VALUE CHAIN AND COMPETITIVE ADVANTAGE OF PT.TOYOTA

(BASED ON THE THEORY M. Porter)

MISSY DESMALA

224409057

MANAGEMENT LOGISTIC

DISTRIBUTION MANAGEMENT

MR. DIDIET HIDAYAT

COMPANY PROFILE

PT Toyota Motor Manufacturing Indonesia Headquarters

Jl. Yos Sudarso, Sunter II, Jakarta 14330,Tel (021) 6515551 (hunting),Fax (021) 6515360 Established: July 15, 2003

Paid-in Capital: Rp. 400 000 000 000 Shareholders: PT. Astra International Tbk (51%) & Toyota Motor Corporation (49%) Toyota Dealer Network

5 Primary Dealer:

PT Astra International, PT New Ratna Motor, PT Agung Automall, Hasjrat PT Abadi, NV Hadji Kalla Trd.Co.

PT. Toyota Motor Manufacturing Indonesia Headquarters

Jl. Yos Sudarso, Sunter II, Jakarta 14330,Tel (021) 6515551 (hunting),Fax (021) 6515360Founded: April 2, 1971

Paid-in Capital: Rp. 19.5 billion Shareholder Toyota Motor Corporation (95%) & PT. Astra International Tbk (5%) Production Facilities

Sunter area: Assembly and Packing Plant Falkirk Plant: Plant Welding, Painting, Assembly

Vision

Being an automotive company's most successful and respected in the region by providing the best experience in vehicle ownership

Mission

Continuously provide products and services of high quality and meet customer needs through marketing programs that bestDevelop competent employees by creating a good working environment to support the achievement of customer satisfactionStrengthen collaboration with manufacturers, dealers and major dealers through communication and better cooperationTo develop a healthy company operating in all aspects, such as regulatory compliance, environmental and others

HISTORY OF TOYOTA

Brief History The establishment of the Toyota

Sometimes we'd never ask - ask in our minds, how its history to Toyota automotive company can grow up big and as famous as this ini. This isa brief review of the history of the Toyota.

In April 1935, 75 years ago he laid the foundation of Toyota, namely Sakichi Toyoda with his son, Kiichiro Toyoda automotive engine successfully completed the first prototype, named Type A.

Type A machine which completed the process in April 1935, the cost of development is only obtained from small households, which was pioneered by Sakichi Toyoda, a yarn spinner tool. Thanks to this dynasty, Toyoda looms could realize his dream of making cars.

A year later or rather April 1936, Kiichiro began mass-producing the first car, with the name A1. Not only cars, in the same month also produced a mini truck with the nickname G1.

Apparently response to the public from Toyoda product was beyond expectations. Both the first automotive products get good response from the community. Armed with the positive progress that is, Kiichiro had founded the Toyota Motor Corporation Ltd., on August 28, 1937.

Kiichiro deliberately replacing the letter 'D' on Toyoda with 'T', because he wanted a name is easier said Toyota pronunciation. With an easy pronunciation, then Kiichiro hope that Toyota will easily attached to the minds of consumers.

Kiichiro confidence now become a reality. Toyota became the world's largest automotive manufacturer with a variety of products in various countries.

It turned out to achieve the success it is today a long road winding nan that unpleasant also been adopted by the founder of Toyota.

To achieve success requires knowledge, enthusiasm, and ingenuity in seeing the opportunity, and also the most important blessing of God Almighty

TOYOTA HISTORY IN INDONESIA

PT Toyota Astra Motor inaugurated on April 12, 1971. The role of TAM was originally only as an importer of Toyota vehicles, but a year later was working as a distributor. On December 31, 1989, TAM merged with three companies, among others:

»PT Multi Astra (assembly plant, founded in 1973)

»PT Toyota Mobilindo (body parts factory, founded in 1976)

»PT Toyota Engine Indonesia (engine factory, founded in 1982)

with the name of PT Toyota Astra Motor. The merger is done in order to unify measures and efficiency in responding to demands for quality and facing intense competition in the automotive world.

For over 30 years, PT. Toyota-Astra Motor has played an important role in the development of the automotive industry in Indonesia as well as creating jobs included in the supporting industry. PT. Toyota-Astra Motor has production plants such as Stamping, Casting, Engine and Assembly in the industrial area Sunter, Jakarta. To improve product quality and production capabilities, in 1998 inaugurated a factory in Falkirk using the latest technology in Indonesia.

