Analysis of Toyota's Business Performance and Recommended Changes

This report provides a comprehensive analysis of Toyota Motor Corporation's current business performance, focusing on key operational areas that require change to enhance overall efficiency and profitability. It identifies critical issues in inventory management, production quality, and supply chain strategies, highlighting the need for improvements to address recent challenges such as product recalls and declining brand image. The report proposes specific changes, including implementing better inventory control, maximizing production output and product quality, and improving supply chain management. It also explores the application of radical change and continuous improvement methodologies, evaluating the advantages and disadvantages of each approach. The analysis emphasizes the importance of strategic decision-making in quality management and the need for a robust HR network to support these changes. The report concludes by reviewing one identified change (quality management) and assessing the implications of the proposed changes to help Toyota regain its competitive edge and meet consumer expectations.

IMPROVING BUSINESS
PERFORMANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Current performance and operational areas that require change in firm.....................................1
Identified changes that should be implemented in Toyota..........................................................3
Review of one identified change.................................................................................................4
Evaluating proposed changes and applying radical change and continuous improvement with
its advantages and disadvantages.................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the modern competitive era, it has become essential for companies to identify change
requirements and make necessary modifications in operations in order to improve overall
performance of business. Change management supports in maintaining day to day operations and
in reducing risk of organization (Toth and Vigo, 2014). Present study is based on Toyota Motor
Corporation which is a multinational automotive firm that provides high quality automobile
products to consumers across the world. It has become the leading firm in selling hybrid electric
vehicles. Current assignment will evaluate the current performance of firm and describe three
operational areas that require changes. Furthermore, it will explain the importance of these
changes in business. In addition, report will discuss the radical change and continuous
improvement methods for managing alterations in organization.
TASK
Current performance and operational areas that require change in firm
Toyota Motor Corporation is the leading automotive firm that manufactures automobile
parts, commercial and industrial vehicles. The main agenda of entity is to raise its profitability
and expand its business across world. There are many automobile firms that are giving tough
competition to entity such as BMW, Volkswagen, etc. (Robinson, 2017). Toyota implements
effective operational management strategies that help organization in conducting its operations
effectually. But over a period of time, firm has faced many operational issues and its many
products are being recalled. This has spoiled the brand image of enterprise and affected its
profitability as well. Company always take support of advanced technologies that help in
managing the quality and controlling cost. Entity also invests a huge amount in research and
development in order raise quality of its products and services. In the year 2010, Toyota has
faced huge losses because in most of the vehicles of company, acceleration problems were
highlighted (Fredendall and Hill, 2016). There are various areas that require change in order to
improve the operational performance of entity. These are explained as below:
Maintaining inventory level
Toyota Motor Corporation is the multinational firm but it is recently unable to maintain
its inventory well. It is responsibility of business that to meet with consumer demand but due to
ineffective management of inventory it is unable to manage stock well. This increases cost of
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business and sometimes create issue of mistakes as well (Fernie and Sparks, 2014). A business is
needed to maintain its raw material and control over manufacturing process. Recently order lead
time and usage rate of material is very high in organisation due to which its profit is getting
declining. This is the major area that requires changes because by improving inventory
management entity will be able to control over inventory which may help in raising its profit to
great extent (Dubey, Gunasekaran and Ali, 2015).
Maximizing production and enhancing product’s quality
In past few years many of Toyota vehicles are being recalled this has created negative
image in the mind of consumers (Toyota Recall Highlights Deep Organizational Failures, 2010).
By this way now people are moving towards other brands. This has negatively impact on
profitability of business unit. In order to gain competitive advantage it is very important for
Toyota that to make changes in its production style. It has to work on raising its production
capabilities and have to raise quality of its cars. Recently Toyota’s production is not good,
wastage and scrap are causing difficulty for business unit, Consumers always prefer to buy high
quality cars, and they are ready to pay high amount for getting such standard products (Zheng,
Wang and Liu, 2015). But if Toyota is unable to meet with their expectation then it might create
difficulty for business and in such condition overall sales of firm can get reduced. Toyota is
implementing traditional quality management tools and these techniques are unable to
manufacture high quality cars. That is why profit of company is getting down. Sometimes
Toyota gets failed to deliver cars on time. Due to slow manufacturing process entity is unable to
meet with expectation of target audience. Thus, it is require making changes in its production
process and have to raise quality of its goods and services (Richards, 2017).
