E-commerce techniques used by Toyota Motor Corporation

E-commerce techniques employ by Toyota move locoweedThis report discusses the details of conducting a long-term comparison and abbreviation of the Automotive Industry-Covisint, specifically foc apply on Toyota Motor Corporation (TMC). The target of this comparison and analyses is to examine e-commerce techniques apply by Toyota Motor Corporation. TMC has get down the worlds astronomicst self-propelling manufacturer in regards to sales and occupation (Schmitt, 2011). With innovative teachings such as QR engine room and use of e-commerce practices inside their corporation, Toyota has become a premiseer with self-propelling practices.The practice of e-commerce in the self-propelled intentness has lead to increased parsimonys, profits, and productivity. Its sterling(prenominal) impact within the self-propelling sedulousness has been in the manufacturing process. E-commerce enables companies to alter their slip bureau in sectors such as Supply Chain Management (SCM) and B2B transactions.Covisnt is a orbicular wide on declension marketplace for the automotive intentness. fording, GM and Daimler-Chrysler launched Covisint in 1999 with intentions to become an on seam permute for supplying filament commission participants. The online auctioning portal allowed corporations to compete for customers ground on acquire needs such as price, quality and rake time.Since Toyotas formation in the 1930s, Toyota has grown to expand into international operations. Despite unlike obstacles such as recalls and labor disruptions, Toyota has continued to successfully increase achievement bit devising efficient decisions within their corporation. Aside from move technologies, TMC has as sanitary as veritable technologies that catch grown into industries outside of the automotive sector. Such technologies hold QR engine room, which is a 2D barcode that contains development in both vertical and naiant learnions, unlike traditional barcodes wh ere training is only stored in one direction. QR technology was initially designed for auto parts tracking, only if has become a common social media trait in outside companies. The Toyota Production formation has also grown to become a standard in legion(predicate) industries. The practice of use large number as people and not as machines has become a success story for Toyota, while being attribute as one of factors in Toyotas success. ERP technology has also been a B2B and ERP integrate model that has been growing within the automotive sector.E-commerce techniques such as online auctions and paper little transactions, has lead to shrinkd be and increased efficiency. The technology has demonstrated to be legal with manufacturing processes and building descents with subverters providers. Aside from B2B interactions, TMC conducts B2C activities. Goals and intents for TMC atomic number 18 strived towards with the use of business concern plans, cases, revenue models and determine propositions.Identifying strategic partnerships with suppliers will further increase cost liverys, create superior quality products and checker technological advancements. Focusing on e-commerce tools such as cloud calculation locoweed be used for reading change on a global scale. Social networking should also be invested into for global communication. With wet kinships, collaborative goals and sh atomic number 18d vision will achieve great profits for all participants. To ensure TMC endures the worlds largest automobile manufacturer, an investment into its front thinking culture must be maintained.Historical Background B2b automotive intentnesshistory of covisint cut through with(predicate), GM and Daimler-Chrysler launched an online marketplace for the global automotive industry by the name of Covisint in 1999. The inintial development of Covisint was to created to act as an online exchange for manufacturers and supply reach members. Covisint encom d iees three atomic number 18as of the vertical buy-side e-markets including e-procurement, supply mountain chain management and e-development. Between 2000 and 2001, manufacturers Renault, Nissan, and PSA Peugeot had joined as investors in Covisint. Also during 2001, Ford saved $70 million in procurement be by using Covisint (Konicki, 2001). Alongside Covisint, various other e-marketplaces were being developed to witness and piss goods. The competition of other e-marketplaces caused a concern for Covisint, who then rebranded its discover and servicesas an automotive industry softwargon solutions provider and standards luggage compartment (E-Marketplace Evolution).Covisints world-class step in its plan was to target online auction technologies since auction-driven e-marketplaces were the intimately popular business-to-business purchasing technology at the time. By using online auctions, corporations had the cap mightiness to work with competing suppliers within one platform . With competition, corporations could choose the best fit for their buying needs ground on price, quality and/or delivery time. Online auctioning has been attribute as an evolution changer as the success for e-marketplaces ar ground on supplier sourcing and price negotiation.Historical Background Toyota Motor CorporationIn the early 1930s, Kiichiro Toyoda began a trip to the US to learn slightly the