Toyota is a Japanese automobile company. According to USA Today," Toyota is as much a state of mind as it is a car company". The original idea behind the founding of the Toyota Motor Company came from the fertile mind of Toyoda Sakichi. The entrepreneurship attitude of Toyoda played a significant role in birth of Toyota Motors.
After the world War II, their starters were determined that Toyota should reestablish itself as a manufacturer of automobiles. Toyota, however, faced a number of problems in doing this:
The Japanese domestic market was too small to support efficient scale mass production facilities such as those common in America at that time.
The Japanese economy was starved of capital.
New labor laws introduced by the American occupiers increased the bargaining power of labor and made it difficult for the companies to lay off workers.
There was huge competition from America and Europe.
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The strategy weapon used by Toyota is their Operational Excellence.
"We place the highest value on actual implementation and taking action. There are many things one doesn't understand and therefore, we ask them why don't you just go ahead and take action; try to do something? You realize how little you know and you face your own failures and you simply can correct those failures and redo it again and at second trail you realize another mistake or another thing you didn't like so you can redo it again. So by constant improvement, or, should I say, the improvement based upon action, one can rise to the higher level of practice and knowledge." - Fuijo Cho, President, Toyota Motor Corporation.
Contribute to the economic growth of the country in which it is located ( external stake holders)
Contribute to the stability and well being of team members (internal stake holders)
Contribute to the overall growth of Toyota.
Toyota Objectives: "To create vehicles and a mobility in society in which people can live with a sense of safety, peace of mind, and comfort" - Toyota's Website.
Operations objective of Toyota is to "Zeronize" and "maximize" at the high level. Maximizing the positive aspects of their working and zeronizing their negative aspects, Toyota don't believe only in minimizing, they just want to eliminate the negative things out of their business, hence zeronizing. Their main operations objective is to deliver the highest quality, lowest cost, and shortest lead time.
To achieve the strategic objectives, as well as, operations objectives, Toyota used operational activity to achieve the target/ objective is shorter span of time. Some of these operations are:
Just in Time,
Muda, Mura, Muri - Waste elimination,
Kaizen- Continuous improvement,
Jidoka- in station quality, and
Kanban System- Ticketing system.
Resources, Systems and Tools:
The Toyota production system, in an emotional sense, is also known as the Toyota Way. Toyota way is more than tools and techniques. The main resource of Toyota is their employees who bring the system to life: working, communicating, resolving issues, and growing together.
Resources, Systems and tools for Toyota lead them for the following practices,
Base your management decisions on a long term philosophy, even at the expense of short- term financial goals.
Create continuous process flow to bring problems to the surface.
Use "pull" system to avoid overproduction.
Level out the workload (Heijunka).
Build a culture of stopping to fix problems, to get quality right at the first time.
Standardized tasks are the foundation for the continuous improvement and employee empowerment.
Use visual control so no problems are hidden.
Use only reliable, thoroughly tested techniques that serve your people and processes.
Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
Develop exceptional people and teams who follow your company's philosophy.
Respect your extended network of partners and suppliers by challenging them and helping them improve.
Go and see for yourself to thoroughly understand the situation ( genchi genbutsu)
Always on Time
Marked to Standard
Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.
Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).
Auditing activities at Toyota:
The Board of Directors holds meetings at least once a month to decide on important management issues, such as policies for the fiscal year, project plans and investment in facilities, while also monitoring conditions related to the implementation of operations.Â
The Company currently utilizes an auditor system. Five auditors (including three outside auditors) attend key company meetings in accordance with audit procedures and plans. They also conduct audit hearings and visiting audits as well as monitor the execution of operations of directors and the administration and the status of financial affairs of the group's subsidiaries. The Company also has established a dedicated post for internal auditing.Â Toyota has introduced an executive officer system separating executive roles into management decision-making and execution of operations with the objective of improving management efficiency and strengthening the supervision functions required in executing operations.
Toyota's rich Heritage is its Cultural aspects:
Toyota is carrying out various activities to contribute to the local community. To help the local civilians in terms of education, and giving out some money in charity for the local NGO's which are dedicated for the development of the people living.
Toyota's rich culture is not only for the outside of the company, but for its employees. They try to keep their employees very happy, so that the motivation level should always be very high. Communication plays a very vital role in the development of the culture of Toyota, where all employees are dedicated to provide in their best efforts for the organization, so as to achieve the objectives.
