ³global complementation´ strategy to itspart plants, and locate the plants in areas that minimize costs (currency exchange, freight,inventory holding, etc). This will allow them to achieve local/regional agility and remainflexible enough to supply non-local factories/assembly plants however necessary. The capacity of the plant in any point of time should not exceed the local forecasted demand.
The ability to supply factoriesadequately is critical, and each plant should be designed with the capacity to supply it's regional factories.
2. Should plants be able to produce for all markets or only specific contingency markets?
Answer: It depends on the situation of the market and the conditions prevailing in the market for Toyota. By applying the global complemantation strategy the company would get the flexibility to sell parts in other part of the world so that it remains profitable in difficult times too. Depending on the requirements of global parts, it may be appropriate for parts plants to be able to supply to all markets but with caution. The parts should be sold specifically with the requirement of the market and then a specific contigency market should be designated for each regional partsplant.
3. How should markets be allocated to plants and how frequently should this allocation be revised?
Answer: The allocation of markets to parts plants should be efficient as possible. The standard allocation should be optimized during the planning phase. However, as markets mature,currency rates fluctuate, and demand changes, it is possible that an adjusted allocation willprovide more efficiency and higher returns for Toyota. For this reason allocation should beadjusted when necessary, reviewed either annually or bi-annually, and optimized to increaseefficiency and take advantage of the part plants flexibility.
4. What kind of flexibility should be built into the distribution system?
Answer: As we already know that Distribution channels move products from businesses to consumers andto other businesses. Also known as marketing channels, channels of distribution consist of a setof interdependent organizations such as wholesalers, retailers, and sales agents²involved inmaking a product or service available for use or consumption. Distribution channels are just onecomponent of the overall concept of distribution networks, which are the real, tangible systemsof interconnected sources and destinations through which products pass on their way to final consumers.
6. What actions may be taken during product design to facilitate this flexibility?
Answer: Uniformity among global products will provide the most cost effective means to facilitate the flexibility between non local plants and factories. However a uniform global product may not bethe most profitable and may result in a loss of customer interest and local relevance. During product design engineers should craft elements that both maximize uniformity and satisfy localneeds. This will aid the flexibility of plants and factories seeking to produce parts for non localmarkets and reduce the dependencies and vulnerabilities of operating in specifically localized markets.
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