Operations Management in Toyota: Process, Analysis, and Evaluation

This report provides a comprehensive analysis of Toyota's operations management. It begins with an introduction to the importance of operational management within Toyota, outlining key functions such as planning, organizing, and controlling. The report then evaluates Toyota's operational management using a process model, emphasizing the transformation of inputs into outputs to meet customer needs. It further explores the significance of the 'Three Es' (Efficiency, Economy, and Effectiveness) in an organizational context, examining the influence of cost minimization versus quality maximization. The report then analyzes performance objectives, including quality, speed, and dependability. The study then assesses the application of linear programming and critical path analysis within Toyota's production processes. Finally, it justifies the need for operational planning and control in a selected production process, providing a detailed overview of the company's strategies and their impact on overall efficiency and customer satisfaction.

Operations Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Operational management importance in Toyota..............................................................3
1.2 Analysis of functions of operation in Toyota...................................................................4
1.3 Evaluation of Toyota's operational management with the use of process model.............5
Task 2...............................................................................................................................................6
2.1 Evaluate the importance of 'Three Es' in organisations....................................................6
2.2 Influence of tension between minimisation of cost and maximisation of quality in
organisation............................................................................................................................7
2.3 Importance of performance objectives that underpin management of operations in
organisation............................................................................................................................7
TASK 3 ...........................................................................................................................................8
3.1 Assess how linear programming adds value to the production process of Toyota..........8
3.2 Evaluate critical path analysis and network planning......................................................9
3.3 Justify the need for operational planning and control in a selected production process 10
TASK 4 .........................................................................................................................................12
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18
.......................................................................................................................................................19

INTRODUCTION
Operational management is the important part of any organisation to carry out their
functions in a proper way, without affecting the growth and goals of an organisation. As there are
several activities that are carried out in the company and to make sure that these activities should
be according to the conditions, operational management is needed (Yang, Hong and Modi,
2011). This study is being carried out on the Toyota's operational management. Toyota is one of
the leading automotive company that deals in the manufacturing of various automobiles. This
study is based on the company's process to manage its operational activities. Main aim of the
study is to provide information regarding operational management and to make analysis
regarding the process and role of operational management in the effective and efficient
production of goods that is being offered by company. Various operational management
functions, their use, process and role is being discussed in the study to provide necessary data.
TASK 1
1.1 Operational management importance in Toyota
Operational management is very important in an organisation to carry out activities
properly and effectively. It is basically defined as the administration or management of various
business activities to maintain efficiency at good level in an organisation. In Toyota also it is
carried out to convert their work force in high quality of products and services so as to achieve
their goals and to gain maximum profit.
Functions of operational management need to be carried down in an organisation for
smooth working of operational activities, these functions may include designing, planning,
organising, and controlling (Wheelen and Hunger, 2011). Proper decisions, organisation of
activities, coordination among employees and control is very important for an organisation to
build goodwill. These may include several strategies that needs to be carried out like, job
description, management of workforce, analysis of situations, availability of resources etc.
Operational management is an important part of an organisation to carry out their day to
day operations in an excellent manner. For Toyota also, operational management is an integral
part for them, as it is one of the largest automobile manufacturer and consist of large no. of
employees around the world .Management of operations involves the right working of every
activity that helps in achieving goals. Operational management is important to:

