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In this section we will cover the role of operations management in a business and highlight the importance of effective operations management. In order to understand about operations management, we need to know what exactly we mean by the term operations. The actions which involves the management of company’s resources and processes (action of production and delivery of the service and the products is called operations. Every business and organisation has and needs operations and its management. When we are talking about Toyota’s operations management, it will be regarding the production and delivery of cars and financial services.
Conversion sources like employees and resources
Already transformed sources like data about the product, reliable customers
Customer service delivery
In any organisation, the operations management needs to be effective as it has an impact on the image of the organisation, the quality and amount of service given, the finance, profits earned by the company to even the on time delivery of there products. Due to effective operation management, most of the businesses have been able to increase there production and have been providing good quality of service and products. Operation Managers and required for effective operations management. People who are part of operations management cover a specified area of focus individually.
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Role of operations management: In order to get a clear understanding about the role of operations management, we will consider the example of an organisation whose input in some product results in the output (product delivery).This process can be called as the conversion process of an item. The operations management’s responsibility is to convert the input actions into a successful output action. The process has been depicted in the below flow chart:
Importance of effective operations management: By the above flow chart we can clearly understand how important an operation management is for any organisation. In o order for any business to succeed and achieve it’s goal for long term, effective operations management is required. The main importance of operations management is that it uses the current resources of the company to develop products and services that can satisfy the requirements of the customers. Effective operations management required a person to be creative, imaginative and a lot innovative, and also who can help in constant improvement in the quality of product and service of company. Effective operations management can bring in lot of profit and increase the number of customer by the efficiency. Effective operations management manages to reduce the extra cost required to produce any articles for customers.
19.1.b Analysis of strategic objectives of Toyota
Toyota was established to fulfill certain requirements of people that can keep them happy. Toyota has listed some if its objective in order to keep up to there foundation:
Toyota believes in helping each other to lead a wonderful and happy life.
Toyota wants to keep a balance between development of a versatile culture and clean environment.
Toyota wants to make sure needs of the future generation is met appropriately.
Toyota wants to launch new product to keep improving the markets.
Toyota wants to increase there market share by expansion of there business worldwide.
In order to get understanding of the strategic objectives of Toyota, we will perform SWOT analysis.
Strength: Toyota has been focusing on segmentation, target and positioning in majority of the market hence they have been able to receive huge profits. The company has right kind of product which is specific for that market. Toyota has become a popular choice among the people due to its quality, and wide range of products. Depending on the requirement of a commercial business or private need, company can develop a product for the person’s requirement. Toyota completely believes is total quality management and utilized the marketing techniques to fulfill the needs of there customers.
Weakness: The market is getting filled with different dealer hence Toyota needs to regularly work on developing new models to keep up to there customer’s requirement. AS Toyota is mainly selling there products in Japan and United States of America, they are facing competition hence they need to start focusing on other countries like United Kingdom. In order to keep up the competence company needs to keep on the production of vehicles. The market situations affect the performance of the company every time (whether market is up or market value is down).
Opportunity: Toyota and Lexus (operated by Toyota) have been developing environment friendly automobiles. Due to innovation in technologies, Toyota has been able to be a brand dealer for selling these technologies to other companies. Toyota mainly targets the youths of the market and tries to develop products which can attract youth. The newly launched vehicles have got all the facility that can attract anyone starting from provision for good music to the cars being totally convertible.
Threats: Recall of the products has always been a threat to the company. Company has been incurring huge loss due to this factor. Responses to legal notices have been delayed most of the time costing the company a lot of cash. There are many car manufacturers in the market who are developing tremendous variety of vehicles giving huge competition to Toyota. Many new companies are emerging from Europe and even China. Trade and industry factors are prospective threats to Toyota.
