Toyota Automotive Company: Operations, Logistics & Supply Chain

This essay analyzes the operational, logistics, and supply chain management challenges faced by Toyota Automotive Company. It examines the company's use of lean manufacturing, JIT, and agile processes, highlighting both successes and issues such as recalls and potential threats to sustainability....Read More

Running head: TOYOTA AUTOMOTIVE COMPANY
Understanding Operations, Logistics and Supply Chain Management
[Toyota Automotive Company]
Name of the student:
Name of the university:
Author note:

1TOYOTA AUTOMOTIVE COMPANY
Operational management is a challenging task, which has attracted ample of strategic
planning from reputed firms. However, there are a very few companies that actually have the
potentials in it to counter the challenges with effective operational strategies. Some of the
identified operational challenges can be the “managing quality” and “exploring an effective
manufacturing process through lean, agile and JIT approach” (Annarelli and Nonino 2016). This
essay is aimed at understanding the different kinds of operational challenges through the
examples from Toyota Automotive Company. Toyota is a renowned name in the world of
automotive industry in using the lean manufacturing process. The chosen approach did help the
company; however, this particular study investigates the manufacturing related challenges to the
company (Čiarnienė and Vienažindienė 2012). The study also focuses on the other issues such as
the Managing Quality. The study recommends few suggestions as well to counter the identified
challenges in the coming section of this paper.
Manufacturing process is governed through three different strategies such as JIT, lean
and agile process. Just-in-time approach is believed to be brought in practice by Toyota. The
approach provides control on the inventories. Earlier, there was a concept to have a large stock of
inventories to support the sudden need of products. After Toyota had introduced the JIT
approach, it appeared to the manufacturing process an effective way to overcome the few most
notable challenges such as the lead time on orders and the production cost (O'Grady 2012). Lean
manufacturing is very much similar to the JIT approach. The particular manufacturing process
does look for adding values to the products. It looks for analyzing the values, which is helping
the product to deliver (Ford et al. 2012). Agile manufacturing is best known for responding to the
customer’s needs and changing market behavior. This is also effective in controlling the
manufacturing cost and retaining the quality of product (Costantino et al. 2012).

2TOYOTA AUTOMOTIVE COMPANY
There is no match to Toyota in terms of producing a cost-effective and quality product.
The fact has helped the company in gaining the top position in the global automotive market in
the year 2008. The company has been able in attaining the feat due to some technically sound
manufacturing strategies such as “Lean Manufacturing”. Interestingly, the process looks handful
to the company; however, it is not so for the others. The process indeed provides several useful
tools but it is also believed that such tools do not work when it is copied. Toyota has designed
few of the tools of the lean manufacturing process to counter the challenges. They are capable in
doing so because they know the core theories of lean manufacturing (Chiarini 2012).
Sticking with the traditional manufacturing process will be a better move for Toyota.
There has been an instance when Toyota has to recall approximately around eight million cars to
adjust the accelerator pedals and replace the floor mats. This could be because of many reasons;
however, the manufacturing process is also believably the one of the reasons behind the incident.
One of the suspected reasons behind the incident was an increased production rate of vehicles.
This is theoretically against the lean manufacturing process. Agile manufacturing process indeed
encourages a large production. It might have gone wrong in picking up pace with the supply
chain complexities and globalization (Business-improvement.eu 2017). On the other hand,
Toyota is known for adding values to the product by implementing the lean manufacturing that
encourages a calculative approach towards manufacturing the unit (Gao and Low 2014).
Toyota has been criticized for quality related issues and blamed to have excessive focus
on increasing profits and gaining market shares. However, an aggressive reply came from the
president of that time proving the speculations wrong. The president indeed said that it has been
an essential part of Toyota to increase the market shares and reduce the costs of production. The
comments were supported with a fact that Toyota is second to none when it is related with the

3TOYOTA AUTOMOTIVE COMPANY
cost-effectiveness and quality products (Austen-Smith et al. 2017). Indeed, the incident was one
of such examples that produced notable evidences, which advocates the importance of sticking to
the lean manufacturing process. Incrementing the production of units year after year is an
“Agile” way of manufacturing.
Triple Bottom Line approach is a very handful approach to analyze the business
sustainability. Business sustainability is analyzed based on three factors such as economic, social
and environmental factors. Firms are analyzed on the three mentioned factors. There is no
specified unit to measure the three different factors for a firm. However, there are some variables
that could be used to measure the business sustainability. Sustainability in the economic
perspectives can be measured through various factors such as the current business value. In the
social perspectives, this can be measured through its role in addressing to different social facts.
In environmental terms, this can be measured through its strategies & efforts to address to the
different environmental challenges. Sustainable Value is a common term, which is used to
understand whether the selected business is sustainable. The higher an organization is sufficient
in addressing to the mentioned factors the maximum will be the sustainable value of the
concerned organization (Milne and Gray 2013).
Toyota is one of very few automotive companies that actually score well in the
sustainability account. It has maintained positive sustainable values through the years. This will
be interesting to analyze the company from the different perspectives such as economic, social
and environmental. The core competence of Toyota, which is to provide the quality products at
the best prices, is a good evidence to understand the economic capability of the company.
Additionally, the company has a very strong position in the different parts of world. The market
share in Japan was close to 45.5% excluding the mini vehicles. The figure was for FY2012. The

