Supply & Demand Workshop

1. & S D Supply and Demand Workshop Supply & DemandWorkshop MIDDLE EAST GROUP Dubai, United Arab Emirates March 22-23, 2005

2. Global Knowledge Center • Created in July 2002 GLOBAL 15 in 2010 MISSION Promote the practice of the Toyota Way in Sales and Marketing through the facilitation of knowledge building, sharing of global best practices and continuous improvement (kaizen). Day One-Final

3. Executive Committee GKC Steering Comm John Kramer Vice President TWSM Promotion Group (Tokyo OMD) Jeanne Glick Admin. Assistant Warwick Harvie Ray Lindland National Manager National Manager Ken Takagi Tammy Ching Jing Tadeo Erin Ilgen Manager Sr. Admin. Manager Manager Hugo Duran Ron Birkle Bill Burden Emma Gibson Financial Consultant Consultant TWSM Consultant Walter Lessberg TWSM Consultant GKC Organizational Chart GKC Champions Day One-Final

4. Global Knowledge Center • Learning forum for the practical application of TWSM principles (Way of Life/ Silver Book) • Development of a conveniently accessible knowledge sharing platform (www.toyotagkc.com) • Building global great practice know-how and innovative ideas on each customer touch point Day One-Final

5. & S D Supply and Demand Workshop Agenda – Day 1 Module 1 Introduction to Toyota Way in Sales & Marketing Module 2 : Vehicle Distribution and sharing of S&D processes Module 3 : Outline of S&D Operations Module 4 : Sales Forecasting and Sales Planning Day One-Final

6. & S D Supply and Demand Workshop Agenda – Day 2 Module 4 : Sales Forecasting and Sales Planning (continued) Module 5 : S&D Planning - Rundowns Module 6 : Key Performance Indicators – Setting and Analysis Process Day One-Final

7. Supply & Demand Workshop Ground Rules • Be on time • Turn off phone, pager, PDA • Participate fully • Respect differing opinions • Constructive comments Day One-Final

8. Participant Introductions • My name • Where I’m from & what I do • Length of time with Toyota and current position • What do you expect from this workshop? Day One-Final

9. & S D Supply and Demand Workshop Module 1 : TWSM Concept Day One-Final

10. The Toyota Way Toyota Production System The Toyota Way in Sales and Marketing The Toyota Way 2001 Day One-Final

11. The Toyota Way The Toyota Way 2001 Continuous Improvement Respect for People Challenge Kaizen Genchi Genbutsu Respect Teamwork Day One-Final

12. Toyota Way in Sales and Marketing • Purpose • Principles • People • Process • Practice 5 P’s Day One-Final

13. TWSM 1 Purpose • Align with heritage from Toyota’s predecessors • Link TMC, Distributors, and Dealers Dealer Distributor The Toyota Way in Sales & Marketing TMC Day One-Final

14. TWSM 2 Principles • Vision • Become the most successful and respected car company in each market around the world • Offer customers the best purchasing and ownership experience Day One-Final

15. TWSM 2 Principles • Mission • Customer First/Lifetime Customer • Radar for All of Toyota Day One-Final

16. TWSM 3 People • “The most important asset of Toyota and the determinant of the rise and fall of Toyota.” —Eiji Toyoda Day One-Final

17. TWSM 3 People 3 C’s for Harmonious Growth • Communication • Consideration • Cooperation • 3 C’s for Innovation • Creativity • Challenge • Courage Day One-Final

18. TWSM 3 People • Just-In-Time (JIT) • “Produce the right product, at the right time, in the right amount.” —Taiichi Ohno Day One-Final

19. JIT Jumble As a team, work together to unscramble the JIT definitions on the game board. Day One-Final

20. Fewer number and they are integrated into the system Customers’ orders pull the products through the dlrship Small batches are made with reduced setup time Everyone’s responsibility Emphasis is on small but continuous improvements High turnover with minimum inventory level Empowerment of workers enables quick response Satisfied, loyal customers = Repeat purchasers Multi-skilled, flexible and work well in teams The system pushes the products through the dlrship Large batches are made due to high setup time “If it ain’t broke, don’t fix it” attitude Low turnover due to high inventory level Q.C. Inspector’s Job Specialized and with strict work rules Centralized at management level Supplier’s are kept at arms length Sporadic customers = One-time buyers Day One-Final

21. The Toyota Way in Sales and Marketing Continuous improvement Respect for people • Purpose • People • Principles • Process • Practice Guiding principles The Toyota Way Toyota Production System The Toyota Way in Sales and Marketing Day One-Final

22. The Toyota Way in Sales and Marketing Own Customer Experience Search Obtain Purchase Visit Own the vehicle with confidence Obtain necessary information quickly and easily • Purpose • People • Principles • Process • Practice Obtain the vehicle with ease of mind Drop in to sales outlets with ease and pleasure Understand the value of the purchased vehicle Day One-Final

23. Objective • Create supply and demand operations that meet both • the expectations of our customers and the standards • of Toyota. • Fast, precise and high-quality supply to customers • Implement a sales and production plan without any • Muri (overburden), Muda (waste) and Mura (unevenness). Day One-Final

24. Sales Plan Create a sales plan in line with market trends Formulate sales promotions to accomplish sales plan Dealer Orders and Production schedule Allocate to dealers in the best possible way to optimize sales opportunities Allocation Schedule Create a production schedule jointly with both sales and production sides Vehicle Delivery Prepare a fair and flexible allocation schedule Deliver vehicles just-in-time OBTAIN Action guidelines Day One-Final