Since the date of July 15, 2003, TAM restructured into two companies, namely:

»PT. Toyota Motor Manufacturing Indonesia which is the abbreviated TMMIN assemblers of Toyota products and exporter of Toyota vehicles and spare parts. Shareholding in this company is Astra International and TMC 5% to 95%

»PT. Toyota Astra Motor as sales agent, importer and distributor of Toyota products in Indonesia. Shareholding in this company Astra International is 51% whereas 49% TMC

Value chain of toyota (porter)

1. Primary activities

Inbound logistics Receiving, storing, and disseminating inputs. E.g., warehousing, inventory

- toyota in obtaining raw materials, they do not process their own, or create your own, they use a third party, they handed the small parts, such as leather seats, steering wheel, tire, to local companies, but to the nature of strategic importance, like a machine, they import from Japan (center), it's all to maintain the quality standard that was created toyota,

- Toyota put on the assembly system in the process, it has led to toyota raw material supply for its assembly,, need a place to store supplies, or warehouse, to avoid piling up too many assets, Toyota to forecast demand,

OperationsTransforming inputs into the final product form, in assembly and manufacturing (its production) Toyoto use various systems to be efficient and effective, we could also call it, TPS is the Toyota Production System, the following explanation,

The concept of Lean Thinking from Toyota Production System. So, if you want to apply it, it must know what the Toyota Production System. As the picture above, the concept of the Toyota Production System can be described as a complete building which consists of various components are integrated. The building was also called a The House of Toyota.

The roof is the result of the efforts below. The results were the best quality, lowest cost, shortest time, by eliminating the things that are not value-added (waste) whether it be time or activity.

- The left pole is Just in Time (JIT), which produces something that prompted a number of necessary and when required by the consumer.

JIT supporting components:

1. Takt Time: The maximum time allowed customers to produce a single product in order to meet customer demand.

2. One piece flow: Producing and moving one item at a time (or a small and consistent) through a series of process steps as far as possible uninterrupted, with every step of the process only makes what is required by the process berikutny.

3. Pull system: the work of raw material is pulled into the workplace only if needed. Opponents of the system is push-pull system, which encourages the work of raw materials to the workplace regardless of whether in the workplace are available resources to do

- Jidoka means “automation with a human touch”

1. Jidoka, in the production context means not allowing defective parts to go from one work station to the next. It specifically refers to machines or the production line itself being able to stop automatically in abnormal conditions (for example, when a machine breaks down or when defective parts are produced). This Automation allows machines to run autonomously, as they will stop when a problem occurs.

2. Jidoka is also used when individual people encounter a problem at their work station. They are responsible for correcting the problem - if they cannot, they should stop the line rather than let the defective part do.

- The base is the Operational Stability. Section on it will not function properly if the bottom is not working. The base consists of:

1. Heijunka: smoothing. Meaning: wherever possible evenly distributed workload made at any time. Without this, Just in time can not be applied, because it will happen stacking and queuing at peak load.

2. Standard work: At each stage of the work there is a clear indication of the order and how to do the job.

3. Total Productive Maintenance (TPM): a comprehensive equipment maintenance process so that the tools are always in good condition to wear to work.

4. Value Chain: It is a series of value-added processes. There are continuous efforts to reduce "non-value added waste" so that what remains is just something that has added value in the production process. Discussion of "non-value added waste" includes the activities of 5S

- Outbound LogisticsCollecting, storing and distributing the product to buyers

output of the production process at the plant, is the finished product,, a car, the car is directly sent to the toyota dealer,, it's for local, or a region (not crossing the sea in distribusianya, if sending more distant or export,, its delivery using container.

- Marketing and SalesProviding a means and incentive which allow buyers to purchase the product

1. Application of Indirect Channels Distrubusi TOYOTA CORPORATEToyota Motor Company was founded in 1937 by the Toyoda family. Business was relatively successful until Eiji Toyoda introduce lean production methods after studying Ford's Rouge plant in Detroit in 1950. Lean production methods became known as the Toyota Production System.

In the application of the Toyota Company or its product distribution channels to use indirect distribution networks which use the Company Toyota dealer or distributor.

in Indonesia Toyota Distributors products, consisting of.

