Introduction
Organisational growth and development is enhanced by various factors among them being cost effectiveness and development of operational strategies that respond to the emerging market needs. Such strategies should also be effective in helping an organisation to gain competitive advantage so that it can withstand competitive forces both in the short and in the end.
The aim of this paper is to discuss various ways in which the Toyota Company treats the different topics taught in its daily activities of development and growth. In the effort to achieve this aim, five main topics are considered in the paper. These are operations performance, operations strategy, new products development, quality management, and inventory management.
Operations Performance
Analysis of operations performance for an organisation is important in the effort to ensure that it remains competitive in the market. According to Chase, Jacob, and Aquilano (2007), operational performance refers to the “performance measured against the standards or prescribed indicators of effectiveness, efficiency, and environmental responsibility such as the cycle time, productivity, waste reduction, and regulatory performance” (p.45).
To satisfy these concerns of operational performance, the Toyota Car Company deploys various operations management philosophies to enhance effectiveness, waste control, and reduction. These philosophies include the just-in-time (JIT) production and kaisen approaches. Toyota Company adopted the just-in-time strategy as a manufacturing philosophy in the 1970s.
The focus of philosophy is waste elimination together with reduction of inventory levels. The central mechanism for operation of the just-in-time approach is based on Kanban, which is a Japanese term that means a card. The key aspect of JIT embraces quality control, waste minimisation, reduction of production complexities and increase in transparency, and ensuring that production is done in small lots or batches.
Increasing the competitive advantage of the Toyota Company through JIT approach is rested in the need to satisfy customers. According to Toyota (2012), this role is accomplished through “fulfilling customer demands efficiently and promptly by linking all production activities to real marketplace demand” (Para.2).This strategy underline the significance of considering customers in enchaining the performance of an organisation in terms of delivering the desired outputs, which satisfy the utilities of consumers.
This case means that the operations of the Toyota Company are organised around building strong customer relationships. Ideally, the JIT approach is dependent on the processes, which are finely tuned so that an assembly sequence only makes use of materials, which are only required by the organisation. Such materials must be of the right quality and quantity.
At the Toyota Company, there is a need to face the challenges of meeting an appropriate mix for production of various models of automobiles. The Toyota Company must select an appropriate product mix that will satisfy the demand besides ensuring production of the demanded automobiles in a cost effective manner.
In this extent, Toyota (2012) reckons, “Just-in-time offers a smooth, continuous, and optimised workflow, with carefully planned and measured work-cycle times whereas the on-demand movement of goods reduces the cost of wasted time, materials, and capacity” (Para.2). Through an effectively planned production process, workers are given an opportunity to concentrate on tasks that add value to an organisation.
Concentrating on tasks having the capability to add value to the organisation has the effect of reducing the prices of products since costs, which do not go into adding the costs that are directly related to production of every unit made by the company, are eliminated. Hence, the performance of the company is directly correlated to adoption of successful production philosophies such as the just-in-time organisation strategy.
Kaisen is yet another important performance concept for operations performance improvement for the automobile manufacturing company. Kaisen focuses principally on continuous improvement of various operations of the company. The performance improvement approach also dwells on reduction of production wastes in the effort to ensure that the final produced products have optimal value addition.
Kaisen ensures that the Toyota Company is able to add value and ensure continuous improvement of every operation. According to Kennedy (2005), “…this idea of continual improvement is carried out on a day-to-day basis serving the purpose of humanising the workplace by eliminating unnecessary hard work” (p.18). This way, it is possible to ensure that all employees are encouraged to engage in practices that foster collective organisational improvement.
In the effort to save the cost associated with implementation of new designs at the Toyota Company, kaisen is deployed as a measure of performance improvement since it focuses on a smaller scale testing of designs before they are implemented on a large scale. This strategy has the effect of saving the company millions of dollars due to the failure of large scale or full size new model and operations route failures.
From the context of operations and performance of employees, Kaisen is focused on increasing the morale of the employees, encouraging collaboration, and teamwork. It also pays incredible attention to the organisational improvement at all levels.
Operations Strategy
The Toyota Company is the second largest company in the world. This immense success has attracted scholarly interest to unveil the business strategy deployed by the company. Many operations management scholars believe that such a strategy can form a significant benchmark. To enhance the success of an organisation, an investment in a credible corporate strategy is crucial (Johnson, Scholes & Whittington 2005: Barney 2009).
The Toyota Company’s business strategy revolves around five main operational facets. These are development of a production system that is unique to Toyota, investments in re-engineering, high emphasis on quality and superior technology, production of hybrid vehicles, and high concerns on employees’ welfare related costs. The strategy also revolves around building a motivated workforce through the adoption of various employee satisfaction strategies.
Although each of these facets is incredible in business strategies for success, the Toyota Company recognises that a production system can affect the overall direct costs of production in such a way that the final products would be offered to the market at exorbitant prices. This case would in turn influence the sales volume and hence the profitability of the company.
