Understanding Operations Logistic and Supply Chain Management

This study material provides an in-depth understanding of operations logistic and supply chain management. It covers topics like managing quality, just in time (JIT), lean manufacturing, agility, and the triple bottom line approach of Toyota. The material also includes recommendations for improving profitability. Suitable for students studying operations management or supply chain management.

Understanding Operations Logistic and Supply Chain Management
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Running head: LOGISTICS AND SUPPLY CHAIN

LOGISTICS AND SUPPLY CHAIN
Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Company introduction.................................................................................................................2
Managing Quality........................................................................................................................3
JIT, Lean and Agility...................................................................................................................4
Triple Bottom Line of Toyota......................................................................................................6
Recommendations........................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
Operations management is defined as the administration of business practices for creating
highest level of efficiency within an organization. It is concerned with converting materials and
labour into goods and services in most effective and efficient way to maximize the profitability
of an organization. Further, Logistics is defined as the management of flow of things between the
point of origin and consumption to meet requirements of customers. There are various concepts
and theories of operation management which helps an organization to improve its operational
efficiency such as just in time, lean and agile manufacturing, total quality management etc. The
current report focuses on effective implementation of various operations management concepts
and techniques in Toyota Motor Corporation, various benefits which are associated with it. The
report also focuses on triple bottom line approach of Toyota Motor and its effectiveness and also
provides recommendation for improvement of profitability of organization in global market.
Discussion
Company introduction
Toyota Motor Corporation is a Japanese automobile manufacturer company established in 1937
by Kiichiro Toyoda. The company is the largest manufacturer of automobile in the world in
terms of volume. It manufactures and sells vehicle and spare parts all over the world and
operates its business globally. The company has 53 overseas manufacturing facilities based in 28
countries globally.
The first topic which has been selected is Managing Quality as it is a vital component of
operations management and it is very important for organizations to ensure quality of products
during production process to ensure that final product is at par with company standards and also
satisfies quality requirement of customers.
The second topic which has been selected is Just in Time, lean and agile as these are various
important components for improving operational efficiency of organizations. The Just in time
concept helps in ensuring that products are available to customers at right time when they require
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and lean and agile manufacturing ensures that production process of company is sustainable in
nature.
Managing Quality
As opined by Song-Kyoo (2015) Total Quality Management is defined as approach towards
management of quality which started in 1950s and has become popular from 1980s. Total
Quality Management implies that organizational culture is defined by and constantly supports
achieving of customer satisfaction by combined system of tools, techniques and training. It is
accompanied by continuous improvement of the processes of an organization, which results in
products and services of high quality.
As stated by Netland and Sanchez (2014) the objective of implementing Total Quality
Management in organizations is to improve their processes, prevent defects of product, prioritize
efforts, develop cause-relationships, measure system capacity, develop improvement check-list
and check forms enables better decision making in teams, develop definitions of operations,
separate trivial issues from significant needs and observe behaviour changes over a time period.
As opined by Phogat and Gupta (2019) Toyota has revolutionized the automobile industry by
implementing concept of total quality management which helps them to make high quality
products and enhances customer satisfaction. Toyota decided to implement total quality
management when it found that the company was manufacturing defective products as a result of
wear and tear that was caused due to accumulation of dirt. As stated by Randhawa and Ahuja
(2018) at that time, Toyota workers followed American practice in which they operated a
machine until it completely breaks down and after that they called engineers to fix the machine
or at time threw it away, which impacted manufacturing of defective parts or products by
machine and lack of productivity of workers. Therefore in order to address this issue, Toyota
implemented Total Quality Management.
As stated by Lahidji and Tucker (2016) for Toyota, Total Quality Management is based on the
idea of “customer first”, kaizen or continuous improvement and total participation which refers
to the involvement and input of all the employees. In 1951, Toyota launched the Creative Idea
Suggestion System for supporting and encouraging the employees towards making significant
contribution towards company development. Toyota also introduced Statistical Quality Control
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in 1949 to ensure quality of products that was produced. They also made significant
contributions to give back to the community based projects and environmental initiatives. The
above mentioned concepts are at the heart of Toyota Production System, which has contributed
to products and work of higher quality, and improvement of Toyota Motors in all aspects ranging
from individuals to services.
