Toyota Production System Analysis

This assignment delves into the intricacies of the Toyota Production System (TPS). It examines the core principles underpinning this renowned management philosophy, such as lean manufacturing, just-in-time production, and continuous improvement. The analysis explores the historical context of TPS, its evolution, and its impact on operational efficiency and competitiveness. Furthermore, the assignment discusses practical applications of TPS across diverse sectors, including automotive manufacturing, healthcare, and service industries, highlighting its versatility and enduring relevance.

Running Head: OPERATION MANAGEMENT 1
Operation Management
Name of the student
Name of the institution

OPERATION MANAGEMENT ESSAY 2
Introduction
Founded in 1937 by Kiichiro Toyoda, Toyota remains one of the leading Japanese
Multinational automotive manufacturer companies in automobile sector located in Toyota, Aichi,
Japan. Today, the company produces automobiles under five brands that include Toyota, Ranz,
Lexus, Hino, and Daihatsu. Not only that, the company also holds 5.9% stake in Isuzu, and
16.66% stake in Subaru Corporation. In addition, it also has a joint-venture with two companies
in China that includes Sichuan FAW Toyota Motor and GAC Toyota (Iyer, Seshadri, & Vasher,
2009, pp, 57). In India, it has one joint-venture in India, Toyota Kirloskar and one joint venture
in the Czech Republic, TPCA. As per experts, TMC is considered as an integral part of Toyota
Group widely-known as one of the largest conglomerates throughout the globe. Currently, the
company is considered as one of the largest automobile manufacturers and markets its
automobiles on every continent. The strategic operation management remains one of the integral
parts of the company with its Toyota way philosophy (Chase, Jacobs, Aquilano, 2007, pp.42).
About Strategic operation management and key objectives
Described as an area of management that is mainly concerned with designing as well as
control of the process of production and redesign of the business operations in the production
process of the products and services of an organization, the main focus of operation management
is to ensure that the business operation of any organization such as Toyota remains efficient in
terms of the optimization of the resources and meeting the requirements of the customers as far
as possible (Krajewski, Ritzman, & Malhorta, 2013, pp, 54). Not only that, the main objective of
the operation management is concerned with an efficient management of the entire production
system as a process that converts the required inputs such as energy, labor and raw materials into
desired outputs includes products and services for the benefit of the customers (Poluha, 2016,

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pp.64). The operation management covers almost every sector of the economy such as health
care sector, banking systems, and includes suppliers, the use of technology and the customers
and is involved in producing products, managing customer services, and quality of both (Cachon,
& Terwiesch, 2009, pp. 53). One of the major functions in any organization such as Toyota, it
can be considered as par with other departments such as human resources, finance, marketing
and supply chain managements. For efficiency purposes, the operation function requires the
management related to both day-to-day production of products and services as well as strategic
management (Cachon, & Terwiesch, 2009, pp. 53).
In this case, the strategic management can be described as the formulation as well as the
implementation of major goals as well as the initiatives that have been taken by the top
management of the owners based on its assessment of internal and external environments and the
consideration of the resources (Cachon, & Terwiesch, 2009). This management offers an overall
direction to organizations and includes its objectives, the development of policies and plans that
are specifically designed for the achievement of these objectives and then, allocate the
requirement of the resources for implementation of the plans. The main focus of strategic
management is to assist an organization and increase its performance through efficiency,
flexibility, and improvement in the effectiveness of various processes (Cachon, & Terwiesch,
2009). The main focus of strategic operation management is to satisfy the requirement of its
customers for dependable and fast services at reasonable prices and assist its own suppliers in
order to improve the service they offer to the company. This is achieved mainly by fulfilling its
five key and basic performances and is applied in all types of operation (Cachon, & Terwiesch,
2009).

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It is a fact that for achieving its strategic operation management strategies, a company
first needs to define its corporate strategy and then, define its operational performance objectives
(Ferrari, and Goethals, 2010). After that, the company needs to define various measures to
determine if these operational objectives are being met. The next step is to configure its
operating environment for accomplishing one key performance objective or all five key
performance objectives and they are quality, costs, speed, flexibility, and dependability (Ferrari,
and Goethals, 2010).
About 5 key performance objectives
The first key performance objective in the strategic operation management is known as
the quality performance objective (Montgomery, 2012, pp.65). As per the experts, quality in
strategic operation management is considered more than compliance to a particular specification
and includes how well a product performs its intended function and includes reliability,
durability, and innovativeness of its products. In addition, it also refers to easy access to service
of the product as well as to the degree to which a product meets their requirement (Montgomery,
2012, pp.65).
The next key performance objective in this type of management includes speed
performance objectives and it refers to the rate with which an organization can generate products
and services (Ferrari, and Goethals, 2010). Not only that, it also includes the rate at which an
organization can deliver its products and services to the customers and how often this rate is
maintained. The speed also refers to various concepts such manufacturing time of one unit of
product or services as well as the time-period required by an organization to research and
development a new product or service (Ferrari, and Goethals, 2010).