Issues Faced in Operations:
Mass Production: Toyota employed mass production methods pioneered by Ford. The basic philosophy behind mass production was to produce a limited product line is massive quantity to gain maximum economies of scale. High economy of scale was only because of fixed cost involved in setup. Another advantage of mass production is that each worker will only perform his job, so that the learning curve will improve and same employee can deliver more output with higher learning. But there were major problems in mass production, some of which are as :
Long production leads to higher inventory that had to be stored in large warehouses.
If there is any flaw in start up, the whole lot of production is rejected.
If a same product is being manufactured, the customer faces the diminishing marginal utility.
Just in Time: Production system can be improved by implementing just in time for delivery of goods from suppliers to the manufacturers. The main issues related with Just in time are as follows:
Operate with minimum resource required to consistently deliver the goods.
Just what is needed.
In just the required amount.
Just where it is needed.
Just when it is needed.
Jidoka: (in station quality) this method is quite useful for Toyota production system. The main issues related with Jidoka and the main problems are:
Since workers understood that any errors would be fixed at the end of the line, they had little incentive to fix the errors,
Once a defective part had been embedded in a complex vehicle, an enormous amount of rework might be required to fix it,
Since defective parts were often not discovered until the end of the line when the finished cars were tested, a large number of cars containing the same defect may have been built before the problem was found.
It is quite problematic for the organization to bring out the problems during operations, and the real problems come under the scanner once the product is in the market and then working for them seems a tedious task. The main issues were
Unused employee creativity.
Â Appropriate ways to solve the issues and Implement the change to ensure quality:
Using Pull system to avoid overproduction: The more inventories a company has, the less likely they will have what they need.
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Applying Heijunka (to level out the workload): The role of Production, planning and control has to do a lot of hard work to find out the exact number of desired production method. Leveling work load will have three other factors, also known as 3-M, Muda (Waste), Mura (Unevenness), and Muri (Overburden). Toyota employed systems to overcome from the three major problems of production to manage their employees
Keeping quality control simple and involving team members by creating quality circles. The attitude to solve the problems should come from within the department and all tasks should be clear in a one go. Redoing is just another crime in the production, as it consumes time and money.
Standardize the modus operandi, as standardization is the basis for continuous improvement (kaizen) and quality.
Sort: clear out rarely used items by red tagging.
Straighten: Organize and label a place for everything.
Shine: Clean it.
Standardize: Create rules to sustain the first 3 S's
Sustain: Use regular management audits to stay disciplined.
With this the implementations in their operations they have shown a tremendous results in making themselves the best quality producers, with growth in profit year per year.
Evaluate the strategic objectives of operations management within theÂ organization
a)Â Â Â Â Identify and explain the role and importance of effective operations management.
Answer: Operations management is of strategic importance to an organization, this is because all of the aspirations that modern day organizations have to excel in any of the following- mass customization, lean production, agile manufacturing, customer centric provision and so on, depends upon the ability of the organization to actually do these things and such capabilities reside within operations. For example, when, in late 1990's, Toyota announces their strategic intention to expand capacity and produce more automobiles, they did only by knowing their great operational capabilities and by year 2004, Toyota had indeed fulfilled their promise and had become the number two car producer in the USA.
b)Â Â Â Â Identify the strategic objectives of your chosen Organization and analyze them with the help of appropriate tools.
Answer: The main strategic objective of Toyota is to become the largest automobile producer, with great quality and low cost, that is to expand Toyota in all perspectives.
The basic tool used by Toyota is lean manufacturing. The Toyota Production System was developed to improve the quality and productivity and is predicated upon two philosophies that are central to the Japanese culture: elimination of waste and respect for people. Waste has been defined by Toyota as "Anything other than the minimum amount of equipment, materials, parts and workers (working time) which are absolutely essential to production."
Other main tools used by Toyota are:
Just in Time
People and Team work
Continuous Improvement ( kaizen)
Jidoka ( In station quality )
Heijunka ( Leveled Production)
Stable and Standardized processes
c)Â Â Â Â Identify the performance operations objectives of the same company and analyze how successful the operations are in meeting strategic objectives of a company. Your discussion need to be focused on Quality, Cost, Speed, Flexibility and/or Dependability
Answer: Operations objective for Toyota is to maximize the positive aspects and zeronize the negative aspects of working. Operations has to be implemented in a way to achieve the objectives of the company and Toyota stands fit to use their resources well to achieve these objectives in shorter time.