 Increase the sales of a particular product or service
 To reduce the production and finance cost
 To generate revenue and more profit
 To have proper planning and coordination among various departments.
Assistant Manager of operation department of Toyota has the responsibility have a proper
operational management in a company (Kerzner, 2013). Functions of operational management is
used in the company to develop strategies related to product and layout. It ensures to give high
quality of products to customer, to have a new developed technology and to focus on further
research to have creativity in products to attract more and more customers. Operational
management helps them in increasing their productivity with low cost and in gaining large profit.
1.2 Analysis of functions of operation in Toyota
Operational functions are of different types that helps an organisation to carry out their
business functions, these are :- Planning : A proper planning is very necessary in an organisation to achieve success. It
helps in analysing the available resources and the use of that resources in an efficient
way. Planning helps an organisation to develop strategies so that an organisation can
handle different situations and can cope up with it. Organizing : Organizing helps an organisation to develop a proper structure in an
organisation, it helps in managing human resources by assigning particular job to
particular person accordingly (Brown, Bessant and Lamming, 2013). Coordinating : Coordination helps an organisation in developing coordination and
synchronization among employees and different departments of an organisation so as to
carry out a common goal or objective.
 Controlling : Another important function of an organisational management is controlling,
it helps to have a control on various business activities of an organisation and to helps in
measuring actual performance with desired performance.
Toyota has used these functions in taking several operational management decisions like
they have used their planning in making location and product related strategies to localize their
plant and to develop new technologies. They made decisions regarding design of services and
goods, capacity and process. Organizing function is used to design jobs and human resources so
as to make several HR policies and strategies (Barratt, Choi and Li, 2011). Coordination is being

used for the management of various departments like supply chain, quality and inventory
management. Function of controlling is used to have a proper maintenance of activities of
business, by applying this they made use of scheduling to decrease production cost by
maintaining desired performance.
1.3 Evaluation of Toyota's operational management with the use of process model
Process model is basically defined as the process of transforming the available resources
or inputs into end products for the needs of clients and customers, and after getting the feedback
or information from customer the process is again carried out with changes according to the
needs of customer. Inputs are the resources or the labour that a company is using to develop
outputs. Transformation process consists of the technology, production lines or skills that are
being used for the production and output is the desired result according to customers needs for
which the process is being carried out.
(Source: Operations Management, 2017)
In the case of Toyota, operational management process is used to develop goods and
services according to the consumers. They first find out the needs of customers related to any
product or services and then applying their capital and workforce as a input to satisfy those needs
Illustration 1: Operations Management, 2017

to produce a desired output, after that a process of conversion or a transformation process is
being carried out by using innovative technologies, skills, ideas to produce an output. With the
help of these steps a desired step that is an output is being produced which includes goods,
products or services according to the customers need (Gunasekaran and Ngai, 2012). When
customer started using that product or service, a various new ideas, feedback, information
reaches to the company and then they again start the operational management process to build a
product according to the changed or new ideas. This process keeps on continuing in the company
and thus makes them grow themselves by welcoming new ides, technology , innovations and
creativity for the satisfaction of customers.
Task 2
2.1 Evaluate the importance of 'Three Es' in organisations
Three Es of organisation can be defined as the Efficiency, Economy and Effectiveness.
Efficiency defines the relationship of the input and the output. Input can be measured in the
expressions of cost or in the expression of manpower or materials. In similar way output can be
measured in expression of profit from sales or the number of products that are being produced.
Efficiency can be achieved when the high amount of outputs can get produced in low cost.
Economy is related with overall revenues and costs that are being generated by a company. It can
be defined as the change in cost of one thing that have effects on others, so this can also mean if
there is improvement in efficiency then that can also have effect on increased cost somewhere
else (Kaplan and Mikes, 2012). The last E in the category of three Es is the effectiveness. It can
be said that the effectiveness is achieved when the objectives are being achieved. It is basically
important for such organisation where the priority is to provide service instead of generating
profits.
In case of Toyota, the all three Es are very important. The products and services are
produced by considering all three Es that is efficiency, economy and effectiveness. By having all
three Es , a company can grow in all aspects. Efficiency is very important so as to have proper
coordination between their input and output. If they can reduce their cost of production without
compromising in the quality of products then it can be very helpful in having high level of
efficiency, and this efficiency is more profitable when they can achieve it economically.
Economic conditions can be achieved when the efficiency does not get affected by reduction in