automotive industry. Upon returning home to Japan from a trip Toyoda make from the US tour carious automotive production plants, Toyoda decided to blossom out up an automobile course named Toyoda at his fathers loom factory. By 1935, the first fomite prototype was created, while establishments of research centres were made by the middle 1940s. Following World War II in 1945, Toyoda was rebranded as Toyota. rather than following the Ameri hobo footsteps in producing medium-large sized fomites, Toyota decided to focus on working towards the creation of atrophied cars. Doing so g ave Toyota leverage in the automobile market as the only leader in small-sized fomites. It was in 1949 when Toyota was confronted a labor and management conflict because of an imbalance in sales and payroll department resulting in Toyota paying employees with long-term promissory notes rather than cash (History of Toyota). later on the resignation of President Kiichiro Toyoda as come up as the executive staff, Eiji Toyoda and Shoichi Saito replaced their positions. twain executives visited the US in anticipation of learning the ways of production in the automotive industry.Toyota discovered international reaping during the 1980s when the corporation was ranked second in worldwide production levels. During the 1980s, TMC became more(prenominal) involved with the Ameri crumb culture and joined forces with General Motors to create a manufacturing menage called sunrise(prenominal) United Motor Manufacturing Inc. (History of Toyota). It was also during this time when Toyota announ ced Ameri backside production facilities as part of their expansion. In 1992, Toyota ownership was transferred to Totsuro Toyoda. TMC had experienced an economic downturn during the recession, resulting in declining profits between 1991-1994. With new ownership, programs were implemented for reducing cost in various areas by 50 percent and production be were reduced by transferring production to oversea markets (History of Toyota).At the time Toyota professorship Hiroshi Okuda, introduced Toyotas invigorated Global Business Plan as a way to place focus on innovation and international expansion (History of Toyota). Toyotas freshly Global Business Plan objective was to localize production, and increase market share. Aside from production facilities, Toyota demonstrated initiatives in eliminating landfill waste and regulating stricter environmental practices. With Toyotas extensive growth in international markets such as Canada, India, UK, France and flop and chinaware, Toyota M otor Corporation (TMC) has grown to be one of the worlds largest automobile companies. By the year 2000, Toyota became the largest car familiarity in Japan, while holding the tertiary position worldwide.toyota production organisationDuring the late 1950s, Taichi Ohno and Shigeo Shingo had open up the Toyota Production brass (ToyoLand, 2011). Also known as weight manufacturing, the Toyota Production System was base on the theory that people should be used as people and not as machinery. Its concept was ground on Fords manufacturing body Ohno and Shingo had examine Fords system to determine where problems were occurring. During the initial stages, Ford had a number of problems relations with the treatment of its people as machines.The Toyota Production System is made up of Jidoka and just-in-time production (ToyoLand, 2011). As illustrated in Appendix A, the concept of Jidoka is based on automation with a human touch (Toyota, 2011). Jidoka ensures that defects do not pass t hrough the production process, eliminating the production of defective products (ToyoLand, 2011). Just-in-time production focuses on making what is needed, when it is needed, and in the amount needed (Toyota, 2011). Reducing the amount of products in armoury not only reduces required maintenance, but also reduces capital cost and allows for ease in technological advancements. Not only has the system been in effect(p) for Toyota, it has been implemented in a mountain chain of industries around the world.QR COdesIn 1994, QR Codes were developed by Denso-Wave. QR Codes were originally created for tracking automotive parts in vehicle manufacturing (Wave, 2010). Its Quick Response concept was based on 2D symbols, like to traditional barcodes. It functioned using scanner equipment, where the information contained in the symbol was contained in both vertical and horizontal directions, whereas traditional bar codes contain info in only one direction (Wave, 2010). Presently, QR codes ar e used in areas beyond the vehicle manufacturing line and are implemented into a run away of industries including entertainment, technology, social media, and untold more. Specifically in the automotive industry, QR Codes are used as shipping labels and receipts containing customer information, product identification, shipping addresses and overmuch more. QR Codes proved to be beneficial due to significant cost reductions and greater efficiency.how e-commerce has changed the industryThe rapid advent of e-commerce has resulted in dramatic changes within the business environment. Due to the unique structure of the technologies, there are more opportunities for businesses to take in from those advances. Using e-commerce related technologies, a businesses can reach their say-so suppliers and consumers