19.1.c Toyota performance operations objectives
How do organization’s meet there targets and strategic objectives? This question might look simple but the underlying fact is very important to understand. A company’s performance operations objectives actually help them to reach there targets. In order for operations to meet the strategic objective of the organisation, they need to make sure all the following standards are met:
In order for any performance objectives to be successful, it needs to be very specific, quantifiable, answerable, practical, timeline based and linked to the company’s objective. In this part we will analyse the performance operations objectives of Toyota in terms of the above mentioned factors.
Quality: Toyota has been the first choice of many customers over other companies for many years. Due to the quality of products offered by Toyota, it is the world leader in quality and safety of the product. Whenever any customer approaches any company for any product, they just don’t see how the product will be delivered; they want to make sure that the product offered is of high quality and within there budget. Toyota is mainly known for their world famous environment friendly cars but due to the recent recalls there is a question that has been raised on the quality of the product offered by Toyota. To make sure the company is able to live up to the standards of the first performance operation objective of quality, Toyota has been implementing many quality control measures to make sure that every car is evaluated before launching in the market and put for sales. Due to these control system, Toyota has been developing quality cars and product worldwide.
Speed: When it comes to one of important performance objective like Speed, Toyota has been leading companies in the market. From the time customer places the order till the time of product delivery, Toyota has implemented various production system and monitoring system to make sure that product are developed faster and consume lesser time in production (keeping in mind quality aspect also).
Cost: Every customer looks are for companies that they fulfill there specific requirement and should be easy affordable to them also. Cost is one of the important factors for the success of any organisation. Toyota makes sure that they reduce additional expenses involved while development of the products likes cars and electronics. Toyota has been developing and launching vehicles that can be afforded by many people of different classes.
Flexibility: Toyota being the market leader, keep an eye on the competitors and the environment/market conditions. Customers requirements and selection changes on daily basis and they try to look for companies who can offer the required product. Toyota understands the market requirement and the product that can make difference in the life of the customer. Toyota has been able to adjust to the various market conditions over the year and achieving there major aspect of the performance operation objective.
Dependability: Toyota is always trusted brand of the customers as they have been highly dependable over the year in meeting the requirements of the customers. As we have already discussed, customers are the top priority for Toyota hence they have implemented JIT system and Kanban system to make sure that the worker are able to deliver the required products to the customers on the stipulated time and with great quality.
Task 19.2 Toyota’s business Process
19.2.a Toyota’s business process description
In this part we will highlight the systems, techniques and the resources that aid in the business processes of Toyota. Business processes are the compilation of all the coordinated activities that are formulated and structurally implemented in the development of a product. Business processes are very important for any business as it helps the company earn revenue and help in the collection of the expenditures. All the business processes within the organisation are dependent and related to each other. Implementation of Business process Management in Toyota has helped the reached where they are now as the world leading manufacturer of automobiles and vehicles. Toyota follows the lean process for organizational development.
Toyota has implemented the Business process management system to support there business processes. Toyota has been performing excellent based on the Lean process system of business management. Toyota has also implemented the Colosa’s business management software namely Processmaker and also Assembly line control system to support there business process. This help to them save time as well as the cash. They have implemented these business process management systems to recue wastage of raw material as well as man power. Toyota has been working on Toyota production system (TPS) which focuses on the reduction of wastages than can have a negative impact on the production and quality of Toyota products.
In order for the business process to be operated, various tools are required to use the resources and the system to give out an output product. There are many tools required to get the business process in place. The tools have been listed below
Process definition tool: Graphical pull and drop tool used by companies to define there business process, actions and rules and the relevant flow of information is known as process definition tool.
Process stimulation tool: Process stimulation tool is to recognize the requirement of resources or any issue right at the beginning of definition of process.
Application development tool: These tools are utilized by the companies to develop the application relevant to the business process.
Process management tool: Process management tool help in monitoring the process and provide wide range of tools of data analysis.
System administration: These allows the system administrators to configure the electronics and application required for the functioning of business process like server, monitors and giving access to important people.
Workflow and rules server: As per the requirement of the business process workflow and server assign task to the people working in the organisation.