the production cost. It also important for a company to have effectiveness. Their are certain
objectives that a company made in order to achieve them, and it is important to achieve them
without any difficulty so as to be effective (Ageron, Gunasekaran and Spalanzani, 2012).
2.2 Influence of tension between minimisation of cost and maximisation of quality in
organisation
Cost minimisation can be defined as the process of cutting cost on undesired processes or
resources. Cost can also be minimised by decreasing production cost, in the various things or
technologies that are not necessary. On the other hand quality maximisation can be defined as the
increase in quality of goods and services that is being provided by the company without having
impact of cost minimisation.
Toyota can minimise cost by maintain good quality on the basis of various factors that
affect it. If the political factor is taken into consideration than the company has support of eco-
friendly products from government. Therefore it need not to spend more cost in it and still can
maintain good quality. According to economic factor the company can improve exports from
Japan based on situation of weaker Japanese Yen. Social factor also have impact as customers
have interest in electric cars where the production cost is low and the quality is high.
Technological factors like the increase in use of E-commerce , this involves low cost and
increase the product marketing (Wang and Wang, 2012). According to environmental factors
company has the opportunity to give products that are environment friendly, which involves low
production cost. On the basis of legal factors, company has opportunity to provide products
based on laws of environment, these are high quality products with low production cost.
Toyota basically targets middle aged customers who are traditional, parents, environment
friendly, financially conservative, multi ethnic. They are concerned with the latest technology
and quality. They provide fuel efficient products that are desired by the customers within the
budget without compromising on the quality of products. They are generally focused with low
cost of production and high quality of products and services.
2.3 Importance of performance objectives that underpin management of operations in
organisation
Performance objectives of operational management are of five types, that can be defined
as :

 Performance objective of Quality : The most important performance objective is the
objective of quality, this is very necessary to have a high quality of products so as to
grow in a market and achieve success (Rosemann and vom Brocke, 2015). Performance objective of Speed : Another important objective is related with the speed,
a company must deliver its product on time according to needs of customer without
hindering its sales. Performance objective of Dependability : This objective is need to be managed by every
company, it defines that apart from quality and speed the product should also be
according to the layout and design and should work for the reasonable time. Performance objective of Flexibility : There should be a flexibility in the design and
structure of products that it can be modified easily according to the needs and
requirements of customers.
 Performance objective of Costs : Cost performance objectives can be defines as the
difference in the unit cost because of change in the quantity produced by manufacturer
and the diversity of products.
These performance objectives play a vital role in the Toyota, as the company has to
deliver the product on desired time with good quality and therefore performance objectives of
quality and speed is must for it (Stadtler, 2015). Dependability object is also needed to deliver
the promised project that is being mentioned by company. Products layout or designing should
be flexible so that they can be modified whenever they need to be, and should be cost effective.
Focus is on high quality of products and services, variety or diversity of products is needed to
attract large ammount of customers so as to increase growth.
TASK 3
3.1 Assess how linear programming adds value to the production process of Toyota
Linear programming is a tool that is used by the manager of operational department so
that they can solve the problems related to budget, materials and other resources (Yang and Kao,
2012). Along with this, it is a mathematical technique that represent the relationship between
different factors of Toyota. Through this, company will be able to improve their growth and
revenues. Assistant manager of car manufacturing industry can use this in order to decrease the
cost and enhance the profits.