* PT. Toyota-Astra MotorJl. Yos Sudarso, Sunter II, Jakarta 14330, Phone: (021) 6515551 shareholderPT. Astra International Tbk (51%)Toyota Motor Corporation (49%)

Toyota Dealer Network5 Primary Dealer: PT Astra International, PT New Ratna Motor, PT Agung Automall, PT Hasjrat Abadi, NV Hadji Kalla Trd.Co.

2. PT. Toyota Motor Manufacturing IndonesiaHeadquartersJl. Yos Sudarso, Sunter II, Jakarta 14330, Phone: (021) 6515551

establishedApril 2, 1971

shareholderToyota Motor Corporation (95%)PT. Astra International Tbk (5%)

Production FacilitiesSunter area: Casting Plant, Stamping Plant Engine Plant, Assembly PlantFalkirk Plant: Stamping Plant, Assembly Plant.

Map of dealer toyota in indonesia.

ServiceProviding service to enhance or maintain the value of the product

Toyota managed to outperform its competitors from the automotive industry in customer satisfaction. This is demonstrated by the results of a survey conducted by JD Power Asia Pacific to its customers in Indonesia

The Best Total Ownership Experience 'is a principle that is always carried by Toyota at each line, starting from the central office to the Toyota dealership on every spread in Indonesia. Their concept is the customer number one, so that makes them always trying to meet customer needs and continuously improve services.

J.D. Power in the survey parameters set 6 pieces, among others: the quality of service, type of problem, the service is user friendly, service advisor, service initiation, service delivery and in-service experience

Toyota recorded occupies the top position with 764 points, 757 points, followed by Nissan, Honda and Hyundai as well as 755 points. Overall average score is 758, making the Toyota as the only company that is above average.

Three main points

. The service is reliable, is one of the main factors

. Reliable Service Every car owner must want to stay fast and reliable service

. People Qualified workforce, is one of Toyota's superior

In essence, what makes Toyota excels is consistency in upholding the principle of 'The Best Total Ownership Experience "that makes customers get the best from

their early experiences have a product until a satisfactory after-sales service. The combination of devices, services and skilled workforce makes the Toyota excels in customer satisfaction auto industry.

2 . Support Activities

Firm infrastructure

- infrastructure owned by Toyota factory is very modern and sophisticated, is a robotic system with humans as the operator,, all the production support until the sale is available with either situation, the factory to the dealer,,

-

HUMAN RESOURCE MANAGEMENT

Toyota to this day has approximately 300,000 employees worldwide, and nearly a third are in Indonesia, in penenmpattanya or acceptance of an employee, the company held a test salalu continued with the training, according to its disciplines and expertise,

TECHNOLOGY DEVELOPMENT OF TOYOTA

Torrance (DP) - As one of the world's largest manufacturers, Toyota is very concerned with the safety of its customers. That is why Toyota did not stop doing research and development of safety technology.

Currently, Toyota has several safety technologies being developed. In fact, Toyota, now, focus on developing technologies that protect older drivers and pedestrians.

It is responding to accident statistics in Japan, where more than half the deaths on the road are people aged over 65 years and pedestrians.

Build safer cars into the center of Toyota's global vision. Learning from data in the real world, Toyota continues to improve testing, products and services, by establishing a Collaborative Safety Research Center in the USA.

Collaborative Safety Research Center in collaboration with a number of North American universities, hospitals, and research organizations.

Here are four technology from Toyota:

. Pre-Crash Safety (PCS) with collision-avoidance assistsPCS became an important element in the work of Toyota to develop cars that can avoid collisions. Currently the system can predict when a collision will occur and trigger action to reduce damage and injury risk

. Pop-up Bonnet Toyota has developed the design of car body structures in such a way as to reduce the risk of injury to pedestrians and other road users. In Toyota developed using data obtained from conventional dolls and THUMS (Total Human Model for Safety).

. Adaptive Driving Beam Two years ago Toyota introduced the function of automatic headlights (automatic high beam) in some cars. This feature allows the headlights is reduced when an attached camera that detects taillights or headlights in front of the car from the opposite direction. The main headlights bounce back when the road ahead is clear.

. Emergency response technology Finally, Toyota has developed a technology that monitors the cardio-vascular function through the driver to grip the steering wheel and risk detection.

Procurement

At Toyota Industries Corporation our procurement activities are based on fair business practices in order to realize amicable relationships and mutual benefit.

