Toyota, the leading Japanese automobile manufacturer currently has the fastest product development in the world. Their automobiles take a year or less to design compared with their competitors who take approximately 2- 3 years. Toyota has turned this excellence into a strategic opportunity to develop deep business philosophy. The company’s success is ultimately based on its ability to build teams, develop leaders, maintain a learning organization and to build a positive relationship with its suppliers. Toyota is a well-managed corporation and has an exceptional record performance as a manufacturer. This is partially due to the perception of excellence that Toyota enjoys.
Toyota is a market leader in Japan. It holds a significant share of 10 percent of the North American market. Consequently, Europe is targeted as the next area of expansion. It has become a leading manufacturer of cars in the UK since it opened its plant in derby. Toyota automotive business accounts for more than 90 percent of the company’s total sales (Elnadi, 2009). The company has developed financial philosophies. First, the customers decide the selling price. It strongly proposes that the main way to increase profit is to reduce cost. Consequently, to cost reduction should be given the highest preference.
Production capacities of its assemblies have been expanded to cope with the expected growth in sale of its new models to British and European markets. It has sold 2.348 million vehicles in the first three months of 2007. Currently, cars are being designed to enable it retain its present market leadership for its best-selling Corolla car. To increase sales, the company has diversified its operations to include prefabricated housing and telecommunication.
Toyota has successfully introduced its production systems all around the world. The company markets vehicles in more than 170 countries. It has 53 manufacturing companies in 27 countries, which produce Toyota and Lexus brand vehicles and components. As of March 2005, Toyota was an admirable employer of approximately 265,800 people across the globe.
Toyota production system
Toyota developed the Toyota Production System after the World War II (Elnadi, 2009). TPS is a production system developed by the Toyota Motors to provide the best quality, fair prices and shortest lead-time by minimizing wastage. The TPS drew wide attention from the industrial community. At the time, Toyota’s market was small, and vehicles were designed in one assembly line. The company focused on maintaining flexible production lines. As a result, it got higher quality automobiles, better customer responsiveness, and better utilization of equipment and space. TPS is serviced and perfected through continuous development and iterations of standardized work.
The first priority in Toyota Production System is the customers’ needs. Value is seen through the customers’ eyes; and value-added techniques that are separated from those are without value. The Toyota Production System has two pillars, Just-in-Time production, and autonomation. Just-in-Time production is designing what the consumer requires, when it is required, and the quantity required. All this must be done utilizing minimum resources of workers’ time, equipment and materials. There are three critical components of Just-in-Time production: take time, flow production, and pull system.
Take time is the pace of the production needed to meet the consumer demand. This varies with the number of shifts per day and the hours per shift. Flow production system entails producing and moving one item at a time. This is done through several processing steps as continuously as possible. Each step makes just what is requested by the next step. The Pull system is where items are produced only as demanded for use or replacement.
Over producing, is an elemental waste in TPS, which leads to overstaffing, storage, and transportation costs. Leveling out of schedule is a foundation for pull and flow systems and for minimizing inventory in the supply chain. Just-in-Time system achieves streamlined production by reducing inventory. It also exposes problems caused by variability and shows reasons for deviation from optimum.
In autonomation, it is best to selectively use information technology. In addition, all manual processes must be streamlined before being automated. This is a way of monitoring trouble spots. A machine stops by itself if it detects a problem. This rapid observation and the response have achieved higher quality and consistent results. It is much more efficient and inexpensive to prevent a problem than to resolve it. Toyota has developed a culture of anticipating problems and putting in place countermeasures before the problems occur. The company also emphasizes on working carefully to get the best results the first time to enhance productivity in the long run.
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Toyota is committed to continuously invest in its people and promote a culture of continuous improvement. The company works with the best workers, and gives them the opportunity to grow in their jobs. In addition, the company encourages teamwork amongst its staffs. This is the core of any business functioning. If an organization is to achieve its mission and objectives, it must prioritize teamwork (Khanna, 2007).
Teamwork involves the development of people and their skills. This is done by supporting the development of continuously improved activities. The company creates teams in different areas of production. These teams work with a management support and work on a project basis. Employee work as teams on projects and they do not participate again until another project comes up. The collective responsibility enables employees to be there for one another in time of stress. The teams stay together for a long period, and thus gradually combine and improve ideas.
Workers in sales, engineering service parts, accounting, and human resources departments are encouraged to embrace teamwork to find innovative ways to satisfy their customers. They must resolve problems immediately to resume production. When a machine goes down, the maintenance people fix the issue while the rest continue with the operations. In doing so, the operations do not have to stop and crisis is averted. They work together to get the equipment up and running. They try to get the root of the issue so that it does not recur.
Manufacturing engineers work hand in hand with design engineers at the concept stage to give input on manufacturing issues. In the planning stage, the cross-functional team and chief engineer work together. The chief engineer comes up with a concept, discusses it with the design team. These acts of teamwork enable the company to formulate concrete plans. This level of unparalleled cooperation across divisions is unusual in the auto industry. Not only does it show the best out of individuals and increase efficiency, it also increases the level of production.
Good relationship and teamwork has resulted in devoted, enthusiastic, and conscientious employees. The involvement of the company’s people in decision-making has also acted as a motivating factor. They feel valued and have a sense of belonging. By encouraging teamwork, Toyota has eliminated barriers between departments by managing the process. As a result, most the organization’s initiatives have enjoyed tremendous success. Without this widespread recognition of the culture of teamwork and cooperation, the company would have a different story.
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In dealing with crisis, be it economic, natural, or environmental, Toyota has always believed in taking responsibility. The latest crisis is from a recall of more than 8.5 million cars with faulty pedals, accelerators, and brakes that occurred in2009-2010. National attention began to focus on Toyota’s quality after the crash on California highway (Messenger, 2012). As a result, the global reputation of Toyota’s quality and safety is at stake.
The company has been accused of concentrating on profits than on the safety and concerns of its consumers. Toyota’s complex computerized systems are believed to be the reason for the glitches. The deadly crash involving a Toyota Carny was blamed on a sticky accelerator pedal. The car slammed into rock killing its passengers instantly. This increased scrutiny of Toyota and congressional hearings were held in March 2010. This buffed Toyota’s strong corporate reputation.
The public and car dealers started losing trust in the company’s products. The repercussions resulted in a disruption of sales. The negative perception of the recall has shifted the demand away from the Toyota products. Vehicle sales in the United States fell by an enormous 16 percent in January 2010 (Messenger, 2012). The shares were not to be spared either and 11.6 percent was lost.
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In reaction to the global recall, the powerhouse shut several manufacturing plants in South Korea, across the United States, Canada and throughout Europe. The top management went public to address the issue. However, they had to explain their delay in acknowledging this defect. Toyota CEO, Akio Toyoda, took full responsibility and apologized profusely for the recall of his companies vehicles. All faulty vehicles were inspected and repaired at no charge. He assured the users that their safety was his company’s priority and that his company was working hard to find a lasting solution to the problem. The company created a positive message to consumers to curb the long-term damage to the brand (Messenger, 2012).