The fundamental concept of supply chain management (SCM) is one of the oldest concepts in the world of management. Almost 50 years ago, it was first introduced by Forrester (Mentzer, 2001). It has become one of the most popular and most widely researched concepts for the last ten years. According to Monezka and his colleagues the primary objective of supply chain management concept is “to integrate and manage the sourcing, flow and control of materials using a total systems perspective across multiple functions and multiple tiers of suppliers” (Mentzer, 2001). It is one of most important aspects in today’s business environment as it is a crucial component of overall value chain. This actually means supply chain is directly related to the aspects like customer satisfaction and value. In fact the main ‘purpose of supply chain management is improving customer satisfaction and value’ which is the main aim of a business organisation (Mentzer, 2001). Any supply chain is consisted of five main areas which are production, inventory, transportation, information and location. The effectiveness and efficiency of a company’s supply chain is dependent on the effectiveness and efficiency of these five areas. This paper focuses on two of these five factors, production and inventory. These two areas are analyzed in the context of Toyota which is one of those rare companies that are global renowned for their supply chain management. The paper provides a clear idea about the Toyota’s production system as well as its inventory management system. Moreover it also shows the way in which Toyota has identified and dealt with the capacities and limitations of its production system and inventory system.
Production and inventory are two of the most fundamental concepts in the field of business operations. At the present business environment which is intensely competitive, efficient and effective production system as well as inventory system is the key