Changes in supply chain management
Company has opened its manufacturing plants in many countries. It has many suppliers
across the world. Supply chain management strategies of company are not good. Though Toyota
tries to minimize bullwhip effect in its supply chain but due to weak supply chain management
strategies entity is unable to improve its production capabilities (Toyota Recall Highlights Deep
Organizational Failures, 2010). This is major challenge for the company and it is increasing cost
of operation in business unit.
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Identified changes that should be implemented in Toyota
It has been identified that operation management is the management process that helps in
improving system and process that require for producing quality goods. It is responsibility of
operation manager of entity that to transform its input into quality output so that more consumers
get attracted towards brand and they retain in business for longer duration. Inventory
management is strategic decision are of operation management (Toth and Vigo, 2014). Toyota
needs to implement this change in business unit in order to issues related to inventory and
minimize wastage in organization. By managing changes in its inventory management process
entity will be able to reduce unnecessary cost and will be able to utilize its resources properly. In
last few years Toyota has become fail to deliver cars to consumers on time. One of the major
reasons of this is its poor inventory management strategies (Robinson, 2017). This is causing
difficulty for operation manager in producing goods on time and meeting with expectation of
target consumers. By making changes in inventory management approach, company can be able
to produce more goods and will be able to deliver goods on time. This would be more effective
change that would help organization in decreasing its production time and enhancing production
capability of enterprise. Company is required to minimize its inventory level by implementing
just in time management method. This will be beneficial in reducing cost and improving
production in Toyota (Fredendall and Hill, 2016).
Toyota is required to make changes in its supply chain management (SCM) strategies.
Recently company is unable to manage its supply chain process well due to which it is not
getting high quality raw material. This is creating issue in its end products. That is why most of
the products of Toyota are being recalled in last few years (Toyota Recall Highlights Deep
Organizational Failures, 2010). This change would be better for entity in minimizing bullwhip
effects and reducing its lead time and usage rate. SCM is essential part of business unit that
always ensure to maximize consumer value and improving [production capability (Fernie and
Sparks, 2014). Toyota is required to make changes in its automation system and real time
adjustments process in supply chain activities. This will be beneficial in managing changes in
organization for longer duration. In order to implement these identified changes in the
organization operation manager of Toyota has to make changes in its HR network. It has hired
skilled employees those who can manage stock level well and can produce high quality goods
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and services in the organization. This change will help in making effective control over operation
and reducing overall manufacturing cost of entity (Dubey, Gunasekaran and Ali, 2015).
Furthermore, Toyota needs to make changes in its quality management process. Recently
most of its vehicles are being recalled. Poor quality products increase cost of business and
decrease its brand image as well. Company needs to maximize its quality by making changes in
its production system. Firm is required to make strategic decision of continuous improvement
that can support entity in improving operational efficiency of enterprise. Toyota needs to
concentrates on waste management and has to concentrate on maximizing process efficiency
(Zheng, Wang and Liu, 2015).
Review of one identified change
Toyota Motor Corporation is multinational firm that perform its operations across the world.
The main aim of entity is to provide high quality products to consumers and offer them
satisfactory cars. Over a period of time due to poor quality products brand image of Toyota has
got affected badly. Many of its vehicles were recalled and that has created negative image in the
mind of consumers. In order to accomplish its objective and meet with expectation of consumers
it is essential for Toyota that to enhance production capability and maximize quality of goods
and services (Toyota Recall Highlights Deep Organizational Failures, 2010).
Quality management is most essential aspect that always ensures that entity becomes able
to provide high quality products to consumers. Creating strategic framework of quality can
support Toyota in raising values for consumers. Incremental approach of quality management is
appropriate for enhancing overall quality of products and services in business unit. TQM and JIT
are most effective methods to manage changes in business. By implementing this process cited
firm can be able to improve its quality of products (Richards, 2017). This will support
organization in reducing operational errors and minimizing cost of operation as well. Continual
improvement method is more relevant for Toyota in order to enhance its production capabilities
and enhancing quality of products and services. This is the method that is beneficial in
identifying internal performance and measuring overall performance of current practices. By this
way operation manager can take action to continuous improvement tin operations so that issues
can be minimized and overall performance of company can be improved (Toth and Vigo, 2014).
