An In-Depth Analysis of Toyota's Operations Management Strategies

This report provides a comprehensive analysis of Toyota's operations management, focusing on the company's strategies and production methods. It begins with an introduction to operations management and its role in a company's competitiveness, followed by an examination of Toyota's chosen production methods, including Six Sigma, Kaizen, and the Theory of Constraints. The report then delves into lean production and its application within Toyota, highlighting the company's "Toyotaism" approach. A SWOT analysis is presented to assess Toyota's strengths, weaknesses, opportunities, and threats, followed by a PEST analysis to evaluate external factors influencing the company's operations. The report concludes by summarizing the key findings and emphasizing Toyota's success in the automotive industry through effective operations management. The report emphasizes the importance of continuous improvement, waste reduction, and customer value enhancement in achieving operational excellence.

OPERATIONS
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Operations Management.........................................................................................................1
Role of Operations Management in Company's Competitiveness.........................................2
Production methods chosen by Toyota...................................................................................3
Lean Production and its application within Toyota................................................................4
SWOT Analysis......................................................................................................................5
PEST Analysis........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Operations management can be referred to a management area that is largely associated
with looking into the designing or redesigning of operations of a business organisation so as to
ensure maximum output (Monden, 2018). This essay is based upon Toyota which is an
automotive manufacturer headquartered in Toyota City, Japan. This essay includes the role of
operations management along with the methods adopted by selected company. Also, it consists
of SWOT and PEST analysis so as to gain knowledge of the internal and external influence
which have an impact over the operations manager. Further, it contains knowledge about lean
production system along with its application within the company.
MAIN BODY
Operations Management
Operations management is one of the most crucial fields of management that is
concerned about managing as well as directing the technical and physical elements of operations
of an entity, specifically those associated with manufacturing and distribution of its products and
services (Chiarini and Vagnoni, 2015). This area of management is significantly stressed upon
making sure that the resources of a company are optimally utilised with a view to manufacture
products and services in a manner that leads to the achievement of organisational goals and
objectives as well as fulfilment of customers' needs. Thus, it can be rightly said that operations
management includes the whole array beginning right from the procurement of raw materials to
the production of finished goods and/or services. Also, it comprises the procedure through which
customers acquire organisational products along with the Customer Processes Management
(Prajogo and et. al., 2018). It is often seen as a process through which the attention of company is
directed towards adding great value to products so as to derive maximum satisfaction from the
customers. Here, customer value is significantly enhanced by way of quality improvement, cost
reduction, substantial decrease in lead time and higher flexibility in response to changing
customer preferences. It can be said that improvement within customer value creation is largely
focussed upon accelerating the value for the company by building a loyal and strong customer
base which is not willing to switch to alternative brands and consequently, earning higher
revenues. Further, the results depend upon the selection of operations management practices and
models made by an enterprise.
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Role of Operations Management in Company's Competitiveness
Over years, Toyota Motor Corporation has been considered as one of the topmost
organisations prevailing within the automotive sector owing to the excellent adoption and
utilisation of operations management tools and techniques across the organisational premises.
Various professionals associated and unassociated with this business sector have accepted that
that Toyota’s rapid success within the global market place is largely due to the exceptional and
unmatchable operations as well as marketing strategies employed by this company. The
management philosophy of Toyota evolves right from its origin and has been significantly
demonstrated in the manner in which the entity has been operating over the long course of time
(Tiwari, Wee and Daryanto, 2018).
Some of the most crucial elements of the operations carried out across the enterprise
comprise of Lean Manufacturing technique together with the Just in Time process (supply chain
management). The production system of Toyota was found to be so effective that by the mid of
1980s, this operations management system was highly recommended to be introduced into the
Western automotive production companies. Toyota's operations management system was
traditionally used as a model to magnify the alterations needed within the U. S. automotive
sector. Operations management within Toyota Motor Corporation demonstrates that company’s
manufacturing system is wholly engulfed in the management philosophy of total elimination of
waste in relation to each and every area of production, in pursuit of the most cost-effective
methods to be taken in use by the company. The vehicle manufacturing process of Toyota is
often regarded as Toyota production system which can be said to be a composite of Lean
Manufacturing System and Just in Time (JIT) system (Maasouman and Demirli, 2016). These
systems have been developed over the course of time by incorporating continuous improvements
in the manner of manufacturing so as to deliver such types of cars which possess the capability to
meet the needs and demands put forward by customers in the most effective and efficient
manner.
This assists the organisation to take a leading role within the industry and operate in a
way that can render strategic edge to company in market place. The operations management
techniques employed by the company provides assistance to the organisation to carry out its
operations in an effective manner with a view to continue to be at the top position within the
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automotive industry. The operations management tools when implemented by the company
across the organisational premises tend to ensure that the output derived is in accordance with
the stipulated targets (Chiarini, Baccarani and Mascherpa, 2018). This consequently implies
higher sales and profitability for the organisation which aids the enterprise to maintain its high
position in global market place.
Production methods chosen by Toyota
Toyota makes use of a number of production and operations management methods in
order to ensure that the operations of entity are carried out in an effective and efficient manner.
