Toyota City

Toast’s global strategy is to open factories in every market it serves. Additionally, Toyota has adopted a strategy of “global complementation” which allows it’s specialized local factories to export to non-local markets In times of local economic downturn. This allows Toyota the flexibility of capturing the demand of non-local markets to remain profitable.

It would be wise for Toyota to choose the location of its parts plants in a way that complemented its assembly factories and maximized profitability.

For parts plants to pirate only locally may have prohibitively high costs, while parts plants that operate only globally may reduce relevance in local markets. Logically, Toyota should apply its “global complementation” strategy to its part 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 remain flexible enough to supply non- local factories/assembly plants however necessary.

The capacity of the part plants shouldn’t exceed the forecasted demand of local/ congenially located factories/assembly plants that each part plant will supply. The ability to supply factories adequately is critical, and each plant should be designed with the capacity to supply it’s regional factories.

2. Depending upon the location and production capacity of each plant the decision can be made as to produce for all markets or only specific contingency market.

Furthermore, By applying the strategy of “global complementation” to Toast’s part plants, It will have developed parts plants with the flexibility to supply other markets when their local market demand is weakened. For this reason parts plants must be able to supply at least one more market/region than it’s normally responsible for supplying. Depending on the requirements of global parts, it may be appropriate for parts plants to be able to supply to all markets.

But In the case that markets are so differentiated that the ability for a parts plant to provide global supply Is cost prohibitive, then a specific contingency market should be designated for each regional parts plant.

A parts plant in a certain region should only serve markets in that specific region, otherwise costs will inevitably go up. Since Toyota makes different cars in different regions, it does not make sense for EVERY parts plant to carry parts for EVERY market right 3. Japanese plants are more flexible than U. S. Lanes, since most assembly plants are located In Toyota City, which means that employees can be moved from one plant to another If demand shifts from one model to another.

In the U. S. Such arrangement is not feasible, and building a flexible line that can assemble different car models is more expensive. The allocation of markets to parts plants should be as efficient as possible. The tankard allocation should be optimized during the planning phase. However, as adjusted allocation will provide more efficiency and higher returns for Toyota.

For this reason allocation should be adjusted when necessary, reviewed either annually or bi-annually, and optimized to increase efficiency and take advantage of the part plants flexibility. 4. The distribution will closely follow the flexibilities of the global complementation strategy. Distribution should be optimized regionally between the factories and their supplying parts plants. However, in times of adjusted allocation, it ill be necessary for cost effective distribution to occur between plants & factories to non-local markets.

. The investment in flexibility will allow Toyota to capture demand and revenue from non-local markets when local profitability/demand/etc declines. The flexible production and distribution will prevent idle facilities and reduced profits during economic downturns. By integrating flexible production and distribution, Toast’s supply chain will have greater access to markets and has the potential to capture greater value. Therefore, this investment should be regarded as highly valuable.

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 be the 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 local needs. This will aid the flexibility of plants and factories seeking to produce parts for non local markets and reduce the dependencies and vulnerabilities of operating in specifically localized markets.