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Evaluating proposed changes and applying radical change and continuous improvement with its
advantages and disadvantages
Evaluation of proposed changes
There are three types of proposed changes that have been identified for Toyota. These are,
maintaining inventory level, maximizing production and enhancing quality of products and
initiating adequate changes in supply chain management. Evaluating all the changes, the
following aspects can be analysed: Maintaining inventory level: Toyota Motor Corporation have not been able to maintain its
inventory due to ineffective management. The manager at inventory management department
is not able to maintain inventory. It is due the communication gap between the department
where they are not able to gain information that how many units have been sold and how
many are actually required to be prepared so as to fulfil further demand that arise in the
market. The reason can be unidentified shoot up and down in sales affecting overall
inventory management aspects of Toyota. In this scenario, it also affects maintenance of
inventory level and presence of material in the environment (Christopher, 2016).
Implementing changes in these functions are required to be initiated that can help in better
management of inventory in the environment. It is required for every business to maintain
raw material and control over manufacturing process that can help in mitigating the situation
of over stock and under stock. Maximizing production and enhancing product quality: Toyota vehicles have attracted
negative image from the side of customer due to degraded quality of their products and
services. Also, unavailability of some products in the market is another important aspect that
can be related to dissatisfied customers. It is important that products and services are
adequately available in the market in such a manner that they are easily accessible top
people. It helps in development of effective brand image in front of customers. It also
initiates in ensuring that they are able to meet the requirements of customers. Failing in this
aspect is leading to bring the sales to reduction. There is certain scenario that have been
noticed that are related to failing to deliver cars in stipulated time. It has also affected
customer satisfaction level to the maximum. Changes in supply chain management: The company have successfully been able to open
certain manufacturing plants in various countries so as to cope up with generating demand of
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Toyota all around the world. However, it has not been able to improve its production
capabilities at various regions. It is the major challenge where the ultimate product provided
to customers is not benchmarked. It generates the requirement of bringing changes in
production function of Toyota that can help in fulfilling the requirements in a well-defined
manner (Fernie and Sparks, 2014).
Continuous improvement process
From all the above aspects, it is important to bring changes in Maximizing production
and enhancing product quality. It s quite important to convey changes in its implementation
where, management can strategize for its effective functions. Implementing change in the
environment may not be an easy task. In this scenario, Toyota will get involved in opting for
Radical Change and Continuous Improvement. In this scenario, it important for the company to
take following steps:
 To assess loopholes in production function and ultimate quality of products delivered.
 To opt for drawing a communication channel between production and sales department so
that generating needs can be assessed.
 Maintaining a balance between what is produced and what is actually sold so that situation of
understock and overstock can be removed.
 Having a margin of 10% from estimated sales so that any unidentified demands cropping up
can be satisfied.
 Drawing estimates from the sales of last year.
 Benchmarking quality so that steps can be taken with respect to maintaining quality of the
products and services that are offered by Toyota (Ahi and Searcy, 2013).
 Further, keeping constant check over what is actually offered to the customer is another
important aspect that can be linked to product and services of Toyota.
 Bringing constant improvement in practices can also help in generating higher customer
satisfaction so that loyalty with respect to customers can be increased.
These steps can help in bringing appropriate change and managing the same in a well-
defined manner. Change management process plays an important role in ensuring that all the
aspects have been taken into consideration and no change will have any impact on functioning
aspect of the organization. Hence, proper management of employees and department is important
so no hassle is attracted due to initiated change.
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Advantages and disadvantages of bringing change in Toyota
The main benefit of bringing this change is that it will help in increasing sales revenue
and profitability of the business. It will then have greater positive impact on level of customer
satisfaction. Another benefit that is linked to it is, the company will be able to enhance its market
share. There are certain disadvantages that are attached to this change. It is quite difficult to bring
changes in department as it affects daily operating functions of the business. There may be
certain employees which may resist this change and are not able to accept new method of
production and distribution. The organization, sometimes, is not able to make prudent decisions
while bringing changes in its functions. It can negatively affect profitability and revenue aspects
of the business.
