Toyota is a highly successful conglomerate that requires no introduction. Toyota products are well-known all over the world because of affordability and performance. The company made its U.S. market debut in the late 1950s and since then it manages to take a major slice of the American automotive market. Its major source of revenue is the manufacture and sales of cars, trucks, SUVs, vans, and hybrids. The secret to its success is just-in-time inventory and lean management systems an example of a sociotechnical system. These were created because the company considered the social side of manufacturing.
The said company was able to determine quickly that main competitors like Ford, General Motors, and Chrysler cannot match their socio-technical systems that enabled the Japanese automaker to significantly reduce costs. When Toyota was just beginning to make a name in the United States, its management team was able to develop strategies that have come to be known as a just-in-time system and lean management system. As a result, the company was able to reduce waste such as 1) overproduction; 2) waiting; 3) unnecessary transport; 4) over-processing; 5) excess inventory; 6) unnecessary movement; 7) defects; and 8) unused employee creativity (Liker, 2004 p.89). Toyota was able to achieve a competitive advantage, selling cars at a higher margin because it was able to reduce operational costs.
A lean management system and the just-in-time system can be considered a sociotechnical system because it enhances the work efficiency of the employees. At the same time, it can boost employee morale. The workers are inspired because of the trickle-down effect of the success of Toyota. The increase in revenue means job security for many of them and at the same time, it increases employment benefits (Hino, 2006, p.10). But the most important thing is that the improvement in efficiency and the reduction of errors in the workplace also means that workers were able to accomplish much and work less as compared to their counterparts in other companies.
The significant difference in having sociotechnical systems can no longer be denied. The competitors took notice. Consider for instance that in the fiscal year 2002 alone, Ford Motor Company suffered a $5 billion loss while in the same fiscal year Toyota had a net profit of $5 billion (Lawfer, 2004, p. 24). There may be other factors at play but no one can deny that the sociotechnical systems within the organization played an important role in the firm’s success. Toyota must seek to continually improve its sociotechnical system keeping in mind that the system was not only designed to reach a high level of efficiency but also to reduce burnout. If the company can achieve this goal then there is no stopping the Toyota juggernaut.
The sociotechnical systems established at Toyota gave the company the needed competitive advantage over its main rivals. It is not easy to understand how a Japanese firm can be planted within the United States and beat companies like Ford and Chrysler. Corporate leaders at Toyota were able to develop the correct mix of a socio-technical system that eliminated waste. This enabled the workers to accomplish more in a shorter period. However, the company must not be complacent and must continue to find ways how to improve its sociotechnical system. It must be refined to create a balance between efficiency and prevention of burnout among its workers. Toyota is the best proof that if the organization considers the social side of their operation, then, they can expect amazing results.
References
Hino, S. (2006). Inside the Mind of Toyota: Management Principles for Enduring Growth. New York: Productivity Press.
Lawfer, M. (2004). Why Customers Come Back: How to Create Lasting Customer Loyalty. New Jersey: Career Press.
Liker, J. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York: McGrawHill.