Imagine an automobile about to be manufactured. Picture the thousands of parts needed on the assembly line before it is finished and ready to roll away to the dealer’s showroom. Now visualize all of those parts not sitting idly in a warehouse, but instead floating through space and moving steadily toward each other, arriving in unison at the right spot in the plant.
The magical dance of coordinating geography, time and production are what make up the modern virtual supply chain, and nobody does it better than Toyota, according to Sridhar Seshadri, a professor in the Department of Information, Risk, and Operations Management.
“This marriage happens on the fly,” Seshadri said. “Just imagine parts always moving and always coming together. Some parts might be three days away, others five days away and some two hours away. Ask any manufacturer who is the best at it and they will say Toyota.”
Recently Seshadri, Ananth V. Iyer and Roy Vasher published the book, “Toyota Supply Chain Management: A Strategic Approach to Toyota’s Renowned System.” Vasher is a former Toyota executive who provided a level of access not found in other books about Toyota, Seshadri said.
In the book, the authors conclude that Toyota carefully balances four elements across the supply chain, and they label this system the 4vL framework. The v’s represent variety, velocity, variability and visibility, and the “L” stands for learning. Above all, Seshadri said, Toyota’s supply-chain excellence can be attributed to a culture that promotes continuous learning.
“Toyota has mastered the art of learning,” Seshadri said. “Moreover, Toyota has spread these ideas throughout its supply chain in order to make learning a practical and ongoing process within every level and every task. It has allowed them to outperform all of their peers to become the largest manufacturer in the world.”
Within the 4vL system, Toyota stresses the importance of constant analysis. “They take science to the extreme,” he said. “They don’t do anything without information. If they don’t know the facts, they design an experiment to get them.”
And unlike other manufacturers, at Toyota, the workers are the ones solving problems. Management is there to facilitate, Seshadri said. Toyota also differs from other companies in that it doesn’t just measure results. The company also measures the process by which an employee reached a solution. “Short cuts aren’t accepted at Toyota,” Seshadri said.
“There is a lot of pressure on employees at Toyota, to always be striving to be the best,” he added.
Ultimately, Seshadri said, the company is exceptional at balancing strategic goals while extracting maximum effort out of every employee. “They think in the very long term and they are consistent on delivering value, for the customer, the dealer and then finally themselves.”