Toyota was founded in 1937 by Kiichiro Toyoda in 1937 and is headquartered in Aichi, Nagoya and in Tokyo.
Slowly Toyota Motor Corporation became the largest and the most successful automobile manufacturer in Japan. Today It is the worlds largest automobile manufacturer overtaking Chrysler and Ford and neck to neck with General Motors. As per Fortune Magazine, Toyota is the worlds 5th largest publicly traded company. As a comparison, General Motors is 9th largest!
In 2009, Toyota's employee base numbered upwards of 350,000 across the world. Quite large as compared to the second largest General Motors, with its employee base of 250,000.
Amongst of the bouquet of its offering, Toyota offers, cars, pickups, minivans, and SUVs along with industrial automobiles such as forklifts and heavy trucks. Its brands such as Camry, Corolla, 4Runner, Land Cruiser, Sienna, the luxury Lexus line, the Scion brand, and a full-sized pickup truck, the V-8 Tundra are virtually household names.
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Toyota also holds a majority holding stake in Daihatsu Motors, and minority shareholdings in Fuji Heavy Industries Isuzu Motors, as well as Yamaha Motors. Toyota Motor Corporation today has 522 subsidiaries.
Toyota also offers consumer financial services through Toyota Financial Services and also creates robots. Toyota Industries and Finance divisions form the bulk of the Toyota Group, one of the largest conglomerates in the world.
Toyota became big thanks to its awareness of the increased competition in recent times. Toyota's ability to offer quality products to its brand loyal consumers has been the cornerstone of its success.
Toyota has developed many strategies to ensure not only this goal is reached once, but its reached over and over again. In pursuit of this ambition, Toyota has created excellent quality and management systems.
"Quality is a "predictable degree of uniformity and dependability, at low cost and suited to the market""
- Gitlow, 2001
This assignment offers an insight into the management policies and systems of Motor vehicles manufacturer Toyota to control their output quality.
Task 1 : Evaluation of strategic objectives of operations management within Toyota
a) Role and Importance of effective operations management
Operations management is a process that is a culmination of various input variables in a production/service unit with the objective of providing an output in terms of goods or services in a standardized manner as defined by the product or service specification.
Hence Operations function is fundamental to any business, regardless of whether the business is into manufacturing or service sector and without reference to any industry since operations is responsible to for ensuring the quality and the timeliness of the output with reference to
"The process of managing the operation unit activities with an aim of obtaining quality output of an organization's products or services is referred to as operation management"
- Panneerselvam, 2006
Clearly, operations management is important because in industries where customisation is required, operations and quality management ensures individualised attention to provide customer satisfaction. Moreover, it takes into consideration the speed of manufacturing or provision of services to ensure that deadlines are met. Any course corrections can be made with lower lead times and ensure that scarce resources are not wasted.
Hence effective and efficient operations and quality management can provide the cutting competitive edge to companies forcing utmost attention on their core competencies.
Therefore, Operations management is a fundamental cornerstone of overall quality and management systems in any business entity in any industry.
Strategic Objectives of Toyota and analysis of objectives with appropriate tools
Strategic objectives of Toyota are bred out of its aim at being competitive in the automobile market. This objectives are supplemented by clear operational and quality guidelines.
Objective 1:Expanded production over large geographical area.
Toyota ensures global presence by ensuring decentralized production for specific markets. These are complemented by single sourcing pattern to provide optimum costs and at the same time lower freight costs for deliveries. This is made possible by senior level managers who uphold standard operating procedures and standardisation of manufacturing processes in line with quality systems to ensure that the output is optimized in terms of time, cost and quality. This is the reason why Toyota is the leading brand that it is today.
Always on Time
Marked to Standard
Objective 2: Social responsibility
Toyota focuses its operations to ensure that customer safety and environmental safety is fundamental to its automobiles. Toyota makes sure that these are taken into consideration for every model regardless of the automobile's value or the brand. Hence this objective cuts across its product lines as long as they are a Toyota product. Even the cheapest models has built in reinforced crumple zones, airbags and disc brakes over and above what is mandated by law. In fact, only earlier this year, Toyota had to recall its Prius model (a hybrid car) due to failed safety standards, it did so all over the world, as a remedial action to ensure that the social responsibility of providing safety to its product users is constantly upheld. A mammoth task of worldwide recall of its products is not treated as a secondary task next to profit making and hence ensuring that the Toyota brand is treated with respect in the long run.