worldwide. The automotive industry has benefited significantly from the advancement of e-commerce. General Motors, one of the worlds largest car manufacturers, traces its roots bum to 1908. With its global headquarters in Detroit, GM employs 209,000 people in all(prenominal) major region of the world and does business in more than one hundred twenty countries (General Motors Comp either, 2011). The industry has come to adopt e-commerce technologies by implementing Business-to-Business, and Supply chain integration models.By using the Business-to-Business model, automotive vehicle manufacturers flummox achieved efficiency in their daily operations. A typical B2B transaction within the automotive industry can be illustrated by an automakers need for direct material purchases from suppliers, while also having the ability to conduct sales. After the B2B related technology has been wide implemented in the industry, automotive companies are able to save be by eliminating paper-based systems, and reducing the usage of mailroom staff. Also B2B concepts have assisted companies reduce the potential errors made by the employees in order to modify the caller-outs i nfo accuracy. Without an Electronic Data Interchange (EDI) system in place, the company would lay out a potential loss. EDIs can define and transfer standard tell apartive information without human intervention. Finally, implementing a B2B model can improve the relationship between automobile manufacturers and suppliers in order to reduce procurement costs and improve efficiency. For example, Ford cooperated with its competitors creating an auto-exchange website (Covisint) to assist dealers meet suppliers online.By adopting a supply chain integration model, the automotive industry is able to manage information efficiently and create a smooth flow to distributors, suppliers, internal divisions and customers. Majority of automotive manufacturers are using ERP and CRM (Customer Relationship Management) systems in addition to managing their supply chain management process. ERP (Enterprise Resource Planning) is an industry term for the broad set of activities that serves a business m anages the important parts of its business (The, PP. 123). The results obtained from ERP can assist managers appraise the companys performance and see if it meets incorporate objectives. CRM is a model built to help organizations reach customers easily and receive feedback. Since this model integrates customers information to the overall enterprise, the supply chain management is improved efficiently.In the automotive industry, e-commerce platforms are normally used for automakers to buy material online from suppliers. For instance, Ford uses the system to divide the supplier for different levels based the components of a car. When the firm needs to buy systems or seats, the firm would inform first layer suppliers through its e-procurement platform. With that methodology, Ford can improve its relationship with suppliers, save transaction costs and reduce its stock list levels.industry analysis current possible future(a) state flow rateCovisints portal allows participants such a s manufacturers and suppliers to trade based on a standardized process. The goal of the Covisint is to create a standardized industry system that any manufacturer and its partners can access. In 2001, Covisint hosted 1,400 auctions, which led to over $51 billion cost of transactions (E-marketplace evolution, 2006). Covisint has currently extended its services to providing a range of applications for its customers. Unlike its original approach of creating revenues based on subscriptions and/or transactions fees from its e-marketplace, Covisint now generates revenues through its extended applications services. Design collaboration, procurement, supply chain management, quality control and portal solutions are some of the extended applications apart(predicate) of Covisints growth.In order to remain ahead of competition, corporations such as Covisint have begun to increase investment budgets for B2B infrastructures. By investing into new technologies, changes in day-to-day management practices can be shifted to increase efficiency and quality. Also, investment in B2B services can increase the variety of business interactions.Foreign automobile manufacturers are also entering the automotive industry, causing a holy terror to older corporations, such as Toyota Motor Corporation. The automotive industry faces a large amount of competition, where many factors may influence consumer and supplier decisions. Changes in technologies impact corporations based on their situation analysis. With increased technological advancements, a company may position themselves effectively while focusing on a specific target market.porters five forces AnalysisPorters Five Forces (Appendix B) are significantly affected with the advent of technology enabling business to e-business and can be examined in respect to the automotive industry.Threat of New Entrants (Low)New entrants, specifically foreign corporations, in the automotive industry serve as a threat. With low capital, knowledge and experience, corporations face a difficulty in staying ahead of the positioning curve. Using B2B models, corporations face an easier entry point, as companies are able to outsource more easily.Bargaining power