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The third key performance objective of strategic operation management is known as
dependability performance objective and refers to the quality of company operation. It includes
various issues such as production and delivery of the products and services on time and
according to the specified prices (Fujimoto, and Miller, 2007). The objective of dependability of
an organization is also measured through the ability of a product to function as expected and
designed. Not only that, it also refers to its capacity of performing in a consistent manner over a
reasonable time-period (Fujimoto, and Miller, 2007).
The fourth key performance objective of strategic operation management is known as
flexibility Performance Objectives. Some of the key issues in this performance objective are
related to flexible operation process as required, for example, if an organization produces various
types of products for the benefits of the customers, the manufacturing facilities should be
configured the product lines to deal with the requirement of various products in the market. Not
only that, the operations process should retain an ability to adapt to new requirement quickly. As
per this performance objective, the company should be able to manufacture products with
different product modifications at various quality levels as per requirement in the market. With
this performance criterion, the systems should also be able to adjust to changing production
volumes or new delivery schedules (Ferrari, and Goethals, 2010).
The last and final key performance objective of strategic operation management also
known as the most important objective that is known as cost performance objective. This
performance objective refers to variation in one unit cost due to continued fluctuation in the
volume of the product and services produced and manufactured by a manufacturer and it also
include the variety of the products that have been manufactured by the manufacturer. As per
experts, the cost is inversely proportionate to the units of the products as well the variety of the

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products that have been manufactured. For example, the cost of one unit decreases with the
increase in the volume of the units and decrease in variety and vice versa (Ferrari, and Goethals,
2010). Further, the cost of one unit varies and affects running prices, product prices and profits.
One of the best examples that illustrate the importance of the key performance objectives in the
strategic objective management of any organization is how it affects Toyota, a leading Japanese
Multinational automotive manufacturer companies in the automobile sector (Ferrari, and
Goethals, 2010).
Toyota and 5 key performance objectives
Located in Toyota, Aichi, Japan, Toyota is famous as a leading Japanese Multinational
automotive manufacturer companies in the automobile sector. Famous for its premier quality
program, The Toyota Way, the main focus of the company remains a continuous improvement in
every aspect of the company that also includes its operation department (Lee, & Jo, 2007). As
part of “The Toyota Way”, the five key performance objectives remain the core strategy of its
production strategy (Lander, & Liker, 2007). The first key operations performance objective
related to TMC is as follows –
Quality operation key performance objective – The definition of quality according to
Toyota is to do the things right by providing the best and error-free products and services that
result in satisfaction of the customers in the market. According to various case studies, Toyota
brand and its products continue to get top ranking in various third-party customer-satisfaction
surveys (Thun, Drüke, & Grübner, 2010). The company cars have also been voted as the car of
the year by various market surveys and research studies for many years. Not only that since the
adaption of “The Toyota Way” the products of the company are very popular throughout the
world due to their innovative features, quality and reduced amount of emission when compared

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with any other car. In addition, the company continues to develop new technologies through its
research and development (Thun, Drüke, & Grübner, 2010).
Speed operation key performance objective – According to Toyota, the speed operation
key performance is related to minimization of the time between the orders of the customer its
availability in the market for his or her benefit. It can be also defined as doing things at the fast
rate (Radnor, & Barnes, 2007). As the main focus of the company is to streamline various
production process, it uses various techniques such as focused operations for reducing the
complexity of the process such as the use of a small and simple machine that are also flexible
and robust (Taylor, & Taylor,, 2008). In addition, the management also simplifies the layout to
achieve a good flow and enhance simplicity that further increases the speed of the production
process. In this way, the company achieves two or three times higher production output per
worker when compared with similar European or US automobile plants (Taylor, & Taylor,,
2008).
Dependability key performance objective – When considered from Toyota point of view,
the dependability key performance can be defined as fulfilling orders of the customers within the
deadline of the promises that have been given. JIT or Just-in-time’ remains an integral part of
the company production system with some core concepts such as 'kanban control' and
presence of multi-skilled workers who are committed to quality control and work as a
team (Amasaka, 2007). Improvement in quality and efficiency remains the core working
values not only of the technical experts and managers but also of every employee in the
organization. By implementation of these values, TMC fulfils the d ependability key
performance objective (Wilhelm, & Kohlbacher, 2010).

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Flexibility key performance objective – Like any other company, Toyota offers a wide-
range of product lines for fulfilling the requirement of different market segmentation groups. It is
a fact that the quality and dependability is not enough if the taste or requirements of the customer
change suddenly or at a slow rate (Wilhelm, & Kohlbacher, 2010). For fulfilling the changing
customer taste, as part of its Toyota way philosophy, the company retains the flexibility to
change its production process in a very short-term time-period. Not only that as the organization
continues to launch innovative features at the regular intervals, it retains the capability to modify
its products at various quality levels and is quite capable of adjusting its production system to
changing production volumes or new delivery schedules (Wilhelm, & Kohlbacher, 2010).
Cost key performance objective – The last and most important key performance objective
in any company, the main focus is to cut the cost of operation and increase the margin of the
profit. The main focus of Toyota philosophy, “The Toyota Way”, is to streamline the production
process, increase quality control and reduce the cost of one unit of the product that is being
manufactured (Rutledge, Xu, & Simpson, 2010). This core concept and process are solely
devoted to cut the cost of the product even when the organization is producing a variety of
products for the benefit of the customers and the company has achieved a significant success in
its endeavor (Rutledge, Xu, & Simpson, 2010).
Conclusion
The main focus of the operation management is to achieve the efficient control of
production as well as redesigning of the business operations in the production process. The
operation management is concerned with daily processes as well as the strategic area of the topic.
One of the best examples of the operation management can be related to “The Toyota Way”,

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mainly concerned with efficient and quality production performance process. For achieving this
purpose, there are five key performance objectives such as cost, flexibility, speed, dependability
and quality that remain the main causes of meeting the requirements of the customers and that, in
turn, ensure the success of any organization such as Toyota in the market.

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