Objective 3: Fuel Economy
Toyota ensures that it manufactures automobiles with high fuel economy. Toyota are hence pioneers of usage of hybrid technology to manufacture engines that are fuel efficient and hence cost effective for the consumers. This opens up possibilities and markets such as developing markets so that the brand has an image of having low running costs. Of course, common sense suggests that cheaper a vehicle to run, the more will be the mass appeal. This strategy works brilliantly in economies where the composition of middle class and lower classes is high.
Objective 4: Low Cost - High Value products
Toyota has streamlined its operations to ensure that cost optimization takes place. This cost optimization is done with the objective of passing on savings to its consumers in the form of lower prices for its automobiles. By having a central point of sourcing for raw materials and negotiating with suppliers for better prices, Toyota has reduced its costs. Initiatives such as production being decentralized and sourcing from low cost countries such as China and India. This has helped the brand to be cost effective and enhance brand loyalty
Identification of performance operations objectives of Toyota and effectiveness of operations in meeting strategic objectives
One of the performance operations objectives of Toyota is to produce quality vehicles acceptable all over the world. A Toyota culture has been developed where the senior executives set specific quality outcome of a vehicle and direct their report directors to implement and the outcome will be used in their bonuses determination. The reports received will then be used by the vice presidents of Toyota to develop plans, set targets and implementation. The executives will care of nothing as long as set results are achieved (Liker, Hoseus & Center for Quality People and Organizations, 2007, P. 453). The developed plan will then be used by operational managers to produce the vehicles.
The quality of a vehicle is not simply the conformation to the laid down specifications but it includes other parameters. These include basic performance facts such as whether the vehicle can perform its primary function, any extra features that is fitted, how well the vehicle will be used without technical failures, the life span of the vehicle before being written off, the ability to service, the beauty and comfort as well as customer perception of its quality (Neely, 2007, P. 68). The sum of all these indicators being of good standards will give a suggestion of a good quality product from Toyota. Thus we can confirm that this performance objective on quality will enable the company achieve the strategic objective of producing quality vehicles.
Second performance operations objective of Toyota is on cost of producing a vehicle. Toyota uses cost benefit analysis in production operation. The managers will analyze the cost of using a line of production and if it meets the company requirements, the option is used. However if it does not meet the cost requirements, the option would be dropped and other options are considered iteratively. This process continues until the cost effective way of producing certain product is achieved (Rother, 2009, P. 53). Thus the strategic objective of Toyota of producing low priced vehicles is achieved through this performance operation objective. Therefore it is the responsibility of Toyota managers to ensure that all their production processes is within the cost budget and failure will mean that they will continue pursuing alternatives to the point of meeting set cost limits.
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Speed is another operation performance objective that encompasses the time taken from production to delivery of a Toyota product to a customer. The shorter the time taken indicates high speed performance at the company. The speed will refer to the duration it takes for obtain quotation, the time taken for a customer to receive the product, the number of times at which deliveries can be made to customers, the time taken in production and the duration of developing a new product for the market (Neely, 2007, P. 68). The overall speed will ensure that a lot of deliveries as well as high production. This is very important in ensuring that the strategic objective of increased volume of production and sales is achieved by the company.
The fourth operation performance objective is the dependability. This refers to the ability to stick to set out schedule of operation. This is to mean that a product will be developed within a standard required procedure without deviation to ensure its quality is maintained as well as speed. The dependability will also include the delivery objective on whether the Toyota product is delivered in required quality and on time while keeping the price low (Neely, 2007, P. 68). This performance objective will support the overall strategic objective increasing customer confidence on Toyota products.
The other performance objective of Toyota is flexibility. This will come in form of range and response flexibility. The range flexibility is a situation where Toyota is able to meet a diversified range of requirements in a product. The response flexibility of a company is its ability to change as soon as possible in situations which demand so. There have been additional flexibility requirements that go well in ensuring strategic objectives of the company are achieved. These include the ability to deal with raw materials of different qualities, output of diverse quality, changed products, altered delivery times, different production quantity, diverse production blend and ability to adjust to different input mix in production (Neely, 2007, P. 68). These are usually the unforeseen situations that a company may undergo. Therefore a company being flexible enough will adjust accordingly in any scenario. This is an important performance objective of Toyota that ensures that all its strategic objectives are achieved.
