Determining a logistics network for Toyota's spare parts distribution
Faculty of Applied Economics
, p. 31-35
University of Antwerp
Like any car manufacturer Toyota produces and distributes spare parts for maintenance or repair of sold cars. Toyotas customers in the spare parts market are dealers, that sell them to car repair shops, or use them themselves. To distribute the spare parts to the car dealers Toyota has set up a highly responsive distribution network that is able to deliver to any dealer within hours after an order has been placed. Peculiar about this network is that it is only partly owned by Toyota and involves a large number of so-called third-party logistics (3PL) providers. These are essentially transportation companies, that have some facilities for temporarily storing, sorting and packing the spare parts. Outsourcing part of the distribution makes Toyotas network more fl exible but also increases its complexity. The car manufacturer now faces decisions concerning which 3PL companies it should include in its network and which part of the distribution it should assign to each of the selected 3PL companies. We have developed a software tool to support these decisions. Toyota currently uses the tool to determine the optimal confi guration of its network. Moreover, the software has proven useful in increasing Toyotas negotiating power in its relationship with the transportation companies. This article describes Toyotas distribution strategy and the development and working of our tool.