Process execution medium: Process execution medium help to assign work to employees and keep on checking on the completion of the task.
There are many resources required to support the business process at Toyota. Resources are one of the main factors for the functioning of business process. Today Toyota is one of the leading companies because of the usage and performance of the resources appropriately. For example for the car manufacturing to function appropriately, Toyota will need resources like raw material, oil, manpower, proper production and manufacturing system and mainly the delivery system. Work cells, SPC, Kanban and JIT are among the other tools and techniques utilized by Toyota to support there business process.
19.2.b Review and quality audit system of Toyota
In order to understand quality audit and review system, we need to first understand about the quality management system. Quality management system can be defined as the process, actions, and resources of the business required delivering the quality management.
Quality Audit system: Quality audit system comprises of methodical examination of the quality system within an organisation. This auditing can be carried out either by an internal or an external auditor.
Quality Review system: Quality review system in simple terms can be defined as the comparison of product or process against a standard set quality level.
Quality audit and review the organisation can figure out the underlying failure reasons and develop a strategy to encounter the issue on time.
As Toyota the first fundamental of quality control policy is that every employee whether its from top management or at an employee level, needs to remember that customers are the main criteria of the policy and this the base for all the quality control activities at the company. Toyota has always focused on developing products which are user friendly as well as environment friendly. They have made sure that the products are in reach of the customer’s pocket. Toyota has been working on Toyota quality control system to maintain there standard in the market. Toyota has developed various principles to achieve these standards:
As we know Toyota mainly focuses on its quality control hence they always try to implement new techniques and quality control system. A proper quality audit system is required in any organisation to meet its objectives and achieve goal. In order for Toyota to meet its objectives and manage its quality monitoring and standards, following procedures can be implemented:
Toyota needs to implement all the three types of audit systems like internal, external auditing.
In order to perform the internal audit, the senior management needs to aware of all the requirements and the need for quality policy of the organization. They need to involve all the executives of management and develop and proper quality policy which covers all the requirements of customers as well as the company’s.
Toyota needs to make sure that there staff and senior management understands the importance and the need of the quality policy in the company.
Toyota needs to make sure that an internal panel of auditors needs to questions every worker in the organisation about the knowledge they have about there company’s policy.
Once the requirement is met by the internal auditors, company can get an external auditor to verify the company’s performance. The external auditors will verify the performance based on the quality policy. They should verify if the employees are working towards maintaining the quality standards and achieving the objectives of the company or not.
Toyota Company needs to meet the quality management standards as per ISO 9000, 9001 and 9004. Auditors will need to provide all the possible evidences for any changes that they are recommending.
Based on the review data given by the internal and the external auditor, Toyota can measure there performance and required changes that needs to be implemented to meet the quality standards.
19.2.c Quality culture in Toyota company
In this part we will highlight the quality culture in Toyota Company. Quality culture in any organization is very important factor. Quality culture in simple terms is incorporating quality in every system within the organisation which helps the organisation to not only achieve their goals and objectives but also develop happy customers. Just by changing the mindset of the people in the management can be considered as the tool for developing quality culture in organisation.
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Eiji Toyoda, the Vice president of Toyota Company, in the year 1960, formulated Quality control principles and started the quality culture in Toyota. After the formulation of the principles, Toyota started focusing on Total Quality Control System to make sure every individual focuses on the self quality of work put forward. In order to make sure every aspect of quality is reached, specific team were made. Raw material required for the production of the products undergoes vigorous checking and examination before sending to the production factories.
Toyota has formulated “The Toyota Way”, which is a collection of the principles of the company for production and quality. This was first started in the year 2001 and was called The “Toyota Way 2001”. The main focus of the culture was to improve continuously and keep respecting the customers. The collection of the 14 principles of the Toyota way has been updated in the book, “The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer” (Liker J, 2004)
Toyota utilized the Toyota Production system to make sure that negative impact factors are eliminated (which can affect the quality of the product). As per the recent review and during the 2007-2010 financial crisis, authors and customer have reported that Toyota is no longer concerned about the quality products and have got deviated from the quality culture that has made them world leaders. Toyota needs to make sure that they start focusing and re-implementing the 14 principles to get back there quality culture:
Toyota needs to start developing new goals and work strongly towards achieving it.