In this regard, the methods employed by enterprise are discussed as follows:-
Six Sigma: Toyota is effectively employing the six sigma approach to operations
management which was first developed by Motorola. This is a method which focuses upon
removal of errors and limiting the variability within production with a view to ensure that low
level of defects within the output. This significantly enhances the quality of cars manufactured
by Toyota.
Kaizen: This is a Japan born approach to operations management which stresses upon
incremental yet constant improvement. This method is closely associated with the lean
manufacturing approach as this technique also gives due consideration to reduction of wastage of
resources which do not hold value within the finished product, but additionally, it also tends to
constantly enhance all the areas of operation (Amasaka, 2016). This philosophy of continuous
improvement is conducted on a daily basis and strives at improving the workplace in a manner
which ensures elimination of unnecessary hardwork thereby motivating the workforce to take
participation in the overall improvement of Toyota. Yet another feature of Kaizen methodology
is that it focuses upon carrying out small experiments with a view to measure their results instead
of executing large changes. This is because the judgment of small changes can be made and they
can be rapidly adapted across the organisational premises.
Theory of Constraints: It is a technique of operations management which depicts that
there are small constraints which tend to limit the ability of a company to attain its desired goals.
Thus, an enterprise should determine these constraints and carry out restructuring of the
operations with a view to take into account and deal with these constraints, thereby striving to
minimise them. These constraints can be internal (such as workforce, equipments, policy etc.) as
well as external. This method mainly depends upon the fact that there are only a few constraints
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that tend to limit the organisational productivity as well as output. Further, this technique
emphasizes that the most significant step is to direct resources towards minimisation of
constraints which significantly aims at producing the greatest improvement across the whole
organisational premises. This strategy is utilised by firstly anticipating and addressing the
principal constraint and then, stressing upon the other constraints in turn.
Hoshin Kanri: This is a model used in operations management which is stressed upon
policy deployment, predominantly by deploying policy at all the levels of company whereby
each level has its own goals that constitute a significant part of the bigger goal of the enterprise
(Suh, 2015). By employing this strategy in context of Toyota, the focus of managers here is to
meet the overall organisational goal instead of the stipulated day to day (short-term) goals. The
major stress is upon the individual achievement of goal by every level of entity so as to ensure
the attainment of company’s objectives within time.
Lean Production and its application within Toyota
Lean manufacturing can be referred to as a production process that stresses upon the
utilisation of materials and procedures in a manner that tends to create value for the end user. As
per the lean manufacturing principles, any expenditure of resources which does not lead to value
addition for end consumer is considered waste and is eliminated. In other words, lean can be said
to be a set of tools which provides assistance to an enterprise in recognising and eliminating the
wastage in manufacturing process. Lean manufacturing is focused upon improvising operations
or implementing the most effective as well as efficient production processes.
Toyota is an effective market player which makes use of operations management and is
the one to come up with the strategy of lean manufacturing which is often regarded as
“Toyotaism” (Kadarova and Demecko, 2016). This strategy focuses upon the diminution of
superfluous resources which do not hold any value of the end product. This manufacturing
technique emphasizes upon employing resources for the products and services that the people
desire thereby rendering the largest value to customers by making use of resources in an
optimum manner. This method helps Toyota to identify those areas where the wastage of
resources is taking place. One exemplary lean manufacturing is the use of cycle-time variation
technique which provides assistance in savings of time to produce desirable output on a
production line.
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SWOT Analysis
Strength Weakness
 Toyota holds good brand image at
market place as it provides its products
at global scale. Along with this, its
supply chain management is very
strong and risk manageable which
contributes in sustaining longer at
market place.
 Another strength of Toyota could be
seen in the continuous based innovation
in organisational culture of this
company. It can be said that operations
management team of this company is
mainly emphasizing on bringing rapid
innovations in company in order to
influence interest of employees as well
as other stakeholders for longer period
of time (Eaidgah and et. al., 2016).
 The company is still using hierarchical
organisational structure which is
becoming major weakness for its
sustainability. This means, Operations
of Toyota are still being performed in
hierarchical structure which is makes it
difficult for them to execute their work
in effective manner.
 At next, it can be said that Toyota is
highly dependent on suppliers. Thus, it
is the major difficult for the company
as they are not able to effectively
produce actual demanded output at
market place.
Opportunity Threat
 Operations management team of this
company is using Just in time approach
in their regular based working life cycle
in order to enhance effectiveness of
their operations. This becomes
opportunity for the Toyota in
international market scale.
 With the changing time, green vehicle
technology is becoming popular at
market place. Along with this,
customers are also accepting this
 Toyota is having vast number of
competitors at market place which
becomes its threat. The main
competitors of this company are
Hyundai, Ford, Mitsubishi and
Volkswagen (Nicholas, 2016). Along
with this, it can be said that these
competitors are rising day by day
within the industry which are becoming
its threat.
 Prices of raw materials are increasing
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technology in effective manner,. Thus,
it is becoming opportunity for Toyota
as if the company focuses on bringing
innovation in this area then it will
become most advantageous opportunity
for the company as it will improve its
sales as well as profits both.
every day. This becomes major threat
for the company as its harder for
operations management staff to deal
with high priced raw materials in order
to execute their operational activities.