Quality: - Keeping Quality Control Simple and Involve team members. ISO-9000 (International Organization for Standardization) - 900 series for quality has awarded Toyota with the best practices to implement quality. The usage of Six sigma concept in their organization made the output such a fool proof one.
Cost:- By using 3M's- Muda, Mura, Muri; Toyota has reduced their waste and taken the employee satisfaction level to new heights and thus they have reduced the cost, by eliminating waste and getting higher efficiency from their employees, low set up time also plays a important role in reducing the cost of production.
Speed: Just in Time concept has helped them to reduce inventory as well as reduced the time of carrying goods from one place to another. Andon System also helped Toyota to place the semi finished goods from one work station to another in very quick time and with higher accuracy.
Flexibility: (FMS) Flexible Manufacturing Systems has also been used in Toyota, which makes Toyota to produce their goods in regard with the industry demands and sales predictions.
Design and monitor appropriate systems to ensure quality of product and services
Define resources, tools and systems required to support business process to improve the quality of products and services
The analytical tools for quality of products and services are:
Histograms: A histogram is a bar graph that shows frequency data. It provides the easiest way to evaluate the distribution of data.
Pareto Charts: They are Histograms aided by 80/20 rule adopted by Juran.
Cause and Effect Diagram: it helps in problem solving by creating a list of possible causes and their effects.
Scatter Diagram: It is used to study and identify the possible relationship between the changes observed in two different sets of variables.
Flow charts: It is a pictorial representation showing all steps of a process.
Run Charts: are used to analyze processes according to time or order.
Control Charts: are used to determine whether a process will produce a product or service with consistent measurable properties.
Define quality audit systems/practice to manage and monitor quality to standards specified by the organization and process operated. Also suggest ways as to how quality audit systems can be implemented in an organization.
Quality auditÂ is the process of examination of aÂ quality systemÂ carried out by an internal or external quality auditor. It is quite important for quality managers and is a key element for ISO 9001.
Quality audits are typically performed at predefined time intervals and ensure that the institution has clearly-defined internal system monitoring procedures linked to effective action. This can help determine if the organization complies with the defined quality system processes and can involve procedural or results-based assessment criteria.
With the upgrade of theÂ ISO9000Â series of standards from the 1994 to 2008 series, the focus of the audits has shifted from purelyÂ proceduralÂ adherence towards measurement of the actual effectiveness of theÂ Quality Management System.
Audits are an essential management tool to be used for verifying objective evidence of processes, to assess how successfully processes have been implemented, for judging the effectiveness of achieving any defined target levels, to provide evidence concerning reduction and elimination of problem areas. For the benefit of the organization, quality auditing should not only report non-conformances and corrective actions, but also highlight areas of good practice. In this way other departments may share information and amend their working practices as a result, also contributing to continual improvement.
c)Â Â Â Â Highlight the ways to introduce quality culture in your organization to ensure continuous monitoring and development of the process.
Â Answer: How to achieve Total Quality Management is no secret anymore. The Challenge is to make certain that a quality program really have a customer focus and is sufficiently agile to be able to make improvements quickly without losing sight of the real time needs of the business. The quality system must be analyzed for its own quality. There is also a need for sustaining a quality culture over the long haul. Some companies that gained a great reputation for quality in 1980 and 1990's have failed because: they have system without passion, or passion without system. So it is quite mandatory for the organizations to introduce the system of continuous improvements - Kaizen Institute have given some information on how to improve the organizations culture for a quality deprived one.
ImproveÂ organizationalÂ performanceÂ
Monitor systems and work activities in your organization and identify problems and opportunities for improvement.
The practical expression of Toyota's people and customer-oriented philosophy is known as the Toyota Production System (TPS). This is not a rigid company-imposed procedure but a set of principles that have been proven in day-to-day practice over many years. Many of these ideas have been adopted and imitated all over the world.
TPS has three desired outcomes:
to provide the customer with the highest quality vehicles, at lowest possible cost, in a timely manner with the shortest possible lead times
to provide members with work satisfaction, job security and fair treatment
It gives the company flexibility to respond to the market, achieve profit through cost reduction activities and long-term prosperity.
