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SCH4801 Assignment 2
(COMPLETE ANSWERS)
2025 - DUE 30 June 2025
No plagiarism
[Year]
, Course
Supply Chain Management (SCH4801)
Book
Supply Chain Management
This document contains workings, explanations and solutions to the
SCH4801 Assignment 2 (QUALITY ANSWERS) 2025
QUESTION 1 QUESTIONS 31 MARKS Section A (question 1) consists of short
essay-type questions. Please note that the questions are based on the case
study – Toyota South Africa's Supply Chain Challenges: A Case Study in
Disruption and Resilience. Please use the underlined words for each of your
report's three (3) questions as sub-headings. Also, number your answers, for
example, 1.1, 1.2, up to 1.3. Also, remember to link your answer to Toyota
South Africa's Supply Chain Challenges: A Case Study in Disruption and
Resilience. Very important: When referring to Toyota, please note that you
cannot just provide the sentences from the case study. Your answers should
not contain replication from the case study but rather demonstrate your own
insight, analysing the information and explaining its relevance to the
discussion. This applies to all the questions. Also, all answers should be
based on the prescribed book's content and no other sources. 1.1 Inventory-
related decisions: Procurement managers at Toyota might, in future, only
source 40% from local suppliers and 60% from global suppliers, which might
impact their inventory decisions. To balance efficiency and responsiveness,
evaluate any three key inventory categories relevant to Toyota with possible
trade-offs for each. [9]
1.1 Inventory-related decisions
In the context of Toyota South Africa's supply chain challenges, particularly after the disruptions
caused by floods and the COVID-19 pandemic, inventory-related decisions have become critical.
The shift towards sourcing 60% globally and only 40% locally introduces new risks and
complexities, requiring procurement managers to re-evaluate inventory categories to strike a
balance between efficiency (cost minimisation) and responsiveness (speed and flexibility). The
three key inventory categories relevant to Toyota are:
1.1.1 Cycle Inventory
Cycle inventory refers to the portion of inventory used to satisfy regular demand during the time
between replenishments. For Toyota, which follows lean production and Just-in-Time (JIT)
principles, cycle inventory is kept low to reduce holding costs.
Trade-off: With increased reliance on global suppliers, longer lead times and transportation risks
mean Toyota may need to increase its cycle inventory to avoid stockouts. However, doing so
, increases holding costs and reduces efficiency, conflicting with lean strategies. Procurement
managers must decide whether to prioritise cost efficiency or buffer against uncertainty.
1.1.2 Safety Inventory
Safety inventory is held to guard against uncertainty in demand and supply. Given the increased
global sourcing, Toyota faces risks such as port delays, geopolitical instability, and fluctuating
shipping costs.
Trade-off: Increasing safety inventory improves responsiveness to unexpected disruptions but
ties up capital and increases warehousing costs. Toyota must balance the need for resilience
against the cost of holding extra stock. Strategic safety inventory for critical components sourced
globally could mitigate risk without undermining lean principles too severely.
1.1.3 In-transit Inventory
In-transit inventory represents goods currently being transported from the supplier to the
manufacturer. With global sourcing, the volume and value of in-transit inventory will rise due to
longer shipping distances.
Trade-off: While in-transit inventory allows Toyota to extend its global supplier base and reduce
local sourcing risks (e.g., floods in KwaZulu-Natal), it also means more capital is tied up in
goods that are not yet usable. Increased in-transit inventory also heightens vulnerability to
delays, affecting responsiveness. Toyota must weigh the benefits of global diversification against
slower replenishment cycles and the inability to react quickly to changes in demand.
Summary:
Toyota’s shift to a 60:40 global-local sourcing model necessitates a careful reconfiguration of its
inventory strategy. By analysing the trade-offs in cycle, safety, and in-transit inventory
categories, procurement managers can better align inventory decisions with the dual goals of
resilience and cost efficiency in a volatile global environment.
1.1 Inventory-related decisions: Procurement managers at Toyota might, in
future, only source 40% from local suppliers and 60% from global suppliers,
which might impact their inventory decisions. To balance efficiency and
responsiveness, evaluate any three key inventory categories relevant to Toyota
with possible trade-offs for each.
A shift in sourcing strategy from a predominantly local supplier base to a 60/40 split with global
suppliers would necessitate a re-evaluation of Toyota South Africa's inventory management.