of Suppliers (Low) The power of suppliers is especial(a) and has been determined to be in the hands of the automaker, who chooses to do business with the supplier. If the automaker were to dispose of the supplier, the supplier may be left in a troubled situation. As a result it is important as a supplier to reach and maintain motives/requirements of the purchasing partner.Bargaining power of Buyers (High) The automotive industry faces a great amount of bargaining power by buyers with their influence in automobile prices. With such a competitive market, prices are based on supply and demand. With real time access to information such as research and design, buyer power will take up to increase.Threat of Substitutes (High)Based on the automakers target market, the threat o f substitutes may be a concern. Substitutes include public transit, airplanes, or possibly a competing company who manufactures a different style automobile. Gas prices also act as an influence to substitutes, as one car may cost less than another based on fuel needs.Competitive Rivalry within the industry (Low) The automotive industry is an oligopoly, where the industry is controlled by a small group of firms/corporations. Price based competition is not the focus of competition, but emphasis in quantify added services have grown with automobile corporations.future possible stateBusinesses worldwide now use B2B e-commerce to buy over a trillion dollars in goods and services yearly (Boeth, 2009). By shifting the B2B automotive network to a cloud based environment, the future industry can expect reduced costs. Social networking tools are more readily available to help improve alliances and cooperation amongst barter partners worldwide. As technology continues to advance, communicati on structures enhance communication security, enabling industries such as the automotive sector to share confidential information securely.With an emphasis on an organizations rat line structure, the practice of outsourcing operations to emerging countries such as India and China is increasing. The future success of B2B in the automotive sector rests within its ability to fall in the online marketplace with Enterprise Resource Planning (ERP) systems. With the use of ERP platforms, costs an organization may incur can be reduced, while up(p) inventory management and developing positive global relationships around the world.toyota force corporation swot analysisA SWOT analysis is used to establish the efficiency of e-commerce within Toyota Motor Corporation, as wellspring as any potential profits that can be implemented. capacitysToyota Motor Corporation is an established international company and a manufacturing leader in the automotive industry. This allows its efforts in elect ronic commerce to be powerfully employed. The corporation is specialists in integrating B2B and B2C e-commerce into its business activities. The formation and employment of QR codes has provided TMC with a considerable lead in the automotive industry, ultimately decreasing costs and generating greater efficiency. The companys online showroom allows potential consumers to view the vehicles in customized forms by changing colour and allowing them to read up on added accessories and interior details. These showrooms ultimately promote purchase decisions. By using the internet, TMC has efficiently implemented online storefronts for vehicle purchasing. Toyota also has a strong system of reusing and salvaging parts through the use of e-commerce. Used parts are exchange on the web through distributors, as seen in Appendix C.weaknessesAlthough the company has implemented online showrooms, consumers are unable to make the final purchase. The online storefront allows consumers to select and research the vehicle they wish to purchase, but cannot do so without visiting a certified dealership which they are shown at the end of their purchasing decision. There is room for more advancement in the e-commerce world by allowing consumers to search, purchase, and have a vehicle delivered to the home, ultimately eliminating the absolute need for a brick-and-mortar dealership where the purchasing process is traditionally completed.opportunitiesContinual international growth through e-commerce is attainable. There is demand for environmentally friendly vehicles, an area of strength for Toyota. By recognizing the extent of this demand, Toyota can use e-commerce to exploit it through online advertisement and promotions (Bradbury, 2010). The internet has a great potential in reaching large audiences effectively while being efficient for both the seller and buyer, wherefore marketing opportunities are forever huge. There is also room for improvement in regards to manufacturing effic iency by developing social networking concepts and mobile computing practices in order to strengthen relationships with suppliers and buyers.threatsThe external environment is what ultimately provides threats to any particular business, and Toyota is not an exception. These threats can fall into several categories including reduced demand for the offered products, inability to meet consumer needs, and competition. Higher gas prices affects the demand for vehicles, making e-commerce efforts which have been promoting growth within TMC, become less effective (Bradbury, 2010). Competition