The paper "A Firm’ s Competence Development" Is a great example of a Management Case Study. The global trend in the automobile industry is unpredictable and requires consistent reviews. The supply chain structures that were drafted many years ago have lost relevance making it prudent to have new strategies in the supply chain. Toyota has been in the front line to make a supply chain plan that will survive all the situations such as disasters. Toyota has proved to be a strong company as it has made through in the global recession, recall of faulty vehicles, and the Tsunami.
The company was able to recover faster compared to the problems it has faced in these disasters. After the Tsunami, it became vital to restructure the supply chain. This led to the formation of the ‘ foolproof’ supply chain that could help the company during tough times. This report will look into the proposed foolproof supply chain plan that will be used in the automotive industry. The report will start by looking at the global problems faced by the industry, the company’ s global supply chain and the required changes (Bozarth and Handfield, 2013) Supply chain management prior to the 2011 Tsunami The Japanese automotive industry had been using a well-streamlined supply chain.
For example, Toyota had contracted a supplier association which dealt with subcontractor suppliers to help in improving their products. This was during the early years of its operation. Toyota used efficient inventory management so that it could be able to be ahead of its Japanese competitors. The supply chain management used up to 2011 had its set of advantages. These advantages came up after the firms furthered their supply chain management in the 1990s.
One of the advantages was the increased market share. The Japanese auto industry was able to set up branches overseas using these supply chain management techniques. The customer's and suppliers' relationship was highly improved in the automotive industry using supply chain methods. The Japanese automotive industry emphasized lean production which catered for quality and high level of efficiency. The supply chain made it possible for companies such as Toyota to buy from their suppliers directly. Despite the success that has been enjoyed through the use of previous supply, several disadvantages were experienced.
The supply chain failed in that it could not cover the problems associated with the current automotive industry. These problems are as discussed below (Bozarth and Handfield, 2013). Issues faced in the automotive industry The current automotive industry has been facing numerous challenges due to the transformation that has been taking place. Toyota has been in the industry for a long time and these issues have affected the company. Toyota has been able to move with the current technology and through this; a larger customer base has been achieved.
I will review some of the global challenges that Toyota is facing. Product differentiation The automotive industry is flooded with a lot of choices for consumers. This leads to problems when there exist similar vehicles with the same performance characteristics. For the company to maintain its market share there is a need for product differentiation. Toyota as a company has enjoyed a high volume of sales due to product differentiation throughout the world. In the recent period, other companies have entered the market and made differentiation more difficult.
This is an issue that can also be attributed to globalization in the automotive industry. One such case is the Toyota Prius. This vehicle brand has been in the American market occupying 12 percent of the Toyota market in this region. This dominance has of late faded due to the introduction of competing brands by companies such as Ford. For example, Ford used differentiation techniques to manufacture Ford’ s hybrid C-Max which has managed to outsell Prius in this region. This has been followed by other brands such as GM’ s Spark EV which is a low-cost model.
Another of Toyota brand that is facing pressure is Camry. This brand is facing competition from the new make of Honda Accord and Ford Fusion. To overcome this problem, Toyota needs to change its differentiation approach. This can be reframed by making sure that the companies make appropriate surveys that look at what the customer wants and how to provide it to them. The automobile market has been fragmented making it prudent that companies must bring the best to the market.
Toyota needs to work hard to avoid misguided markets which can lead to high losses (Paul, 2013).
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