Along with this, increasing raw
material also raises cost of actual
produced products which will going to
be sold in market in near future. As a
result, increased prices of products
might influence interest of customers
towards other reasonable brands.
PEST Analysis
PEST analysis has been conducted by the manager of this organisation to gain knowledge
of the external influences that tend to impact upon the mindset and decision making of
operations manager.
Political Factors define the extent of government intervention in the operations of
company. In this regard, the governments across the globe fosters the growth of such entities
which make use of effective operations management techniques with a view to lower down the
cost and enhance the operations (Suh, 2017). This has a positive impact upon the operations
manager of Toyota and urges him to employ effective approaches and techniques to gain
recognition and support.
Economical Factors define the economy of a country. In this relation, most of the
dominant revenue generating countries for Toyota are developed and thus facilitate the growth of
this company and this organisation has been employing innovative techniques over years to
change the phase of automotive industry and further give a boost to the global economy.
Social Factors can be referred to as the trends and lifestyles of consumers which have a
significant impact upon an entity. In this relation, the techniques such as lean, Kaizen, JIT
employed by Toyota are in accordance with the latest market trends and are employed by the
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enterprise to ensure best quality of cars being offered to customers in market place (Helleno and
et. al., 2015).
Technological Factors can be referred to as the advancements taking place in technology
which tends to generate opportunities for company to enhance the operations as well as
performance of enterprise in market place. In this regard, the techniques used by Toyota such as
Six Sigma and Kaizen are innovative approaches that provide assistance to an enterprise in
enhancing its sales by raising the quality, eliminating the wastage and lowering the costs (PEST
Analysis of Toyota: Malfunctions Ruining a Brand Image, 2019).
CONCLUSION
From the above discussion, it can be concluded that operations management is the key to
success of an organisation. Further, it has been analysed that there are various production
techniques which are employed by an organisation with a view to enhance the operations and
simultaneously lower down the cost such as Just In Time, Lean Production, Kaizen, Six Sigma,
Theory of Constraints. In addition to this, it can be comprehended that lean production is a
technique which is aimed at elimination of waste thereby improving the operations. This
provides assistance to organisation in achieving the goals and objectives in an effective and
efficient manner. Further, it has been assessed that there are a number of internal and external
influences that tend to have a significant impact upon the operations manager in an entity and
impacts upon the decision making process.
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REFERENCES
Books and Journals
Amasaka, K., 2016. Innovation of automobile manufacturing fundamentals employing New JIT:
Developing Advance Toyota Production System at Toyota Manufacturing USA.
In Proceedings of the 5th Conference on Production and Operations Management,
Havana, Cuba, International Conference Center (pp. 1-10).
Chiarini, A. and Vagnoni, E., 2015. World-class manufacturing by Fiat. Comparison with Toyota
production system from a strategic management, management accounting, operations
management and performance measurement dimension. International Journal of
Production Research, 53(2), pp.590-606.
Chiarini, A., Baccarani, C. and Mascherpa, V., 2018. Lean production, Toyota Production
System and Kaizen philosophy: A conceptual analysis from the perspective of Zen
Buddhism. The TQM Journal, 30(4), pp.425-438.
Eaidgah and et. al., 2016. Visual management, performance management and continuous
improvement: a lean manufacturing approach. International Journal of Lean Six
Sigma, 7(2), pp.187-210.
Helleno and et. al., 2015. Integrating value stream mapping and discrete events simulation as
decision making tools in operation management. The International Journal of Advanced
Manufacturing Technology, 80(5-8), pp.1059-1066.
Kadarova, J. and Demecko, M., 2016. New approaches in lean management. Procedia
Economics and Finance, 39, pp.11-16.
Maasouman, M.A. and Demirli, K., 2016. Development of a lean maturity model for operational
level planning. The International Journal of Advanced Manufacturing
Technology, 83(5-8), pp.1171-1188.
Monden, Y., 2018. Toyota management system: Linking the seven key functional areas.
Routledge.
Nicholas, J., 2016. Hoshin kanri and critical success factors in quality management and lean
production. Total Quality Management & Business Excellence, 27(3-4), pp.250-264.
Prajogo and et. al., 2018. The relationships between information management, process
management and operational performance: Internal and external contexts. International
Journal of Production Economics, 199, pp.95-103.
Suh, Y., 2015. A global knowledge transfer network: The case of Toyota's global production
support system. International Journal of Productivity and Quality Management, 15(2),
pp.237-251.
Suh, Y., 2017. Knowledge Network of Toyota. Annals of Business Administrative
Science, 16(2), pp.91-102.
Tiwari, S., Wee, H.M. and Daryanto, Y., 2018. Big data analytics in supply chain management
between 2010 and 2016: Insights to industries. Computers & Industrial
Engineering, 115, pp.319-330.
Online
PEST Analysis of Toyota: Malfunctions Ruining a Brand Image. 2019. [Online]. Available
Through:<https://pestleanalysis.com/pest-analysis-of-toyota/>.
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