Toyota Industries Corporation is involved in a wide range of business fields and procures the parts, materials, and equipment for these many different businesses from suppliers all over the world. Along with requiring our suppliers to provide quality items at a low price and in a timely manner, we cooperate with them to promote environmental preservation and meet the other demands of society. In addition we take a long term view toward our relationships with suppliers with an aim to realize an amicable relationship of mutual benefit based on fair business practices.

COMPETITIVE ADVANTAGE

by poter

Porter's Generic Competitive Strategies (ways of competing)

A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost

leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

2. Differentiation

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

3. Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

IMPLEMENTATION

1. COST LEADERSHIP

LEAN SUPPLY CHAIN MANAGEMENT[Toyota Indonesia Case]

GOAL of LEAN ACTIVITY COST REDUCTION PROFIT INCREASE

as Basic Philosophy

(1) SALES PRICE = COST + PROFIT

No Cost Reduction , No Profit IncreaseNo Cost Reduction , No Profit Increase

(2) PROFIT = SALES PRICE - COST

PROFIT = SALES PRICE - COST

SO IN TOYOTA,, PRESSING THEIR PRODUCTION COSTS TO INCREASE PROFITS,, NOT WITH raise the price,, BECAUSE IF THE PRODUCT PRICE increased, WILL AFFECT CONSUMERS BY PEMBELILIAN volume

SIMPLE CONCEPT FROM TOYOTA

___________I_______I__________I______I_____________I______I_________I______I__________

LD LD LD LD LD LD LD LD

=============================TOTAL LEAD TIME==================================

(1) SHORTENING LEAD TIME

Simplifying the Process Continuous Flow ( One Piece Flow Process )

(2) REDUCE INVENTORY LEVEL

SUPPLY CHAIN IN MANUFACTURING

VENDOR(1)

(2)MANUFACTURE (3) DEALER (4)END USER

Local Parts

PC storeProductionReceivingDock Dealer

(1) AND (2) Linked between internal and vendoR

STOCK REDUCTION USING KANBAN ( Kanban Cyclic ) & SEQUENTIAL PARTS DELIVERY

KANBAN:- A small time that is the key control for JIT production.

Internal Logistics

Simplify Process à Re-arrangement of Process

Summary

Import Parts

TOYOTA Indonesia utilize Toyota Production System as the base of manufacturing process, and Lean was blend inside of TPS as the focus point in TPS Basic Philosophy : Cost Awareness with Customer First and Quality as priority.

Saurce:

LEAN SUPPLY CHAIN MANAGEMENT[Toyota Indonesia Case]

Sharing on 6th Indonesia Supply Chain and Logistics Conference and Expo 2011 (ISCL) à “New Era of Indonesia Supply Chain and Logistics : Center of South East Asia

J.F. Ferry Yanto

Jakarta, November 3rd, 2011

different strategies

Toyota has a difference with its competitors, here I see the scope of the two .. that is

1. human resources

2. product

1. Management of human resources

Toyota is very concentrated in terms of human resources,, is demonstrated by the filosophy toyota way,, following his 14-point philosophy

The 14 Principles of the Toyota Way is a management philosophy used by the Toyota Corporation That includes the Toyota Production System. The main ideas are to base management decisions on a "Philosophical sense of purpose", to think long term, to have a process for solving problems, to add value to the organization by developing its people, and to Recognize That continuously solving root problems drives organizational learning.

14 Principles of the Toyota Way.

1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals

2. Create a continuous process flow to bring problems to the surface.3. Use "pull" systems to avoid overproduction.4. Level out the workload (heijunka). Work like the tortoise, not the hare.5. Build a culture of stopping to fix problems, to get quality right the first time

6. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.

7. Use visual control so no problems are hidden.8. Use only reliable, thoroughly tested technology That serves your people and

processes.9. Grow Leaders WHO Understand thoroughly the work, live the philosophy, and teach

it to others.10. Develop exceptional people and teams WHO follow your company's philosophy.11. Respect your extended network of partners and Suppliers by Challenging Them and

Helping Them Improve.12. Go and see for yourself to thoroughly Understand the situation (Genchi Genbutsu).13. Make decisions SLOWLY by consensus, thoroughly considering all options;

implement decisions rapidly (nemawashi).14. Become a learning organization through Relentless Reflection (hansei) and

continuous improvement (kaizen).