TPS strives for the absolute elimination of waste, overburden and unevenness in all areas to allow members to work smoothly and efficiently. The foundations of TPS are built on standardization to ensure a safe method of operation and a consistent approach to quality. Toyota members seek to continually improve their standard processes and procedures in order to ensure maximum quality, improve efficiency and eliminate waste. This is known as kaizen and is applied to every sphere of the company's activities.
Recommend improvements which align with the organization's objectives and goals and which result in a reduction in the variation between what customers and other stakeholders want and what products, processes and services deliver.
The methods of improvement which align the organization's objectives and goals and results in reduction in variation between the customers and other stakeholders related with the products, processes and the services delivered:
Kaizen - Continuous Improvement
Kaizen is the heart of the Toyota Production System. Like all mass-production systems, the Toyota process requires that all tasks, both human and mechanical, be very precisely defined and standardized to ensure maximum quality, eliminate waste and improve efficiency.
Toyota Members have a responsibility not only to follow closely these standardized work guidelines but also to seek their continual improvement. The day-to-day improvements that Members and their Team Leaders make to their working practices and equipment are known as kaizen. But the term also has a wider meeting: it means a continual striving for improvement in every sphere of the Company's activities - from the most basic manufacturing process to serving the customer and the wider community beyond.
It is perhaps not widely known that the 'just in time' approach to production that has now gained almost universal acceptance in world manufacturing was actually pioneered by Toyota. In fact, a Toyota engineer coined the term itself. Essentially, 'just in time' manufacturing consists of allowing the entire production process to be regulated by the natural laws of supply and demand.
Customer demand stimulates production of a vehicle. In turn the production of the vehicle stimulates production and delivery of the necessary parts and so on. The result is that the right parts and materials are manufactured and provided in the exact amount needed - and when and where they are needed.
Under 'just in time' the ultimate arbiter is always the customer. This is because activity in the system only occurs in response to customer orders. Production is 'pulled' by the customer rather than being 'pushed' by the needs or capabilities of the production system itself.
In Japanese 'jidoka' simply means automation. At Toyota it means 'automation with a human touch'. This principal, jidoka, of designing equipment and processes to stop and call attention to problems immediately when they sense a problem is a central concept of TPS.
The Toyota Production System has inherited the principle originated by Henry Ford of breaking down work into simple steps and distributing those steps amongst employees on the line. But employees in the Toyota system are in charge of their own jobs. Through their teams, they run their own worksites. They identify opportunities for making improvements and take the initiative in implementing those improvements in co-operation with management.
Evaluate the wider implications of proposed changes within the organization.
Just-in-time manufacturing and other elements of the Toyota Production System work best when they are a common basis for synchronizing activity throughout the production sequence. This is an egalitarian arrangement in which each process in the production flow becomes the customer for the preceding process and each process becomes a supermarket to the following process.
Independent suppliers participate on an equal footing with Toyota operations in the production flow, each fulfilling their own role in that flow.
The only participant in the entire sequence who does not answer to anyone is the customer who selects a vehicle in the marketplace. Suppliers who participate in the Toyota Production System enjoy the same benefits that Toyota does from the system. Just-in-time manufacturing can dissolve inventories at parts suppliers just as readily and effectively as it does at Toyota's assembly plants. Product quality improves, too. That's because the Toyota Production System includes measures for illuminating defects whenever and wherever they occur.
Suppliers who adopt the Toyota Production System also report improvements in employee-management relations. That is mainly because the system provides for an expanded role for employees in designing and managing their own work. It brings together employees and management in the joint pursuit of improvements in productivity, quality, and working conditions.
The changes within the organization is tending them to be a near market leader, by giving more profits by reducing the costs and increasing the revenues.
d)Â Â Â Â Develop an Implementation Plan for the evaluated recommendationsÂ and evaluated the possible changes within an organization.
The major recommendation for Toyota is to take their product to the newer market, which is totally free from competition like the countries of Africa, where there is almost no fierce competition. As Toyota is one of the major automobile manufacturers in world, and the likes of these countries could give them early mover advantages.
This implementation will take some time, by learning the cultures of these countries and this will change the working scenario of Toyota, to teach them the learning methods, the quality culture and all this will take some time for implementation.