Linear programming add some value into the production process of the company.
Through this effective technique, manager of operational department will be able to provide
quality and innovative products to their customer. There are many manufacturing industries
which are following the operations management in order to improve their performance. For
example, BMW is having a operational department at their workplace so through this they will
be able to create a strong base of their customer (Fairclough, 2013). So, Toyota can follow this
approach as programming technique add more value to the production process:
It solves the problems: Through the mathematical formula of linear programming, the
assistant manager will be able to solve their business related issues. When the problems get
resolved then this will lead towards the high production process. Through this, their overall cost
can be reduced and profits can be increased.
Quality decisions: The manager of Toyota will be able to take the quality decisions for
their employees and overall process so that they can meet the needs of the customers. When
satisfaction level of consumers will get improved than they will be able to perform well so
through this high revenue can be generated (Hsu and Huang, 2011).
Planning and designing: It is the responsibility of operational manager to make an
appropriate plan to design a product. Through the linear programming, manager can use the past
data and on the basis of statistical data they can improve their performance.
3.2 Evaluate critical path analysis and network planning
Critical path analysis is a technique that is used by the organisations in order to identify
the activities and the time that is required to accomplish those activities. Through this method, an
operational manager will be able to forecast the time that is needed to complete a tasks so that
they can achieve their objectives in an efficient manner (Diseth, Danielsen and Samdal, 2012).
This will be helpful for the operational department as through this they can resolve the complex
issues regarding to the work. The overall cost can be minimized and the higher authority of
Toyota can control their budget. On the other hand, network planning is a tool that is used by the
supervisor of particular function area so that they can minimize the cost and maximize the
revenues.
The critical path analysis works in a sequential manner so that overall activities can be
completed on time as there are some task that cannot start without completing others. In critical

path, operational manager fix a time for different projects so they can identify the number of
days to complete a particular activity.
(Source: Critical Path, 2017)
The critical path diagram is the combination of different activities which are represented
by circles and arrows with the start time and finish time. From the above mentioned diagram it
can be concluded that the longest critical path is of 11 days which is represented by red colour.
Along with this, manager can prioritized the activities as per their timeline so that their overall
performance can be improved (Ku, Fulcher and Xiang, 2011). They will be able to identify the
quickest time for every project so that overall cost can be minimized and profits can be
maximised. There are some advantages of these theories such as through this supervisor can
reduced the risk in the complex task and they will be able to forecast the cost and profits for
future.
3.3 Justify the need for operational planning and control in a selected production process
Operational planning is important for an organization as through this they can improve
their production process. When this process get improved then Toyota will be able to offer
quality and innovative products to their customers in an efficient manner. The importance of
operational planning is that through this they can prepare their budget in order to achieve the
high profits. Along with this, an operational manager can manage their staff so that their overall
Illustration 2: Critical Path, 2017

performance can be improved (Annesi and Marti, 2011). There are some theories that are used
by the industry in order to make production process more effective:
Capacity planning: This is used by the organisation so that they can determine the
production that is needed in order to fulfil the needs of the customers. For this kind of planning, a
manager has to make an effective decision so that they will be able to improve their growth in
the market. Through this, Toyota will be able to know identify the number of resources that are
required in order to make the quality product for the consumers.
Inventory planning: This planning play an important role in determining the inventory
level of the company (Skaggs, 2011). This can directly affect the sales, growth, profits and cash
flow of Toyota. Through this an enterprise can make a balance between supply and demand of
the customers. Through an effective management of inventory, manager can prevent the stealing
of goods.
Project management: It is a process that contains some steps such as initiating the
project, planning, evaluating and controlling. Through this effective process, Toyota will be able
to manage their overall projects that needs to be completed in an efficient manner.
Quality assurance: It is an approach that is used by an enterprise in order to prevent or
reduce the risks while delivering the products to the customers. Through this, an assistant
manager of operational department can maintain the quality of their services so that they can
improve their performance in market (Bunzli, Gillham and Esterman, 2011).

TASK 4
Covered in PPT

CONCLUSION
From the above mentioned report it can be concluded that operational department play an
important role in enhancing growth of the organisation. The manager perform such functions
such as planning, designing, controlling and coordinating. Through the effective production
process, company will be able to give the innovative and quality services to their customers.
They can sustain their competitive advantage in the market as compare to the other market
leaders. The enterprise can use some theories such as capacity, inventory, quality planning in
order to make the production process more effective. Further, Toyota can use critical path
method and network planning in order to accomplish the activities on time.

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