Tuesday, January 29, 2013

Apple improved Toyota Kanban system

What is the Kanban system?

The Toyota Production System (TPS) is the manufacturing management system, which was developed around 1970 by Toyota Motor Corporation, in order to produce a car efficiently in the shortest time and deliver it to customers faster[1]. One of the famous methodologies of TPS is the Kanban system for optimizing component procurement timing. The Kanban system adopts an approach of receiving the information from the demand. That is to say, a post-process gives the information (what kinds of parts, when and how many parts a post-process needs) to a pre-process, using an instruction-card called Kanban.

The problem of the Kanban system

A negative aspect of the Kanban system is that a supply chain based on the Kanban system does not include subcontractors, auto parts manufacturers, because it is the build-to-order system restricted to inside own factories. This provides subcontractors with the following disadvantages[3].
  • Adopt make-to-stock production system
  • Carry a vast inventory of products
  • Increase the cost to deliver products in a moment

The improved Kanban system, Global Demand Visibility of Apple

Apple improved the Kanban system and created its own supply chain system called Global Demand Visibility (GDV), which manages the number of sales and inventory in all the retail shops including online ones[4]. The scope of GDV is very wide, including sales and manufacturing terminals. In GDV, subcontractors participate in the supply chain. This means that GDV overcame the aforementioned disadvantages in the Kanban system. In addition, there are other merits in GDV. In real time, Apple knows the exact number of products in inventory, that in delivery and that of work-in-process in factories. Furthermore, the products in GDV range from main products to accessories like cases and cables. Recently, Apple has kept the top position in supply chain ranking in Gartner, which comprises two main components; financial and opinion[2]. This seems to result from the fact that the positive factors of GDV enable Apple to forecast production, sales and inventory (PSI) accurately.

The different scope between Toyota Kanban and Apple GDV

1. Toyota Motor Corporation. (n.d.). Toyota Production System
Retrieved January 29, 2013, from http://www.toyota.co.jp/jpn/company/vision/production_system/index.html

2. Gartner Announces Rankings of Its 2012 Supply Chain Top 25 . (2012, May 22).Technology Research | Gartner Inc.
Retrieved January 29, 2013, from http://www.gartner.com/newsroom/id/2023116

3. Report on the book, "The Future of Apple". (2012, April 10). Miyamae Laboratory
Retrieved January 29, 2013, from http://m-saburou.cocolog-nifty.com/blog/2012/05/1-d036.html

4. Cool Business Knowledge by systems research. (2011, January 20). Global Demand Visibility
Retrieved January 29, 2013, from http://www.cool-knowledge.com/2011/01/20/277/

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