2. Product

Toyota continues to prove its commitment in providing the Best Total Ownership Experience to customers. Reflection of customer satisfaction to service Toyota this year can be seen from the results of the survey JD Power category CSI (Customer Satisfaction Index) and SSI (Sales Satisfaction Index), where Toyota was ranked first. In terms of products, superior quality products back Toyota proved by JD Power Asia Pacific 2007 Indonesia Initial Quality Study (IQS), where the Toyota Yaris, Vios, and Rush was ranked top in each segment.

3 products outperform Toyota 5 segments were taken into account in this survey. Vehicles that are in the first position is recorded at least get a report on problems per 100 vehicles in the survey in their respective segments. Toyota Yaris is ranked top in the segment of premium compact vehicles. Ranked second in this segment is followed by a Suzuki SX4 and Honda Jazz. Meanwhile, Toyota Vios in the top position in the entry midsize car segment / midsize, which won second place Honda Civic and Honda City in the third position. Both the Toyota Yaris and the Vios was also in the same position the previous year.

While Toyota's new product, the new Toyota Rush marketed since early 2009, managed to outperform the Daihatsu and Isuzu Panther in the entry SUV segment.

Responding to these achievements, Johnny Darmawan said, "This is testament to the quality of Toyota products are marketed in Indonesia. We are proud that these results obtained from the consumer voice, which indicates the quality of Toyota's product is above its competitors ", said President Director of PT Toyota-Astra Motor is.

J. D. Power Asia Pacific 2009 Indonesia Initial Quality Study (IQS), which this year enters its fifth year, a survey conducted on the new car owners who make purchases in the month of

October 2006 - June 2007, on matters of quality vehicles. Results J.D. Power Asia Pacific 2009 Indonesia Initial Quality Study (IQS) is obtained from a survey conducted over 2796 new-vehicle owners, including 50 passenger and commercial vehicles from 14 brands. Field survey itself is conducted in April - August 2009

Competency Toyota products are also recognized by the media, as can be seen on the list of winners Autobild Award 2009 in which the Toyota Vios, Toyota Avanza Toyota Camry and was crowned as the best vehicle in the category Small Sedan, Big Sedan, and People Carry.

3. Segmentation

PT Toyota-Astra Motor, or commonly abbreviated by TAMs is a Brand sole agent (ATPM) Toyota Cars in Indonesia. TAM is a joint venture between PT. Astra International Tbk with the percentage shares of 51% and Toyota Motor Corporation, Japan with 49% the percentage of shares.

Products sold by the TAM itself are:

Sedan: Vios, Altis and Camry Mini MPV: Yaris and Avanza SUV: Fortuner and Rush Pick up: Hilux MPV: Innova and Corolla Truck: Dyna

Market segmentation Toyota-Astra Motor is as follows:

- Geographic Segmentation

In supporting the sales and after sales service, TAM is assisted by 5 Primary Dealers who oversees dealers spread all over Indonesia

Auto 2000 is the Toyota Main Dealer in the area of Jakarta, West Java, East Java, East Nusa Tenggara, Bali, Borneo and Sumatra in part

PT New Ratna Primary Dealer of Toyota Motor is in Central Java and Yogyakarta

Co NV Hadji Kalla TRD is Toyota Main Dealer in South Sulawesi and Southeast Sulawesi

PT Hasjrat Abadi is a Toyota Main Dealer in the region of North Sulawesi, Central Sulawesi, Gorontalo, Maluku, Ternate and Papua

PT Agung Automall is a Toyota Main Dealer in the area of Bali, Riau, Jambi, Bengkulu and Batam.

TAM now also have to have a website that contains the product being sold, info-info about toyota, forums, and community toyota car so it can further strengthen the relationship between TAM with consumers and consumers with the formation of the community.

- Demographic Segmentation

1. Gender: The car is offered can be purchased by men and women 2. Age: minimum 17 years due to the buying process must use the ID card 3. Price: Toyota offers car prices vary in accordance with the wishes of the buyer 4. Number of families: Toyota offers various types of car buyers as desired

- Psychographic segmentation

1. Social class: Toyota to offer products with different kinds of circles 2. Design: Toyota always release an innovative car design 3. Type: Toyota offers the kinds of cars such as mini MPV, MPV, sedans, SUVs, pick ups and trucks so that buyers can choose according to their own needs

- Segmentation Behavorial

1. Toyota Parts are easily available and cheap enough so the price is affordable 2. The legs of the car a more durable than competitors 3.Customer care 24 hours