Toyota

Background

Toyota GB Limited doesn’t need any introduction. They are the 4th largest car manufacturer in the world, with annual UK registrations of almost 100,000.

What is probably not known so widely is that Toyota is the fourth largest UK exporter of vehicles, with 75% of Toyota car production in Burnaston (220,000 vehicles in all) being exported to 16 European countries. Toyota parts distribution centre in Lutterworth holds over 160,000 parts and accessories needed to back the range of products sold in the UK.

"The automotive industry has entered an era of mega-competition, which is focused on global mobilisation and next generation technologies (traffic information systems, infrastructure, traffic congestion avoidance, and safety systems)", says the Chairman, Hiroshi Okuda. “In this challenging environment, Toyota will not rest on its laurels, and will continue to focus on next generation technologies”.

The Business Objectives

Given Toyota’s status as a world class innovator, how could Entity be of assistance? Toyota GB Limited, like the parent company, was not complacent with its position, and wished to improve its customer service in their parts supply operation. Toyota parts management had heard of the achievement Entity had made with Daihatsu’s parts operation, lower stock holding, whilst increasing the customer service (improving parts availability), and this fitted well with their own business strategy to raise parts availability, whilst containing their stock holding (in excess of £10million of stock).

Entity’s Role

Entity’s involvement was consultancy lead, identifying achievements, examining processes and analysing historic performance data. This process results in a series of process changes to the inventory system to more clearly identify demand information, seasonal factors, differing markets, etc.. and the commissioning of a new forecasting ‘engine’ to better and more accurately analyse the past performance, in order to forecast more accurately the future.

Entity built and deployed a forecast model that replaced the existing forecast system, and replaced it with one that had the following capability to:

classify automatically, each part with the most appropriate forecast model and reordering class (and revaluated it monthly as parts moved through the lifecycle)
simulate ordering strategies, within parts classes, using "what if"” capabilities to evaluate differing performance criteria, enabling Toyota to fine tune their ordering parameters to meet cost and service targets
perform the ordering function, and promote it back to the main inventory system
analyse the historic performance to determine achievement against targets, turnover ratios, stock availability, obsolete stock, and excess

The Benefits to Toyota

Specialist Forecasting Skills
Toyota benefits from Entity expertise in forecasting and inventory management skills, in being able to improve its parts customers service level (from 93%, to 97%), reduce the stock holding (from £13m to £10m), and avoid the cost of additional warehousing.

Specialist Modelling Skills
Toyota continues to benefit from a model that operates day in day out, and manages their parts supply chain, optimally.

Relevance to Other Organisations
Entity has a wealth of experience in forecasting and modelling techniques that can benefit organisations both within the automotive industry, or in similar demand driven process.

Visit Toyota UK