Toyota Web-Enables Dealers, Supply Chain

Toyota Motor Sales USA is pushing the pedal to the metal to get its products and operations as Internet-enabled as possible.

The automaker's efforts to streamline its transactions with dealers and its supply chain aren't much different from earlier initiatives driven by rivals such as General Motors and Ford Motor, according to analysts. But Toyota is one of the first automakers to use the Web aggressively to connect with its dealerships, said Karen Peterson, an analyst at Gartner Group (US).

Toyota is also the first company to pursue an online replacement-parts aftermarket exchange.

Last week at the Planet 2000 trade show here, sponsored by i2 Technologies, Toyota CEO Yoshi Inaba outlined his company's wide-ranging Web initiatives. They stretch from providing automobiles with wireless access to live traffic and safety reports to connecting Toyota dealers in a virtually paperless communications network across the country.

With the rapid growth in the number of cars sold and models available internationally, success will depend on which carmakers use the Internet to capture and use information most effectively - particularly in areas such as supply-chain and customer relationship management, said Inaba.

For its part, Inaba said, Toyota is working closely with Dallas-based i2 to launch what the automaker is calling the Monarch Project, which is aimed at improving operations in Toyota's $US1 billion parts-replenishment business.

Inaba and other Toyota officials declined to disclose how much the company is investing in the project. But one of its goals is to use Internet connections to speed up communications between dealers and parts suppliers and distributors. I2 software will enable Toyota to order parts based on the time of year or region.

The project, slated to go live by 2002, should enable Toyota to cut its transportation costs by 25 per cent and reduce the "current day's supply of total inventory" by 50 per cent, Inaba said.

A major part of the initiative will be Dealer Daily, a Web-based portal that will connect Toyota's 1,300 dealers with its factories around the clock, improving parts ordering, sales and vehicle repair operations.

For example, dealers will be able to download sales and other company information directly from the Web using a virtual private network and leased lines, said Barbra Cooper, CIO at Toyota Motor Sales USA, in an interview last week. This will prevent Toyota from having to send two pounds of paper-based updates to dealers each week, slashing about $3 million in annual printing and distribution costs.

In the long term, Toyota wants to have complete visibility in its supply chain, said Cooper. Suppliers will be able to look at Toyota's parts inventories and automatically replenish them, instead of waiting for Toyota to make a request.

The new i2 system will also allow dealers to instantly locate the exact car model a customer has ordered - whether it's in a warehouse, on a truck or in a factory - and deliver it as soon as possible. This is a challenge other carmakers are currently wrestling with, said analysts.

Though it's not quite the build-to-order model Dell Computer Corp. uses to sell its PCs, Toyota's approach should greatly reduce the cycle time for customers to get their cars, Cooper said. "There are lots of improvements that can happen in the whole process," she said.

"When a company has significant buying power and relatively deep ties to its suppliers, they have the power to do it on their own without consensus from their peers," said Dan Garretson, an analyst at Forrester Research Inc. in Cambridge, Mass. Toyota has both and will use its muscle to streamline supply-chain costs, he said.

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