It is for this purpose that the Toyota Company has invested on technologically aware production systems with the aim of cutting the cost of production. These systems include lean manufacturing, just-in-time approach, Kaisen, Jokoda, Andan, Kanban, and the pull system.
New Product Development
Developments of new products are accomplished through different approaches. In western and Japan car manufacturing firms, software applications together with other appliances are deployed in the assessment of new design options. In the western manufacturing firms, the approach of development of new products essentially entails defining various new product specifications, development of performance requirements, and the building of prototypes.
The prototype is then tested against the anticipated performance requirements. In case of failure of the prototype to meet the desired performance requirements, the new product development teams repeat the whole design process by considering the design alterations that are identified in the first design phase. This agile approach to new product development is both time and financial resource consuming.
Upon identification of this drawback, based on JIT and Kaisen production philosophies adopted by Toyota, the company adopts a different new product development approach. The main objective of new product development engineers at the Toyota Company is to ensure a continuous flow of various models of cars.
Opposed to the agile design approaches to the development of new products discussed above, “instead of assigning a team to focus on developing one product in particular, work is concentrated on the subsystems level” (Kennedy, 2005, p.17).
The main reasoning behind this approach is that it is possible to inter-mix various subsystems within the organisation to establish different matches, which increase the possibilities of creating new products in the shortest time possible. Hence, the company is able to maintain creative and innovative approaches to the development of new products.
The subsystem design approach in the development of new products gives rise to several advantages. For instance, whenever any new product under development arrives at the stage of testing, in case the system encounters a challenge to progress, engineers have immediate alternative subsystems to try rather than restarting the whole design process. This approach to the development of new products at the Toyota Company is consistent with the Muda approach to operations at the company.
Quality Management
In operation management, one of the essential topics that are taught at an organisation is the maintenance of preset quality control levels. Quality is important in enhancing customer satisfaction. The Toyota Company pays incredible attention to the consistency of quality for all its automobile models. This role is accomplished through the total quality approach to operations of the company.
In fact, in Japan, the Toyota Company was the first manufacturing company to implement quality control strategies in the 1940s. Over the years, the Toyota Company has made immense strategies in ensuring that quality control at all production levels is deployed as a tool for reduction of wastes through lean manufacturing. Through the approaches of continuous improvement, all employees are held accountable for quality of all products in their workstations.
Instead of focusing on accessing the quality of products at the assemblage stage, or when the products have been fully assembled, the Toyota Company carries quality assessment at the on the job site. This strategy means that all products that are assembled will have passed through quality screening.
The Toyota Company’s way of operation ensures that quality standards are met in a concise manner. This methodology endeavours to “eliminate waste and overproduction, as well as to create a bureaucratic system where any employee can suggest a change where he or she sees it can fit” (Kennedy 2005, p.18). This postulation means that quality control measures of the Toyota Company rely heavily on human involvement.
Through employees, the Toyota Company encourages them to take responsibility for the consistency of the quality of all its products. This aim is accomplished by focusing on two main quality goals and strategies. These are ‘respect for people’ and more importantly, the urge to meet the needs of customers through an operation model that keeps the needs of the ‘customer first.’
Inventory Management
In large manufacturing organisations such as the Toyota Company, cute management of inventories is important. The company appreciates that keeping large inventories amounts to poor utilisation of space. From the paradigm of the just-in-time production philosophy, at the Toyota Company, this case is treated as waste accumulations.
Hence, the JIT scheme is an important philosophy that guides the process of determination of appropriate levels of inventories that should be held by the company. With regard to Chase, Jacobs, and Aquilano (2007), inventory control is important in the efforts to “reduce costs, improve quality, and meet the ever changing customer needs” (p.81).
However, certain levels of inventories are appropriate because of the need to mitigate the costs associated with low inventories levels in any production organisations. These include the costs of urgent replenishment of raw materials and late deliveries of ordered products. Since the Toyota Company does not store finished stocks or raw materials that are not in use, a reliable means of determining the market demand and anticipated sales volumes in all markets of the company is necessary through statistical forecasting.
Through the just-in-time approach, the Toyota Company makes it possible to procure and/or receive inventories in appropriate times. Hence, it also becomes possible to produce various models of cars that are ordered by customers to be delivered at the exact time when they are required. Since the production system is continuous and balanced such that no accumulation of materials in the production process is evident, work-in-progress materials do not accumulate.
Hence, apart from elimination of the finished product inventories or raw material inventories, work-in-progress inventories are also eliminated. Inventory control is an important topic at the company since all employees are mandated to report on any inventory accumulations at their workstations so that appropriate steps can be taken to correct the problem.
References
Chase, B, Jacobs, F & Aquilano, J 2007, Operations Management for Competitive Advantage, McGraw-Hill, New York.
Johnson, G, Scholes, K & Whittington, R 2005, Exploring Corporate Strategy, Prentice Hall, Harlow.
Kennedy, M 2005, ‘Implementing Toyota’s Products Development Systems’, Appliance Magazine, vol. 1 no. 1, pp. 17-18.
Toyota 2012, Toyota material handling. Web.