Based on the current market situation, Toyota needs to start looking out for the areas of improvement and start working on it.
Toyota needs to start monitoring and analyzing situations within the organisation to avoid issues later.
Toyota needs to start understanding that in order to be in business they need to keep on developing products in such a way that it meets the market requirement and avoid over production in the factories.
Task 19.3 Toyota’s business improvement plan
19.3.a Factors effecting Toyota’s business performance
Toyota has always been known for the quality for the products that they have been offering over the years, but due to the recent recalls of the car models like Prius in 2010 has affected the company’s business performance a lot. This problem cropped up due to the safety concerns created by the faulty accelerator pedals in the cars. Toyota has to refocus on the ABS system. Toyota has been condemned in the past for taking advantage of the worker in terms of hours of work and safety issues in the factories. Toyota has faced huge loss due to the faulty accelerator pedal which is nearly 2.3 million automobiles in United States.
Even before the recent recalls, Japanese workers have been complaining about the poor quality of products and poor working environment. Member of the union labor kept on putting pressure on the Toyota management regarding the safety concerns and construction of plants, but Toyota didn’t show much concern over it and we still working more or less like non-union workers. Many complaints were logged regarding the forceful working, work without payment and even physical abuses that the workers were undergoing. Over the past years company has been charged for breaking the environment safety conditions. (John M, 2010)
Opportunities to improve the business performance
Toyota needs to focus on there continuous improvement principle. Toyota has always been known for the quality, and since the launch of Prius Hybrid vehicle, Toyotas has been able to regain the lost image in the mind of the customers. The have been able to get back in the business and there status in the market. Not only Toyota but many other companies got affected due to the financial crisis on 2007-2010, but Toyota has made efforts to emerge as winner out of all the complaints and become world leaders in automobiles.
Toyota needs to make sure that they keep up on the quality policy and develop appropriate system to measure and monitor the vehicle before launching it in the market. Toyota needs to get the top management more focused to make sure the recent activities such as recalls are not repeated again as it ruined the company’s performance completely.
19.3.b Business improvement plan for Toyota
In this part we will summarize the improvement methods that can be implemented by Toyota in order to minimize the issues affecting the company’s performance and increase the efficiency. Through the implementation of effective corporate strategy, Toyota can aim to achieve the objectives and goals of the company.
Effective corporate strategy can help Toyota show the reason for them to be in the business of manufacturing.
First step towards the development of the improvement plan is to document the current practices and the process involved in the manufacturing of the products by Toyota. This will help to understand as to what is the long term vision and goal of the company and help in delivering best quality products.
As discussed earlier, Toyota needs to implement excellent internal and external audit and review system that can help in verifying the actions in line to the Toyota production system.
In order to make sure that every employee and worker is aware about the happenings within the organisation, presentations and meeting needs to be conducted.
All the required instructions of the company need to be written and formulated in a appropriate way. Information needs to be clearly and easily available to all the people working in the organisation.
Toyota needs to make sure that every employee is technical savvy and has the ability to access the computers for any work profile.
Toyota can develop and implement new technologies that can help them to save and update relevant data and information whenever possible. This way every kind of information will be easily available aiding in the speedy production of the vehicles and in appropriate quality and quantity.
Most important factor that can reduce the issues and problems encountered by the company is to make sure proper testing system is developed to check the product before its launch in the market.
Toyota needs to keep in mind the philosophy that was put forward to avoid any confusion among the workers. They need to make sure that there work is in line with the 14 principles put forward for continuous improvement and respecting the customers. Currently the most important issue that is being faced by the company is the recent recalls over couple of years and the huge loss that the company has to bear. Toyota can implement methods like Kaizen, Kanban and JIT (just in time) to minimize the factors that can incur loss to the company financially as well as the reputation.