As opined by Phogat and Gupta (2019) Toyota has its own version of quality management which
is termed as Toyota Production System which is established on two concepts namely jidoka and
just in time. As stated by Toma and Naruo (2017) the sole purpose of Toyota Production System
is to maximize efficiency in manufacturing through elimination of wastes. Jidoka is a Japanese
term which refers to “automation with a human touch” which is a technique that helps to
instantly identify and correct any issue which can lead to defective manufacturing. Just in time
refers to filtering and integrating each process of production so that it solely manufactures what
is needed by the upcoming process. By, implementing the above mentioned ideas, Toyota is able
to manufacture automobiles in quick and efficient manner by meeting standards of high quality
and by also meeting the needs of their customers.
Whereas, Hyundai has constructed total system of quality management and focuses on
accomplishing customer satisfaction with world-class quality and service through continuous
improvement for continued growth which guides the automobile and machinery industries in the
era of global competition. Hyundai’s quality assurance process consists of P.D.C.A namely Plan,
Do, Check and Action. With continuous and repetitive execution of above mentioned steps,
Hyundai further strengthens their competitive position in market. The quality assurance strategy
which is followed by Hyundai is WOW (Worst of Worst). This particular strategy is geared to
the real world conditions for improvement of quality which identifies various potential issues
through verification of worst operating condition by simulation of customer usage of product.
Hyundai’s quality first policy with WOW strategy verifies the condition of product to ensure that
the best quality machine tool products are supplied which exceeds customer expectations. At
every step, Hyundai does their best to shorten the development time and to strengthen quality of
their products using various tools which are at disposal. Further, they promote systematic process
controls and continuous monitoring and have currently updated statistical technique to achieve
the goal of company regarding zero defects.
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JIT, Lean and Agility
The just in time production methods are simultaneous with manufacturing operations of most of
the companies. The Just in Time technique of organizing regular, small deliveries of exactly the
required amount required was spearheaded by Toyota.
As stated by Lilja (2017) the Just in Time concept is defined as a pull system of facilitating
varied processes in the sequence of an assembly with only the items which it needs in the right
quantity and at the required time. In this concept, production and transport take place at the same
time throughout the sequence of production, within or inside the processes.
As opined by Paraschivescu and Cotîrlet (2015) the primary objective of Just in Time concept in
Toyota is to save warehouse spaces, un-necessary carrying cost and to enhance efficiency, which
implies arranging the delivery of the material to single work stations just before they are needed
physically. In Toyota, in order to apply this flow in an efficient manner, it implies depending on
order signals from Kanban boards or by forecasting parts usage before time, even though the
subsequent methods requires numbers of production to remain constant. The use of Just in Time
in Toyota Production System implies that single cars can be developed according to order and
that the entire component has to perfectly fit at first instance as a result of lack of alternatives.
Therefore it is very tuff to hide previously occurring issues related to production and these
requires to be solved immediately.
As stated by Parkes (2015) Toyota Production System is a vital predecessor of lean
manufacturing. It is grounded on the conceptual pillars of Just in Time and Jidoka. The sole
purpose of Toyota Production System is to eliminate 3 vital issues which are as follows:
Muri- A process is developed which is easily repeated and which provides smooth results,
therefore excluding lack of consistency in line of production.
Mura- The minimization in inconsistencies helps in reducing stress or overburden as there are
less errors being committed.
Muda- The absence of stress massively helps in reducing wastes which can occur in 8 forms
namely waste of overproduction, waste of time in hand, transportation wastes, over processing
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wastes, stock and inventory wastes, movement wastes, waste of making defective product and
waste of underutilized workers.
As opined by Chikudate and Alpaslan (2018) Toyota uses scrum in combination with Toyota
Production System to deliver lean production and also enable their teams to deliver faster
P.D.C.A cycles. Scrum of Scrums, Meta Scrum and the Chief Product Owner are some of the
techniques which are being used by Toyota to measure scrum for multiple teams and products of
the company. Scrum, the predominant agile framework is mainly based on Toyota Production
System which can be referred to as lean. As opined by Lepadatu & Janoski (2018) scrum is
simple empirical planning approach, with rapid feedback loops built-in to enable certain
behavioural characteristics in a team. Scrum is actually PDCA codified with time boxed steps.