This change directly impacts the balance between achieving supply chain efficiency, which
focuses on cost minimization and lean operations, and responsiveness, which emphasizes agility
SCH4801 Assignment 2
(COMPLETE ANSWERS)
2025 - DUE 30 June 2025
No plagiarism
[Year]
, Course
Supply Chain Management (SCH4801)
Book
Supply Chain Management
This document contains workings, explanations and solutions to the
SCH4801 Assignment 2 (QUALITY ANSWERS) 2025
QUESTION 1 QUESTIONS 31 MARKS Section A (question 1) consists of short
essay-type questions. Please note that the questions are based on the case
study – Toyota South Africa's Supply Chain Challenges: A Case Study in
Disruption and Resilience. Please use the underlined words for each of your
report's three (3) questions as sub-headings. Also, number your answers, for
example, 1.1, 1.2, up to 1.3. Also, remember to link your answer to Toyota
South Africa's Supply Chain Challenges: A Case Study in Disruption and
Resilience. Very important: When referring to Toyota, please note that you
cannot just provide the sentences from the case study. Your answers should
not contain replication from the case study but rather demonstrate your own
insight, analysing the information and explaining its relevance to the
discussion. This applies to all the questions. Also, all answers should be
based on the prescribed book's content and no other sources. 1.1 Inventory-
related decisions: Procurement managers at Toyota might, in future, only
source 40% from local suppliers and 60% from global suppliers, which might
impact their inventory decisions. To balance efficiency and responsiveness,
evaluate any three key inventory categories relevant to Toyota with possible
trade-offs for each. [9]
1.1 Inventory-related decisions
In the context of Toyota South Africa's supply chain challenges, particularly after the disruptions
caused by floods and the COVID-19 pandemic, inventory-related decisions have become critical.
The shift towards sourcing 60% globally and only 40% locally introduces new risks and
complexities, requiring procurement managers to re-evaluate inventory categories to strike a
balance between efficiency (cost minimisation) and responsiveness (speed and flexibility). The
three key inventory categories relevant to Toyota are:
1.1.1 Cycle Inventory
Cycle inventory refers to the portion of inventory used to satisfy regular demand during the time
between replenishments. For Toyota, which follows lean production and Just-in-Time (JIT)
principles, cycle inventory is kept low to reduce holding costs.
Trade-off: With increased reliance on global suppliers, longer lead times and transportation risks
mean Toyota may need to increase its cycle inventory to avoid stockouts. However, doing so
, increases holding costs and reduces efficiency, conflicting with lean strategies. Procurement
managers must decide whether to prioritise cost efficiency or buffer against uncertainty.
1.1.2 Safety Inventory
Safety inventory is held to guard against uncertainty in demand and supply. Given the increased
global sourcing, Toyota faces risks such as port delays, geopolitical instability, and fluctuating
shipping costs.
Trade-off: Increasing safety inventory improves responsiveness to unexpected disruptions but
ties up capital and increases warehousing costs. Toyota must balance the need for resilience
against the cost of holding extra stock. Strategic safety inventory for critical components sourced
globally could mitigate risk without undermining lean principles too severely.
1.1.3 In-transit Inventory
In-transit inventory represents goods currently being transported from the supplier to the
manufacturer. With global sourcing, the volume and value of in-transit inventory will rise due to
longer shipping distances.
Trade-off: While in-transit inventory allows Toyota to extend its global supplier base and reduce
local sourcing risks (e.g., floods in KwaZulu-Natal), it also means more capital is tied up in
goods that are not yet usable. Increased in-transit inventory also heightens vulnerability to
delays, affecting responsiveness. Toyota must weigh the benefits of global diversification against
slower replenishment cycles and the inability to react quickly to changes in demand.
Summary:
Toyota’s shift to a 60:40 global-local sourcing model necessitates a careful reconfiguration of its
inventory strategy. By analysing the trade-offs in cycle, safety, and in-transit inventory
categories, procurement managers can better align inventory decisions with the dual goals of
resilience and cost efficiency in a volatile global environment.
1.1 Inventory-related decisions: Procurement managers at Toyota might, in
future, only source 40% from local suppliers and 60% from global suppliers,
which might impact their inventory decisions. To balance efficiency and
responsiveness, evaluate any three key inventory categories relevant to Toyota
with possible trade-offs for each.
A shift in sourcing strategy from a predominantly local supplier base to a 60/40 split with global
suppliers would necessitate a re-evaluation of Toyota South Africa's inventory management.
This change directly impacts the balance between achieving supply chain efficiency, which
focuses on cost minimization and lean operations, and responsiveness, which emphasizes agility