19.3.c Impact and feasibility of the improvement plan
In this part we will how feasible is our new proposed improvement plan and what impact it can have on Toyota’s business.
Toyota needs to monitor the current performance and objectives of the company and see the areas of improvement. Based on the areas of improvement new sets of objectives can be formulated. Through this Toyota will be able to increase the efficiency of the Toyota production system and also the quality of the products that are being currently offered.
Toyota can implement system like Kaizen, Kanban and even JIT to increase the competence and keep on improving in the quality of the performance.
Toyota can utilize the Processmaker and also Assembly line control system to support the process to increase the business.
Toyota should work towards constant learning and being flexible to changes in the market.
Toyota needs to keep up to the concept of Just in Time, Total Quality System (TQS), Lean manufacturing system and Toyota production system.
Working on the concept of Lean production system, Toyota can keep in manufacturing and delivery quality products to there customers by reducing the additional costs and increasing the on time delivery.
Toyota should work on reducing the hidden costs rather then decreasing the marker value of there products. The business strategy needs to reliable and adaptable to the market situations.
Toyota should encourage lean thinking with there organisation as it will help the worker to individually think and utilize there skills to there potentials.
Through implementation of efficient environment management system, Toyota can develop and implement new technologies and even upgrade the current technologies within the organisation and production houses.
The main focus of the company is meeting the requirements of the customer by reducing or minimizing the factors affecting the company’s reputation and business. Apart from the recent faulty accelerator issues, Toyota has not faced any serious problems hence company needs to make sure appropriate systems are developed to reduce the errors in the production of vehicles.
Toyota should try and implement different methods of improvements like six sigma for quality, kaizen for continuous improvement, proper production planning, and even Just in time can help them figure out the areas that needs attention and then develop action plan to tackle the situation.
Toyota needs to make sure that they are adaptable and constantly try to raise the benchmark for the quality standard. They can implement principles like workers involvement, performance feedback, system point of view etc to develop and environment friendly work conditions.
19.3.d Formulation and examination of improvement plan
The above plan has been focusing mainly on increasing the competence of the company and the product and also the productivity given by the company. We can summarize that in order to get a continuous development approach and keeping in mind the current environmental conditions, we can suggest Toyota to implement a plan that is a combination of Toyota Production System and Environmental Maintenance system.
Toyota’s efficiency and improvement
Factor 1- Environmental Maintenance System
Factor 2- Toyota production System (Lean Manufacturing)
From the above flow chart we can clearly understand the concept of the new improvement plan, but the steps to achieve the requirements lies in the education of people on the importance of lean manufacturing and environmental maintenance system.
Effect of the new plan after formulation and implementation:
Once the plan has been formulated and implemented, a proper evaluation method needs to be followed to check on the effects of the new improvement plan. The changes that can be expected within the organisation have been listed below:
Once the awareness has been spread, top management will easily coordinate with the worker on the importance of the factor 1 and factor 2.
Due to the implementation of both the factors people will know the importance of reducing the wastages in sink with the environmental issues.
Toyota can meet other companies who have implemented these plans and see the effect it had on the organisation and develop action plan for Toyota based on this.
Through this new plan, Toyota can again emerge as leading market competitor who provided quality product and service to the customers.
Through this plan, Toyota will be in position to tackle any issues like recalling or crossing environmental safety rules.
Toyota can develop an online reference for the employee showing the factor 1 and 2 and how its adoption can help the organisation. Through this workers will try to increase there performance and productivity.
Based on the Toyota production system, Toyota will continue to manufacture products that are of high quality and as per the company’s standards. This will help in alignment of the products. Company can develop practices that help to develop the lean process and even environmental system.
Once we have a record of the changes that has taken place within the Toyota organisation would help in tracking the effect that the new plan has taken on the production, quality, speed and even on the environment.
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