Toyota’s Approach to Lean Procurement and Production

How Toyota Approaches Lean Procurement and Manufacturing as Part of the Toyota Production System

The Toyota Production System (TPS) is the manufacturing philosophy that dictates Toyota’s wider procurement strategy.  It is designed as a lean or ‘just in time’ procurement method, as it can eliminate waste and maintain high efficiency.  Applying the ‘just in time’ approach to procurement, it means Toyota can make products efficiently and at the pace needed by the demands of the market.

The TPS system is now one the most famous methods of production and working with suppliers in the world, and has been studied and adapted by many other organisations to achieve lean procurement principles.  

Toyota say the process follows a four point process, by making "what is needed, when it is needed, and in the amount needed"

  • When a vehicle order is received, production instructions are issued to the beginning of the vehicle production line.
  • The assembly line is stocked with the required number of all necessary parts so that any kind of ordered vehicle can be assembled.
  • The assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process, which is known as ‘the preceding process.’
  • The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.

What does ‘Muda’ mean in the Toyota Production Process?

The word ‘Muda’ in the TPS relates to the elimination of waste and other non-value adding activities. This reduces the amount of unnecessary consumption of company resources and so helps to increase profitability.  It is relevant to procurement and supply chain management with the inventory the business carries, as capital outlay that is not used quickly produces no income. 

Over production is also a key consideration, as it requires more parts to be purchased from suppliers than required, and results in larger batches than needed being produced.  

Toyota’s just in time production strategy 

The procurement and production strategy is dedicated by the needs of the Toyota customer, so products are not produced until they are required.  TPS is known as a ‘pull’ system, so when each vehicle is produced according to incoming orders, a signal is sent for used parts to be replaced by suppliers to keep the procurement and stocking of parts and materials at a balanced level.  This helps to cut the amount of purchasing and holding of parts in stock. This reduces the cost of storage in warehouses, and cuts cost-carrying by having too many parts in stock.  


Read more about the use of lean procurement and how to achieve it. 

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