However, it can be stated that using appropriate strategies for bringing change can always
help in attracting more of benefits rather than limitations. In case of Toyota, it can be suggested
that, better improvement strategies can help in increasing sales and profitability aspects of the
business in the most convenient manner.
Literature review of change
According to Sarkis, (2012) change can be quite effective in nature, if implemented
effectively. Preparing proper strategies and channelizing the same to subordinates using right
method of communication can prove to be quite effective in this case. Manager must
appropriately be involved in the process so that subordinates can be convinced and positive side
to change can be shown to them. Further, adequate presence of resources and monitoring them
time to time are the other important factors that are linked to benefits of implementing change in
Toyota. Empowerment in organization by involving all the employees can play an important role
in this scenario. However, in contrast to this, as per the views of Wisner, Tan and Leong, (2014)
there can be chances where plan of the organization may backfire. In order to bring any type of
change, entity opt for investing some amount of money to it.
In this scenario, it can act as a loss to the company, where they are not able to generate
adequate profits of what was actually invested in the project. Another negative aspect that can be
faced by Toyota is resistance from the side of employees, where they may not be quite happy
with the new plan of organization. There are high chances that employees may not respond to
change happily and understand what is actually going through within the top-level management.
Poor communication and less engagement can be two important factors of it. It is important for
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Toyota to ensure that actions have been taken with respect to it. Although, overcoming these
challenges and effectively managing the change can help in better dealing with it. Allowing
employees to ask questions and sorting out their queries can help Toyota in bringing positive
results.
Recommendations
There are certain recommendations that can be extended to change of Toyota, which are
mentioned as follows:
 Overcoming opposition by better as well as effective communication skills.
 Effectively engaging employees and each and every activity of organization.
 Implementing changes in various stages so that it does not overburden the employees.
 Understanding the perspective of employees as well for better implementation of change
 Since, it can affect performance of employees, Toyota must be patient about ultimate results.
It can be generated in the form of high revenues as well as greater employee satisfaction.
CONCLUSION
From the above study, it can be concluded that it is very improvement for the
organization to identify improvement areas and make changes in its strategies so that overall
performance of business can be improved. There is major operational issues that are faced by
Toyota are ineffective supply chain management practices, poor quality control and ineffectual
production capabilities. It is essential for the firm to make changes in its operational strategies so
that business can meet the expectations of consumers and provide them high quality products.
Continuous improvement is the best way of increasing quality and making changes in production
practices. This will support entity in providing services and products to consumers as per their
requirements and minimizing changes of recalling of vehicles.
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REFERENCES
Books and Journals
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sustainable supply chain management. Journal of cleaner production. 52. pp.329-341.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dubey, R., Gunasekaran, A. and Ali, S. S., 2015. Exploring the relationship between leadership,
operational practices, institutional pressures and environmental performance: A
framework for green supply chain. International Journal of Production Economics. 160.
pp.120-132.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Fredendall, L. D. and Hill, E., 2016. Basics of supply chain management. CRC Press.
Richards, G., 2017. Warehouse management: a complete guide to improving efficiency and
minimizing costs in the modern warehouse. Kogan Page Publishers.
Robinson, A., 2017. Modern approaches to manufacturing improvement: The Shingo system.
Routledge.
Sarkis, J., 2012. A boundaries and flows perspective of green supply chain management. Supply
chain management: an international journal. 17(2). pp.202-216.
Toth, P. and Vigo, D., 2014. Vehicle routing: problems, methods, and applications. Society for
Industrial and Applied Mathematics.
Wisner, J. D., Tan, K. C. and Leong, G. K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Zheng, Q. P., Wang, J. and Liu, A. L., 2015. Stochastic optimization for unit commitment—A
review. IEEE Trans. Power Syst. 30(4). pp.1913-1924.
Online
Toyota Recall Highlights Deep Organizational Failures. 2010. [Online]. Available through
<https://www.cbsnews.com/news/toyota-recall-highlights-deep-organizational-failures/>.
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