Title: Balancing sales needs with supply chain needs: production control as the arbiter

Authors: Hiroshi Ozawa; Jeffrey K. Liker

Addresses: Graduate School of Economics, Nagoya University, Furo-cho, Chikusa, Nagoya 464-8601, Japan ' Department of Industrial and Operations Engineering, College of Engineering, The University of Michigan, 1205 Beal Ave., Ann Arbor, Michigan 48109, USA

Abstract: The bullwhip effect is a problem of variation in customer demand that gets increasingly large as it propagates backward through the supply chain. A common assumption is that the company must learn to better respond to demand changes through better information systems leading to elaborate scheduling algorithms and 'visibility' of demand in real-time. The Toyota production system starts with the foundation of a levelled schedule and seeks to reduce the problem itself by smoothing demand, thus reducing variability in schedules, and at the same time reducing the lead time of response. This paper, for the first time, explains in detail how Toyota levels the schedule and still manages to satisfy customer demand. It requires cooperation between sales and production mediated by production control. Information displays are very simple using nothing more complicated then spreadsheets.

Keywords: lean thinking; Toyota production system; TPS; supply chain management; SCM; bullwhip effect; production smoothing; logistics management; production planning; sales needs; supply chain needs; production control; spreadsheets; scheduling.

DOI: 10.1504/IJLER.2015.076660

International Journal of Lean Enterprise Research, 2015 Vol.1 No.4, pp.329 - 350

Received: 14 Jul 2015
Accepted: 29 Sep 2015
Published online: 19 May 2016 *

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