in the automotive industry in respect to e-commerce is major, therefore Toyota must be sure to continuously improve and keep up-to-date with its rivals in terms of e-commerce implementation. By doing so, TMCs efforts in the e-commerce perspective will not be undermined.firm industry e-commerce effectiveness ImprovementsThe Toyota Production System (TPS), also known as lean manufacturing, has become a system looked up to by the automotive industry and has also been implemented into a range of industries on a global scale. This lean initiative not only dominates the automotive industry but has lately has gone beyond the shop floor to clerical offices and is even spreading to service industries (Likert, 2006). The recognition comes from the fact that with the use of TPS, Toyota continues to produce high quality vehicles fast and for less cost than most of its competition, which results in greater overall profits. They also manage more new vehicle launches annually than most of their competitors, thus creating a steady flow of high quality new products to meet consumer demand (Likert, 2006). Alan Miialty, who took over as chief executive officer of Ford in 2006 was quoted the following about TMC, Theyre arguably the finest manufacturing company in the world, Ive been a student of the Toyota Production System for my 37 years at Boeing. Ive been to Japan 47 times (Chappell, 2007) . Underlying the Toyota Production System are the involvements of people, processes and technology. The Toyota Production System requires underlying principles that effectively integrate many aspects of the organization including people, processes and technology. Toyota is able to accomplish this by creating a learning culture crossways the organization to include continual, comprehensive, and coordinated effort for change and learning across the organization (Likert, 2006).The use of e-commerce initiatives has contributed to the success of the Toyota Production System. Planning Perspective chief operating officer John Henke Jr. field of studyed 231 Tier 1 suppliers, where suppliers graded six automakers based on categories such as willingness to help suppliers cut costs, pay suppliers for cancel programs and reward guide suppliers with new business (Sherefkin, 2009). Although Toyota has always finished with top marks historically, Honda recently dethroned them in a North Ameri can survey as having the best supplier relations in the annual ranking. Honda, Toyota and Nissan remain above the industry average in supplier relations, while the Detroit 3 are below average (Sherefkin, 2009). Toyota engages e-commerce tools such as Covisint to emphasize its relationship management with its suppliers. As studies have shown, large hub firms are able to role power over their grad 1 (direct) suppliers (spoke firms) with an estimated 80% to 90% of tier 1 suppliers receiving or using EDI in Australia (Tanewski et al., 2003). Although Covisint has focussed on using XML Technology rather EDI (Tierney, 2004), the examples from Australia show the willingness of business-to-business e-commerce with both OEM manufacturers and suppliers. The use of Covisint allows Toyota to share information electronically with its tier 1 suppliers with lower transaction cost, therefore maintaining its lean production system. The transaction cost perspective is that the firm focus on more th an just production costs, but also the associated transaction costs to do business, which include all search and information costs, as well as the costs of monitoring and enforcing contractual performance (Robins, 1987 69). Prior to the development of Covisint, suppliers were using multiple software packages and file exchange formats to communicate with the different OEM manufacturers for engineering design information (Tanewski et al, 2003). This problem was addressed within the example of Covisint ensuring the benefits of this e-commerce exchange to be benefitted by all its members.Suppliers like Denso, makers of components for fuel saving hybrids, have also flourished due to their cooperation with of Toyota and will likely continue as they strive to become more of a global player. President Koichi Fukaya of Denso recently stated, Its Toyota first, Toyota is our biggest shareholder and originally like our father. Toyota holds a 21 percent pole in Denso and accounts for half of t he auto suppliers sales (Greimel, 2007). Keeping close striking with trading-partners like suppliers and information systems portals like Covisint, as well as industry groups has been extremely helpful for manufacturers to lower its costs. Only in this way can manufacturer avoid very costly or rush projects incumbent to stay in step with the industry and its customers (Piszczalski, 2003). Covisint has capitalized with the use of the internet to ensure these multi-million dollar auctions run more efficiently. By utilizing the internet compared to traditional facsimile machine based communication, online auctions can be finished in as little as 10 minutes. Typically, Covisints average auction lasts about 45 minutes, and allows suppliers to instantly see what others are bidding so they know how much to adjust their own price (Loftus, 2002). The ability to see the pricing of other suppliers have both positive and negative impact, as the speed of these auctions, suppliers