Design and monitoring of appropriate systems to ensure quality of food items
Resources, Tools and Systems required to support business process in improvement of quality of products
Resources are the requisite need of any company before the start of any operation. A resource is an input requirement which when mixed with other resources and utilized gives the desired outcome of any company. As for Toyota, the desired outcome is quality vehicle production whereas all resources utilized perform specific tasks. One of the major resources utilized by Toyota is people. There are executive decision makers, ordinary people and lean zealots (Liker, 2004, P. 269 & 260). The lean zealots are those that have led the cost cutting agenda of Toyota to achievable standards. For any company to achieve lean objective in its procedures, there must be employees who consider lean budgets a very important element and go to the length of defending.
The other people are executive decision makers of Toyota. These are the people who know little about the processes involved in making Toyota products but they are keen results. They are important for ensuring desired objectives and results are met by the company. There are also the ordinary people at Toyota. These are the normal managers and operational staff. They know the whole process of production to the point of sale and they carry out the technical operations of the company. They normally do their job without seeing the flow thereof or how it translates to benefit Toyota (Liker, 2004, P. 270). Their concern is to work and get paid and they follow instructions to the later.
Other resource used by Toyota is the technology. This has given a lot of benefits to Toyota because it has enabled it to be efficient in production. The use of technology to produce fuel economical engines is a great utilization of technology resource (Vaghefi & Huellmantel, 1999, 381). This is an efficient utilization of technology to ensure that the strategic objectives of Toyota were achieved.
The systems and tools used mean those developed programs specifically to be utilized by Toyota in order to meet its business processes. These tools are important because they ensure that accurate results are achieved and that production capacity is enhanced. An example of a tool used by Toyota is Quality Function Development (QFD). This is a customer centered method of management strategy because it focuses on anything that concerns a customer (Denton, 1991, P. 61).The QFD helps in assessing the customer requirements in order to focus all the attention on a customer while producing any product. Another example of a system being used is Toyota production system. This system has ensured minimal wastage during production and thus keeping the cost of production as low as possible. The system encourages total quality production utilizing technology. The tool has helped Toyota to develop acceptable vehicles in the market and as such lead to a successful business process.
Quality Audit Systems/practice to manage and monitor quality to standards specified by Toyota and process operated.
Quality audit is a process whereby an analysis of a system is carried out to check on its accuracy levels, functioning and effectiveness in carrying out the required tasks. The process of review is the act of confirming whether a system is performing required tasks as per set standards. According to Mills (1989, P. 17), a quality system review is a formal evaluation by management of the status and capability of a system in relation to quality policy and new objectives occurring from changing situations.
A system used by Toyota is called Toyota production system. The process starts from raw materials transformation to the point of finished products. The good quality audit should be able to examine the process analysis as well as operation analysis. The process analysis is the examination of the movements of raw materials or products from one point to the next. The operation analysis examines the job done by people and machines (Shingo, ShingÅ and Dillon, 1989, P. 4). Thus a good quality audit system should be able to review all the processes involved in Toyota production system.
The Toyota production system is based on lean manufacturing. Therefore an effective audit should be aimed at meeting lean manufacturing requirements. It includes an audit system which focuses on ensuring that the products meet the value expected by the customer. The audit should be able to identify areas where value is compromised and corrective measures recommended immediately (Russell, 2005, P. 237). The audit system should also be able to monitor the value stream. This is the process where the audit tests the value of the product as it passes through the various production processes and should be able to detect any variance as soon as possible.
The audit system should also be able to monitor the product movement in the Toyota production system. There should be a continuous flow without stoppage and the audit should be able to detect any such interruptions and recommendations suggested. In addition appropriate quality audit system should ensure that customers are supplied with the product only when they need to avoid dumping process which may cause excessive supply hence pulling the prices down (Russell, 2005, P. 237).
The other important factor for quality audit system appropriate is a system that ensures perfection is achieved by Toyota production system always. The system should ensure a continuous test process to ensure only improvements are accepted and any retrogressive happenings corrected immediately (Russell, 2005, P. 237). The quality audit system should be able to ensure a normal functioning of Toyota production system as expected and any technical errors detected should be corrected.
The quality system described above is important because is ensures the competitiveness of Toyota by ensuring that it achieves its strategic objectives without being affected by errors that may affect their system. This is because effective quality audit ensures that such errors are limited as possible. The system can be adapted by hiring experts who can develop such a system and then put in place at all times. This quality audit should be able to run concurrently with production process at all times for it to be effective in ensuring that Toyota production system achieves its performance objectives.
How to introduce a culture of quality consciousness to ensure continuous monitoring and development of the process.
