Organizational Knowledge in Supply Chains of Toyota

The report analyzes the role of information technology in the supply chain management of Toyota and how it helps the company to maintain a healthy relationship with its suppliers and end customers.

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ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
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1ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Table of Contents
Task 1 for Part 2..............................................................................................................................2
Introduction......................................................................................................................................3
Epistemologies & Innovation..........................................................................................................4
The SMED program....................................................................................................................4
Jidoka or Autonomation..............................................................................................................5
Gradual or moderate clearance of Muda or industrial waste.......................................................5
Cross-training the employees......................................................................................................7
In-time production.......................................................................................................................7
Heijunka.......................................................................................................................................7
Supply Chain management..........................................................................................................8
Conclusion.......................................................................................................................................8
Task 2 for Part 2..............................................................................................................................9
Introduction....................................................................................................................................10
Information technology in supply chain management of Toyota..................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

2ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Task 1 for Part 2
Abstract
Organizational knowledge has been the centre of focus for a long time due to the nature
of the knowledge. This is because the standpoint of the knowledge-as-possession view differs
from the standpoint of the knowledge-as-practice vies. Both the viewpoints are thoroughly used
for constructive and relevant methodologies for different aspects of different organizations where
knowledge is nothing but an object of practice. However, either of these models are adopted for
relevant design and management of different aspects of an organization like the supply and chain
as both of the models are equally beneficial in theoretical and practical implementation. A model
combining both the viewpoints is much more beneficial than any model in every possible way.
Toyota in the market of automobile industry is a perfect example how both the viewpoints are
combined to get best results in supply chain management and production system (Kitazuka,
2016). In this report, a thorough analysis is done about how the company has combined
knowledge-as-possession and knowledge-as-practical viewpoints. A thorough analysis of the
techniques adopted by Toyota is given in this report.

3ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Introduction
Over the last five decades, Toyota has sharpened their production system and supply
chain management that helped in the ascending position of the company in global automobile
industry. The methodologies the company implement does not stay limited within the department
of production but also it extends to the supply chain management of the company creating a
value added system. In this system, every link is important, beneficial and focuses deeply on the
team-efforts, communication between links, better utility of resources, waste management. All
these ensures continuous improvement in the process flow (Gao & Low, 2014).
Apparently, the focus of the automobile companies are shifting from traditional division
based on the production system of the companies based on their geological locations, the
companies are adopting different production ideas keeping for global audience. Regional ideas
can no longer be the cause of success for any automobile company as they are giving huge
efforts in delivering high-end technology and superior customer handling systems to make their
marks in the competitive market of automobile industries (Lopes et al., 2017). Over the past
years, Toyota has been able to transform the production process of the company as the major
beneficial link in the overall supply chain management system (Alves & Alves, 2015). This has
helped the company to ascend to the forth position among the global position of car
manufacturers. Just after companies like General Motors, Ford and Daimler Chrysler, the
successful combination of improved production management, excellent automobile
manufacturing system and excellent customer care system. However, the production system of
Toyota, which is closely associated with lean production, is the key factor of the success of

4ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Toyota besides an excellent supply chain management and good relation with their global
suppliers (Bicking, 2015).
Epistemologies & Innovation
The production system and supply chain management of Toyota is a perfect example of
combined implementation of organizational knowledge-as-possession viewpoint and knowledge-
as-practical viewpoint (Nonaka, Kodama, Hirose & Kohlbacher, 2014). This is the reason the
Toyota production process has been recognized as the revolutionary process as it has been
upgraded to the future process of mass production with minimum error. The organizational
knowledge in terms of possession viewpoint comes from the experienced employees of the
company, which in case of Toyota is the greatest asset. While on the other hand, the company
has improved their process of production and supply chain management by implementing their
organizational knowledge, which comes from the knowledge-as-practice viewpoint. This
practice has helped to improve their relationship with their suppliers and customers in global
market (Birasnav, 2014). Toyota has successful combined to different aspect of organizational
knowledge to define a production and supply chain management system, which is simply the
next level for any competitor of Toyota. The company has implied the combined effect of
possession and practical based knowledge in every link of the overall process (Ringen,
Aschehoug, Holtskog & Ingvaldsen, 2014). To define the effect Toyota has implied it is
necessary to understand all the links, which are the SMED program, Jidoka program, gradual
elimination of Muda, exact time delivery production system and the Heijunka. Besides these
links, it is also important to understand the supply chain management system of Toyota.

5ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
The SMED program
Implementing the vision of Toyota’s chief engineer Taiichi Ohno, Toyota has developed
easy die changing process. In this process the dies are changed as frequently from a day to even
three minutes. Initially the process was-planned five decades ago and was developed
experimentally using second-hand American presses. As the process proved to be helpful, it was
implemented in the production system, which reduced the necessity of die specialists. The
process is termed as the Single Minute Die Change process program (Tekin et al., 2018). This
system has helped reduce the overall cost of small units of stamping. The SMED process has
been beneficial for two major reasons. Manufacturing small units reduce the carry cost of the
enormous units of completed parts, as mass production department required calculated amount of
parts. On the other hand, this reduces the overall manufacturing mistakes, as having small
number of parts while assembling a car makes requires higher accuracy rate in the system. This
improves the quality of product in every batch.
Jidoka or Autonomation
Jidoka is the Japanese term for autonomation, which is defined as an automation system
with human intelligence. Jidoka refers to the self-improving system of Toyota production
system, which stops in case of any problem in the production chain or over-production happens
and analyzes the problem immediately. After that, it takes necessary action to overcome these
problems, implement them in the system, and restart the production line again (Yang & Yang,
2013). This way Toyota has been able to reduce industrial waste which the Japanese people call
Muda and improve the quality of the products. This also helps the company to reduce the overall
production cost, which indirectly reduces the price of their cars in global market.

6ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Gradual or moderate clearance of Muda or industrial waste
Muda or industrial waste are those by products generated in a production system, which
only increases the cost of production without adding any value to the process, or experience of
the employees or the system itself. Toyota has implied three methods to cope up with the
industrial waste. They are Kaizen, analysis of main cause or Root-cause and the Poka-Yoke
(Chiarini, Baccarani & Mascherpa, 2018). Kaizen is the Japanese version of progressive
advancement system. The company makes a team of experienced construction employees and
engineers to suggest progressive ways to improve the manufacturing system. It is the duty of the
team members of Kaizen to come up with collective ideas about improving the process, quality
of products, and every possible aspects related production (Knechtges & Decker, 2014). This
way Toyota is implementing the knowledge-as-possession of the employees to improve the
system. By convincing, the employees to join the improvement process of the company, Toyota
is not only identifying new horizons of innovation but also giving chance to the employees to
explore their job and the opportunities.
The Main reason or Root-Cause analysis method of Toyota combines with 5Ws and 1H.
W stands for WHY and H stands for HOW-TO-DO (Macpherson, Lockhart, Kavan & Iaquinto,
2015). Each employee of Toyota is trained to ask 5Ws whenever they face any trouble in the
manufacturing system. This way, employees will be able to identify the problems clearly and
analyze what to do to cope up with the issue. For every 5Ws, the employees have to answer 1H,
which is the exact way to solve the issue. This process does not require any survey analysis or
statistical record and can be implemented very fast.
Poka-Yoke is a manufacturing system technology, which prevents any kind of error to
occur in the production system. The technology is simply like a proof reading system. The

7ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
system of Poka-Yoke is designed with standard set of requirement of even the smallest part
required for every car. This way in case any faulty piece is loaded in the system, it will
automatically stop the process. This way Toyota is implementing the organizational knowledge-
as-possession of engineers and employees and build knowledge-as-practice to improve the
overall system.
Cross-training the employees
The administration of Toyota, simply making groups of employees with an experienced
team lead. The job role of the team lead is to assign different tasks to every employees in the
group (Saurin, Rooke & Koskela, 2013). This way every employees are trained in every task and
the cost of recruiting experts is reduced. In total, this will reduce the overall production cost of
the company.
In-time production
Coordinating the production of small parts and construction of the car in daily base is the
best way to reduce the overall production cost. This is the best way to reduce the stock by
decreasing over-production of parts (Chopra & Sodhi, 2014). In-time production has been proved
beneficial for the company by not only eliminating extra production and reduction in the
manufacturing process but also providing flexibility of modifying the overall production process
anytime.
Heijunka
Heijunka is a Japanese term used to define the level matching of production. This is a
method of smoothing the demand level in the market (İşler & Güner, 2014). Toyota has adopted
a policy of doing market survey based on the requirement and demand of their car in the market

8ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
in weekly and monthly basis. In this way, they can shortlist the exact amount of production need
to be done. This will help in reducing excess production and overall production cost. Toyota has
adopted the organizational knowledge-as-practical viewpoint via Heijunka to reduce the
production cost and improve productivity of the company.
Supply Chain management
Some of the systems adopted by Toyota, by combining organizational knowledge of
possession and practical viewpoint, has been proved helpful even in supply chain management
policies of the company. For example, Toyota has used the just-in-time production policy for
suppliers and dealers too. The company has implied timely stock clearing and supply based on
demand to the dealers. Excess stock can bring up the production cost of the cars and parts of
them. On the other hand, keeping stocks timely cleared offer chance of productivity and also
production cost is also reduced. This way Toyota has been successful in achieving one of the top
positions in the automobile industry using the organizational knowledge in every possible way.
Conclusion
The case study of Toyota is an example of how to combine to different viewpoint of
organizational knowledge and achieve the best result. The company has utilized the knowledge-
as-possession viewpoint achieved from experienced employees to implement new and effective
ways to reduce the overall production cost. On the other hand, they have implemented the
knowledge-as-practical viewpoint to bring out the best of their employees and improve the
overall productivity. The company is a perfect example of perfection achieved by implementing
two different viewpoints.

9ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Task 2 for Part 2
Abstract
Information technology in any industry plays a huge role in production management and
supply chain management. So as the automobile industry. This has been significantly proved by
the Japanese automobile giant Toyota. The company has implemented an IT system, which
supports the unique production process of the company. The administration of Toyota has
implemented a way of utilizing every available resources by TPS and eliminating waste from the
production line. All these are done by the information system of the company. The IT system of
Toyota relies on the pull strategy to stop over production to reduce stocking. On the other hand,
the IT provides integrating planning combining reports of every links in the production and
supply chain of the company to the administration, which shows the exact demand and the
required production level of the company. Based on this report the company takes future
decision of production. This also helps the company in maintaining a healthy relationship with
the suppliers and end customers. A superior customer relationship is build based on the IT
system of the company.

10ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Introduction
The supply chain management of Toyota is an important aspect of the operation
techniques, which is totally based on the internal production model, termed as Toyota Production
system (Fritze, 2016). The system was developed shortly after the Second World War. The
principal of action of this system is termed as the “lean manufacturing” system and it depends on
the concept of understanding and deriving the best out of every available resources be it human
resource or machines or information system (Martínez-Jurado & Moyano-Fuentes, 2014). On the
other hand, eliminating waste or Muda is another major concern of the system. No soon has the
company gained success in the global platform, other automobile companies started to
implement their own version of TPS in their companies.
Information technology in supply chain management of Toyota
The information technology implemented in the supply chain management and
production process of Toyota is termed as Toyota Supplier Partnering Hierarchy: mutual
understanding and trust, interlocking structures, control systems, compatible potentials,
information sharing, joint advancement activities and last but not the least Kaizen and learning
process (Dominici & Palumbo, 2013).
The “Just-In-Time” operation system implemented by Toyota is the key feature of the
overall supply chain management, which controls the flow of information and resources among
different departments and suppliers of the company (Pinto et al., 2018). The principal of “Just-
In-time” operation are active participation of pulling of the system in case of any problem arises
based on the Kanban analysis, quality control management, waste management, reducing over-

11ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
production of inventories, improve productivity and parts and focusing on the co-operation
among employees.
As per the Kanban analysis, every part comes with an identification card, which is used
in every phase it passes by. The card contains information regarding every details of the part.
This is an integrated part of the IT system of Toyota. Whenever, the part is used, the card is
removed which signals refill to stocks of the company. Kanban is a very efficient IT system
implemented by Toyota as the company believes in keeping limited stock based on demand and
fresh supply of products (Tseng, 2014). This reduces the excess cost of stock piling and lowers
the chances of quality mismatch and exchanges.
The information technology adopted by Toyota also helps in potential analysis of the
company. The principal of the IT system adopted by Toyota is different from other companies as
it strives to limit the inventories of the company. The aim of such system is to include space for
productivity in the overall system. This is why the system totally depends on strict analysis of the
demand survey within the production system of the company. Toyota has implemented the
concept of “Lean Production and Management” in their IT system to stop excess production,
eliminate problems and provide superior quality customer care (Aguado, Alvarez & Domingo,
2013). The primary objective of “Lean” implementation is to eliminate every kind of waste. Just-
In-Time production is the best application of “Lean Production” for this purpose (Dombrowski
& Mielke, 2014).
The IT system of Toyota works in cooperation with the order and demand survey in the
market especially for the administration who are not aware of the technical details of production.
The information flow within the system of the company coordinates details of every phase of
production regarding every car model. For example, the sales increment of cars during any

12ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
occasion will have huge impact on all the phases of production. This way, all the departments not
by single one do integrated planning. In general, the company provides easy registration to the
customers, which is a huge risk for the customer relationship of the company. However, if the
integrated report has any backlog for the administration then rechecking of the overall system is
done by reviewing the individual reports of every department. The process comprises of three
steps. They are as follows.
1. Preparing an integrated planning to understand the logical issues within the company
planning process. This process incorporates activities to build an overall integrated
planning, which will be beneficial for the supply value chain incorporating the decision-
making in every phase of production adding value to the overall system (Schaltegger &
Burritt, 2014). This way the process benefits the end customers and suppliers all by
information flow.
2. The process steps one common goal for every phase of production to logistics and
suppliers. This is to serve the best to the customers. This way the company sets a
common goodwill for every link in the overall supply chain to deliver the best result.
3. The administration helps in rebuilding a common understanding between different
departments. This is important to set the common objective of the supply chain
management and deliver the best to the customers. This includes details planning and
necessary quality management of the system. To provide the best to the customers and
maintain a healthy supply management system this is important.
Conclusion
The supply chain management and the production system of Toyota are the key features
that defines the quality of service they provide to their customers. The information system of

13ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
Toyota aims to serve their customers with the best quality products and services as much as
possible. Besides this reducing production cost is the major principal of the IT system
implemented by the company. when the major automobile companies of Europe and America are
focusing on mass production to reduce the production cost, the automobile giant from Japan has
devised a way to reduce production cost by utilizing all the available resources and limiting
production as per demand and eliminating as much waste from the production line as possible.
This is all done by implementing a high-end information technology, which ensures timely flow
of information from suppliers from the top administration of the company and vice versa. In
recent times the company tied bonds with the tech giant Softbank to handle their information
technology and launch self-driving cars in the market. The information technology is playing an
important role in Toyota to survey the demand in the market regularly and calculate the
production on basis of this. On the other hand, it also helps in improving employee
administration connection by providing detail information about every employee in the system.

14ORGANIZATIONAL KNOWLEDGE IN SUPPLY CHAINS OF TOYOTA
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