25. Workshop Mission Statement Facilitate your creation of an “OBTAIN” model • theoretical information • practical applications • associated with a credible and efficient monthly Supply and Demand operations Day One-Final

26. Challenge! Genchi Genbutsu! Kaizen! P-D-C-A Respect! Teamwork! The Toyota Way Day One-Final

27. & S D Supply and Demand Workshop Module 2 :Vehicle Distribution

28. TMS SELLING CYCLE Sales & Production Planning Production Negotiation Sales Analysis Area Allocation Sales Reporting Production Admin. Vehicle Sales Production Order Analysis Vehicle Admin. Dealer Allocation Production Order Vehicle Production Day One-Final

29. Supply and Demand Operation at TMS Monthly Operational Flow May June July Final Region Order Jun 5 Dealer Allocation #1 Jun 15 Dealer Allocation #2 Jul 1 Region Collect and compile result data May 1-31 Sales Forecast Jun 1 Order Validation & Processing Jun 5 Dealer Swaps and Order Changes Jun 15-Jul 10 Dealer Swaps and Order Changes Jul 1- 25 Sales Planning Rundown Jun 1 Preliminary Regional Order Jun 3 Suggested Region Order May 20 TMS Internal Sales Meeting Jun 1 Regional Allocation Jun 1 Production Evaluation & Scheduling Jun 3 Production Confirmation Jun 4 NAP Production Jul 1-15 NAP NAP Production Jul 16-31 Day One-Final

30. & S D Supply and Demand Workshop Module 3 :Outline of Supply & Demand Operations

31. S & D Operation Plan Action Do Check • - Sales forecast • Vision/Sales plan • Rundown • Adjust production order • - Adjust allocation S&D Operation - Production order - Allocation S & D KPI Day One-Final

32. S & D Operation Module Objectives: • To understand the purpose and role of S&D Operations. • To understand the monthly processes of the S&D Operation. Day One-Final

33. Purpose and Significance S&D Operations consist of two main processes: 1. Creating a Sales Plan 2. Creating a Supply & Demand Plan (Rundown) Day One-Final

34. Types of S&D Plan Sales Plan and S&D Plan can be divided into levels. Plan Type Plan Positioning Annual Plan (12 months ahead) Sales volume plan Compare with Annual Sales Target Rolling 6 month Plan (6 months ahead) Mainly, Sales volume plan Reflect Production Arrangements Monthly Plan N N+1 N+2 Mainly, N Production Order Adjust with DLR Order Reflect Allocation Plan Monthly Operation ( N ) Deal with additional/ revised order for the closest month N Day One-Final

35. Purpose of Annual Plan • Target sales volume • Base of production planning • Base of business planning Day One-Final

36. TMC’s Aim Identify the proper volume of vehicles to produce Market Demands Produce enough volume of vehicles in a shortest time Deliver vehicles in the shortest time Day One-Final

37. Making of Annual Plan • Based on previous plan and result. • Consider market factor changes • Economy, Market • Duty, Tax change etc. • Competitors movement • Price • Products • Promotions • Sales channel etc. Day One-Final

38. Making of Annual Plan • Set goal for the next 3 years • Find out most probable sales figure Share 30% Sales 2000units Share 30% Day One-Final

39. Process of approval May/Oct General Managers meeting 3 months work Board Meeting(Consultation) June/Nov Director/General Manager Meeting Board Meeting sales side July/Dec Board meeting production side Final Approval by board Public announcement Day One-Final

40. Utilization of Annual Plan Personnel Production Control Global Production Planning Vehicle Logistics Production Engineering Annual Plan Domestic Planning Overseas Production Planning Accounting Corporate Planning Procurement Plants Supplier Government Day One-Final

41. Gap between annual plan and result 400,000 units 12% increase ‘000 Day One-Final

42. Annual Global Sales Result ‘000 Day One-Final

43. Monthly S&D Operation • A fundamental activity in the automobile business • Accuracy and objectivity are necessary tools in decision-making Day One-Final

44. Purpose of monthly operation • Forecast market & sales for short term (a few months) • Determine adequate supply volume • Adjust and fix monthly production capacity Day One-Final

45. Market trends Sales results CC results Forecast Sales / CC’S and Create Sales Plan Sales/CC Forecast Sales target including Profit Sales Plan Inventory Back order S&D Plan (Rundown) Create S&D Plan Sales Meeting Production Order Allocation Plan Steps in the S&D Operation Day One-Final

46. Customer Contracts: • Are commonly used in Japan, Europe and Africa, but not in the U.S. and other countries • Some customers are willing to wait for the specific vehicle they desire. How long will a customer wait? • Signed, binding agreement • When undelivered, are back orders Day One-Final

47. Time lag of several weeks The Significance of Customer Contract Data Delivery Payment Sales talk Retail Sales Customer contract Sales Forecast alone will not guarantee high accuracy Customer Contract (CC) forecast is important for leading indicator of sales Day One-Final

48. What is a Customer Contract? What is your definition of “Customer Contract”? Day One-Final

49. N-2 N-1 DLR Collect/Compile Result Data (1)Forecast Demand (CC) Adjustments with Dealers (7)Adjust Allocation Plan/ Assignment Plan, as necessary (2) Create Sales Plan Distributor (3) Create S&D Plan （Rundown） (5) Allocation Plan (8) Final Full Spec Order (6) Preliminary Order (4) Suggested Order (9) Create Final Rundown Allocation Capacity Check TMC TMC Production Mtg For N mth production Steps in the S&D Operation ( Timing ) Internal Sales Meeting Day One-Final

50. Key Points of the Operation • Well-planned and flexible management • Backed by accurate Sales / Stock- vehicle status information (and Customer Contract information if available) Day One-Final