A quality culture is defined as behavior that encourages trust and respect among individuals, shared belief of membership of an organization and a belief that constant improvement is for a common good to all (Dale, 2003, P. 184). According to Dale (2003, P. 184), quality culture in an organization is where all members share a common view of continuous improvement aimed at customer satisfaction. The change of culture in many organizations has been difficult but it is an important part in ensuring that all members have similar desires to achieve.
The culture of Toyota has been continuous training and improvement of its employees over time with the intention of ensuring that they offer excellent service to customers (Liker and Hoseus, 2007, P. 112). They have been taking its employees to classrooms for further trainings. Although, Toyota has a lot of employees it is important for it to develop detailed policies that encourages customer focus and constant improvement of employee performance. The need for a culture is important for future continued success of the company.
Improving organizational performance
Monitoring of systems and work activities in Toyota and identification of problems and opportunities for improvement.
Toyota has had its systems in place and has been developed over time. However, there have been problems which have caused losses to occur in 2009. Although it has been affected by economic crisis which hit world economies the system was not able to respond appropriately to avoid the loss. Therefore Toyota production system failed as indicated by recent activities of recalling defective vehicles. The intended purpose of the system was to detect and rework on several parts as it carries repairs to ensure what goes to the market is fault proof. Therefore the core strategic objective of producing quality and safe vehicles has been badly affected by recent activities of the company.
The major problem affecting the system is failure to deliver on its core purpose of detecting errors. This has led to failure to eliminate detective products and has caused wastage of time and resources in recalling the defective vehicles. This has caused loss of sales and focus thus reducing profits and maybe forced to situations of loss. The manpower used to repair defective vehicles has been diverted from its core duties of manufacturing to repair thus reducing the quantity produced.
The opportunity that Toyota can avail to improve its business process is to work on getting back the customer confidence on its products. This calls for systems improvement to make it error proof in the future and thus no problems pass without the notice of the company. The move to recall all the defective vehicles was wise in showing Toyota's concern on safety. The system should be focused more on safety improvement to eliminate serious errors like brake system failure which puts off prospective customers.
Recommendation of improvements to align with Toyota objectives and goals
Based on the strategic objectives of Toyota the recommendations are directed toward achieving these goals. The safety should be prioritized by Toyota by all means possible. This is part of the core objectives that the company should make vehicles of high safety. The problem that has befallen the company is because of safety. Thus I recommend that the company engage experts in improving the safety of all produced models.
Another core objective of Toyota has been low cost production. This has been affected by globally rising prices which may make it impossible for Toyota to maintain low cost. I would recommend that Toyota improve the quality standards of accessories so that customers will notice appreciating quality of the vehicle and may not respond negatively to upward price adjustment but rather appreciate added quality. This may be a good option to maintain both market share and make profit to sustain its future growth and development prospects.
The company should aim to use its flexibility performance objective effectively to be able to adjust to the changing business environment to avoid being found in scenarios where it cannot absolve itself from losses out of worsening market environment. They should use their diversification techniques to try new markets in the world through aggressive marketing which may bear fruits. They may go an extra mile by offering after sale service maintenance for extra duration or miles covered. This will raise their image and will work well to achieving their core objective of producing and selling the highest number of vehicles. This achievement will translate to high profit margins.
The system should be integrated to be able to accommodate above recommendations so as to be able to integrate the whole costs and processes involved. The opportunities available for Toyota is to carry out further research on its system of production to enable it carry out available adjustments in order to continue being competitive in the motor vehicle manufacturing industry. Thus the company should invest on further research activities on it business processes.
The recommendations will be possible to be implemented by the company because it is an already established in the sector and improving on available systems will be a success. The implementations and further engagement in research as the system is improved will turn the company to its profitability status as it was and customer satisfaction achieved. The core vision of the company will be attained in the long run.
Wider implications of proposed changes within Toyota
Development of an Implementation Plan for the evaluated recommendations and possible changes that may be required within Toyota
An appropriate plan for implementing feasible recommendations is first to ensure that the quality of the vehicles is achieved in terms of safety. All the quality analysis should be in done in order to achieve the customer confidence on the products. Once that is achieved, the company should embark on a marketing strategy as they include improved after sale services and other enticing attractions to their vehicles. Finally a continued research should be done on an ongoing process to ensure that flexibility of the company is achieved at all times. The possible changes after implementation is that the company will probably return Toyota back to its profitability status. Continuous research will suggest changes on a slight basis as the company continues in its day to day production.