Review of Toyota Supply Chain Management by Iyer, Seshadri and Vasher

Toyota Supply Chain Management by Ananth Iyer, Sridhar Seshadri and Roy Vasher is a valuable book that will be of interest to the students and practitioners of supply chain management or the Toyota Production System. This book takes major step in closing the gap that has existed in understanding how Toyota leverages its supply chain to sustain operational excellence. The book is filled with facts and details on how Toyota designs and manages its supply chain holistically and truly as a chain rather than as a series of connected silos, as most companies do. The authors provide an inside look at Toyota’s end-to-end supply chain management process by sharing the results of their research, interviews and first hand experience. Many questions are answered while new ones are raised. The reader is left curious to learn more about the details of Toyota’s proprietary management methods the authors introduce.

The authors attempt to frame this study in terms of variety, velocity, variability, visibility and learning, or what they call 4VL. This 4VL framework is not consistently and explicitly presented throughout each chapter to be fully convincing, with the exception of Chapter 11 in which the links to 4VL elements were made very clearly. Instead the 4VL points were recapped at the end of each chapter in the form of Reflections. The connections to velocity, variety, variability and visibility, while all valid and no doubt valued principles at Toyota, seemed to be slightly forced at times. On the other hand, the placement of the 4VL lessons at the end of the chapter made for natural reading of the chapters themselves without any sense that the authors were trying to force a framework on the subject matter or to skew the subject matter with preconceptions.

Chapters 1 through 6 are somewhat dry reading but provide the essential foundation for understanding of how planning and ordering of parts happens at Toyota. This is an often overlooked area that creates stumbling blocks for companies attempting to implement the Toyota Production System when ignored. These chapters help establish the importance of heijunka for stability across the supply chain, the crucial differences in how Toyota utilizes MRP (Material Requirements Planning), as well as the role and importance of production control personnel in the smooth functioning of the holistic supply chain. There are some valuable insights and gems to be discovered in these chapters to the reader with more than a basic background in the subject matter.

Chapters 7 through 11 will provide best value to most readers. These chapters present important ideas for further study and development on the topics of supplier management, logistics, dealer and demand fulfillment, and crisis management in the supply chain. There are excellent automotive supply chain performance benchmarks, descriptions of the workings of Toyota’s supply chain subsystems, as well as stories and examples to demonstrate that these ideas are not theory but practice. I thoroughly recommend this book to everyone in senior leadership, purchasing or supplier management positions, with special emphasis on study and discussion of these chapters.

Chapter 12 is about how these supply chain principles are applied in nonautomotive environments. It reads like a name check of various innovative brands and their approach to supply chain management. Those looking for the “how to” in the chapter title may be disappointed, as the descriptions are limited to “what” and not “how’. In all examples one or more of the 4VL principles are present. However it was not clear that these nonautomotive companies had explicitly learned from Toyota. Was it that these companies shared the deep values which cause Toyota to partner with their suppliers and learn from mistakes or were these examples superficial similarities to Toyota’s supply chain management practices? Taken as a chapter that makes a case that the 4VL and lean supply chain principles based on the Toyota Production System principles can apply widely across healthcare, service and retail industries, it is a valuable reference.

Chapter 13 provides a description of the supply chain simulation known as “the beer game” which demonstrates the bull whip effect. We are introduced to the typical beer game and a scenario “If Toyota were to play the game…” The authors demonstrate the effect of applying Toyota supply chain management on the beer game. A future kaizen for the authors would be to actually run the beer game with a group of participants, both the “push” method and the Toyota supply chain management method. This would provide an opportunity to document both the impact on supply chain KPIs and the effect the transformation experienced in this game has on how people learn and respond.

Chapter 14 presents not interviews but summaries of what was learned from various interviewees. Some of these points were made in previous chapters of the book, and while there are bright spots, as a whole the reader is left wanting to read the transcripts of the raw interviews.

This book belongs in the library of any serious student of operational excellence and the Toyota Way. The end notes for each chapter provide articles and titles for further reading and research. These alone are worth the price of the book. The book also presents Toyota’s holistic view of the supply chain rather than the traditional OEM-suppler power relationship.

Toyota considers itself part of the value chain. Therefore, asking company representatives how they manage the company’s supply chain is like asking people how they manage the circulation to their feet.

This philosophical cornerstone is missing in many companies purporting to implement the Toyota Production System within their organizations and their supply chains. The argument for a partnership-based, holistic supply chain management approach is such an important one that it could have been the overriding and driving message of the book chapter by chapter. The authors do an excellent job of presenting the evidence and making the case. It is up to each reader of this book to carry out the judgment on how we will manage our supply chains.

---