Whereas, as opined by Kumar, Maiti and Gunasekaran (2018) Hyundai Mobis uses the just in
time which enables them to provide to automakers and to customers the parts that are needed
“just in time”. The just in time system has helped Hyundai Mobis reduce their overall inventory
in Europe by 20% and helped in reducing overall cost of storage and maintenance which in turn
has benefitted the two auto making affiliates of Hyundai Mobis namely Hyundai Motor
Company and Kia Motors corporations and also their European customers. The just in time
system adopted by Hyundai Mobis has also helped in reducing the duration time to deliver the
requested parts to the customers to 6 days, which was 13 days earlier. Therefore the reduction in
delivery time of the products has largely benefitted European customers who drive Hyundai or
Kia vehicles. The just in time system allows them to maintain a stable supply of automobile parts
and just when they are required by customers it can be supplied. As opined by Kubota and
Pfanner (2015) the just in time process of Hyundai Mobis helps in reducing unnecessary costs
for customers which also helps in enhancing level of customer satisfaction. In order to ensure
that customers of Hyundai Mobis are supplied with the parts at right time when they require it,
the company has focused on closely integrating the Just in Time System with the Just in
Sequence system.
Triple Bottom Line of Toyota
Toyota communicates its ambitions to contribute to enhancing lives of the community. The
efforts of Toyota towards promoting sustainability includes improving performance of the
product, designing and manufacturing cars which remains environmentally friendly through its
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entire life cycle and developing a comfortable next generation society with local stakeholders by
utilizing technologies. The guiding ideologies of the Triple Bottom Line approach of Toyota are
as follows:
 Honouring the local dialect and language and legal spirit of every country and take up
business activities which are fair and open to become globally good corporate citizen.
 As stated by Arain, Low and Wu (2015) respecting the traditions and culture of all
nations and contribute towards economic and social development via undertaking
different corporate activities in their individual communities.
 Dedicating the company to provide clean and safe products and to improve the life
quality at all places via the activities of company.
 Creating and developing technologies which are advanced and providing high quality
products and services which satisfied worldwide customer needs.
 Fostering a corporate culture which improves creativity of individuals and also teamwork
values while showing mutual trusts and honour and respect among management and
labours.
 Pursuing development via harmonies with community located all over the world through
management of innovation.
 Working with business partners in context of research and manufacture for achieving
stable, long term growth and mutual benefits while keeping the company open to new
partnerships
As opined by Brondoni (2015) Toyota has undertaken various initiatives in aspects of the society
and the environment to achieve the triple bottom line objectives such as Restoration of
Rainforest Initiative in Philippines, Toyota Traffic Safety Campaign, Toyota Teach in South
Africa and Together Green in the United States.
As a part of Sustainability approach, Toyota has appointed a Global Chief Risk Management
Officer to lead global risk management and have developed systems under Global Chief Risk
Management Officer for monitoring risks on frequently. They have also established a Risk
Management Council under Corporate Social Responsibility Committee which annually meets
twice for identifying all potential risks which may include activities of business and accordingly
takes action to prevent these risks.
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Recommendations
The first and foremost recommendation to Toyota Motor Corporation in order to improve
profitability and competitiveness is to set up more plants in various Asian locations as it will
enable them to reduce their operational cost due to lower costs of labour in the Asian countries
and also due to reduction in the cost of raw materials for the company. As stated by Malihi and
Shee (2017) the other recommendation to Toyota Motor Corporation is to increase the
production of hybrid cars which will help them to gain significant market share in the hybrid car
market and will help to achieve sustainability goal of the company regarding production of
environmentally friendly car throughout its lifecycle. The other recommendation for Toyota
Motor Corporation is to provide training to staffs regarding quality assurance as it will help in
improving the quality of products of the company.
Conclusion
From the above report it is clear and evident that the theories and techniques of operations
management which are being followed by Toyota results in their increased popularity The
various operational management concepts such as total quality management, just in time, lean
and agile manufacturing not only helps in improving the quality of the products of Toyota but
also ensures that their products meets the expectations of the target customers. These operational
management concepts at Toyota also ensures that their products are delivered to the customers at
the right time when they require it. The recommendation to Toyota for improving their
profitability is to open more manufacturing facilities in Asia and focus on manufacturing more
hybrid cars along with providing training to the workers regarding quality assurance for
sustained quality improvement and growth.
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