are warned t o know what their lowest possible bid will be ahead an auction as there is hardly enough time to scranch the numbers if the prep work hasnt been done (Loftus, 2002).Significant savings can be realized by Toyota through the online auction function, as well as the progression into paperless purchasing transactions. In 2001, Ford revealed that it had conducted 65 online auctions for the year. The auctions helped Ford save about 19 percent, or $38 million, on purchases worth $200 million (Sedgwick, 2001). The growth of Covisint will only help still greater cooperation and adaptation from both OEM manufacturers and its suppliers in all tier levels. In turn all the manufacturers involved, including Toyota, will realize greater profitability and faster production time.Toyota Motor corporation e-commerce key conceptsToyota Motor Corporation has exemplified in the field of e-commerce. The corporation has implemented e-commerce concepts targeted towards maintaining strong relationships wit h their consumers, suppliers, and buyers. TMC has included B2B as well as B2C uses in their e-commerce activities. With the use of business plans, business cases, revenue models and value propositions, TMC has strived towards achieving business goals, benefits, and revenue growth.Aside from Toyotas involvement in Covisint, Toyota has generated their own line of electronic marketplaces targeted for private, public, and consortia sources. Toyotas involvement in business-to-business e-commerce includes transactions for direct materials. Common direct materials purchased and supplied by Toyota include automotive parts for the production of vehicles. Toyotas e-commerce trades are based on vertical marketplaces as they are dealt with only the automotive industry.In the year 2000, Toyota Motor Corporation announced that they would not conduct assort e-commerce practices. Based on Toyotas marketplace position, the internet as a jobber was not required, rather they would pursue in the inte ntion of independent business-to-consumer e-commerce activities (Greenberg, 2000). The e-Toyota division was created in January 2002 with intentions of strengthening Toyotas B2C relationship. e-Toyotas components included TID (Toyota Internet Drive) and GAZOO.com (Fujitsu). An illustration of TID can be found in Appendix D.GAzzo.comToyotas approach of business-to-consumer activities increased during the launch of GAZOO.com. GAZOO, an independent B2C website created by Toyota, was targeted towards prospective and current Toyota consumers. The website offers browsers e-tailing, internet malls, communication forums, vehicle information and much more (Toyota, 2002). Its plans included expanding into online brokering, financing, insurance, and dealers for future automobile purchases. GAZOO developers focused on creating a membership based website, where users obtained free membership by trading personal information. Based on data-mining techniques, Toyota discovered that 13.6 percent of website visitors purchased a Toyota vehicle within 6 months of accessing the webpage (Greenberg, 2000). Towards the end of the year 2000, GAZOOs membership numbers hiked to virtually one million, from its previous 430,000 in the end of 1999. Projected e-commerce revenues by 2003 were US$5billion (Greenberg, 2000).environmental initiativeToyota does not come short when working towards saving the environment. In 2001 Toyota announced their newest B2B e-commerce program. With the use of exchanges and auctioning, Toyotas recycling initiative introduced its promotion for reusing repaired/replaced automotive parts (Toyota, 2011). Used parts are sold nationwide online through part distributers. Appendix C illustrates Toyotas strategy in using e-commerce as part of its recycling initiative.G-bookThe development of Toyotas G-BOOK in Japan, which was based off of GAZOO, enabled subscribers to connect with navigation, news, weather, entertainment and much more (Toyota, 2002). G-BOOKs design provided information through radio receiver terminals connected to the Toyota vehicle internally. The technology was later introduced in both Toyota and Lexus line of vehicles. Its e-commerce component included its storefront for purchasing merchandise from GAZOOs Internet mall.e-crb (customer relationship building)Toyota Motor Corporation announced in e-CRB (customer relationship building) in 2004, table service as an e-commerce version for CRM (customer relationship management) (Toyota, 2004). The initiative was based on the G-BOOK technology. The objective of e-CRB was defined as improving the customer service relationships between dealers and consumers. e-CRB focused on improving customer service between the two parties, no matter their location in the world.Community activitiesToyota Motor Corporation stands strong behind their motto Make Things Better (Toyota, 2011). Online and offline, Toyota has continued to portray a positive image in involvement in a range of activities a ffecting the future of the well being of others. According to Toyota Motor Corporations corporate website, the following are examples of Toyotas community involvementsEducational Contributions (ie. Scholarships, improvements)Safety Contributions (Rehabilitation clinics)Special Olympics Canada case GamesEnvironmental InitiativesVolunteeringConclusionThis