4TOYOTA AUTOMOTIVE COMPANY
market share of Toyota in North America is 12.2%, 13.4% in Asia (excluding China and Japan)
and 4.3% in Europe. In China the market share is 7%. Such a strong presence in the international
market is a reason behind the higher sales growth of Toyota in both the domestic and the
international markets (Analysis of Toyota Motor Corporation 2017).
An extensive production and distribution network is the other reason that positions the
company at the top position in the automotive industry. The manufacturing is done with the help
of 50 manufacturing companies across 27 countries. The distribution centre is widely spread
enabling the company to reach to a wider area, which is an important factor in driving the
revenues. The business relationship with BMW is poised to bring success at the global platform.
The collaborative work will bring advancement in technology, which is really helpful in
addressing the changing demands of customers and the changing behavior of market (Analysis of
Toyota Motor Corporation 2017).
Toyota is a creative company that uses its utmost strategy making capability to produce a
connecting impact on the target market. One of such examples is its strategy in Indonesia. The
growing population of middle class groups was largely targeted. The sheer strategy making
capability has helped the company in acquiring a very strong position in Indonesia. The company
has 40% shares in Indonesia. Toyota has outperformed others in the automotive industry to
become the leading automotive company in the world (Analysis of Toyota Motor Corporation
2017). The current market position and the rising market shares do only support a progressive
graph of economy of Toyota. Additionally, the strategy to produce according to what customer
needs is something that has positioned it ahead of other giants in the industry.

5TOYOTA AUTOMOTIVE COMPANY
Triple Bottom Line approach is believed to be an effective way to measure the
sustainability status of a business (Milne and Gray 2013). Toyota has a strong contribution in
lifting the Japan’s economy. It is the largest company in Japan in terms of sales. This is also the
largest automotive companies in the world in terms of business values. The company is also the
largest ad buyer in Japan. The feat has even forced the media to think twice before criticizing the
company (Fackler 2017). Toyota has indeed been in highlight with recalls issue at the different
occasions. One of the latest and the largest ever recall for the company has happened in the year
2017. The company had to recall approximately around 1.16 million vehicles sold to the people
of Oceania and the Middle East. The latest recall was believed to be originated from the
exploding Takata inflators. The extreme failure has happened in the United States. According to
Toyota, North America which is the biggest market for Toyota had been exempted from the
recall (Fortune 2017).
This appears as a real threat for the company. Business sustainability is in question.
Trump wants to impose a “big border tax” on the company. The statement has come against the
expansion plan of Toyota with a new plant in Mexico (McCurry 2017). According to the triple
bottom line approach, the current status of Toyota does not on the track of sustainability
especially in the United States. This look like the case as a business can never attain
sustainability if it does not find the political support.
There are some environmental challenges that Toyota has set to mitigate by 2050. The
targets are to attain a zero CO2 emission in latest vehicles, bringing optimization in the usage of
water and establishing an eco-friendly atmosphere for the world. They had introduced Prius
hybrid car, which is a good solution to environmental challenges to some extent. They have also
introduced the EVs, which is expected to grow in popularity in the nearing future. It looks like

6TOYOTA AUTOMOTIVE COMPANY
Toyota is capable of turning the operational objective into reality. However, sustainability can
only be measured through its effort to attain the set vision for 2050 (www.toyota.co.jp 2017).
There is a huge social impact on the car industry. The future of car industry is expected
to be driven by the Electric Vehicles (EVs). This is for its capability to control the emission of
CO2. The changing perception of customers and their growing concern towards the EVs will be
the driving factor behind the world turning towards the Electric Vehicles (EVs) (Business
Insider 2017). The future will only tell the sustainability of Toyota. This is one of the social
factors that will have a different customer base in the nearing future. The recalling issues are a
serious problem for Toyota. This has hampered its reputation in the past years. This has also
hampered its reputation in 2017 as well. The recalling issue in 2017 is a serious concern for
many reasons. The incident is a significant impact on the reputation that Toyota has won in the
United States. North America is one of the largest markets for the company. Additionally, such
incidents will affect the company’s performance due to a high opposition from the local
government of the United States. The opposition is unfavorable for a further expansion of
Toyota in the country. An unexpected political circumstance especially after the recall issue in
2017 is a potential threat indeed (McCurry 2017).
To conclude the essay, this can be said that Toyota is a renowned name in the
automotive industry. However, the few recall issues in the past and in 2017 due to various
different reasons have put a question mark on its sustainability. The warning statement from the
American president Mr. Donald Trump can be seen as a threatening consequence for the
company. The statement is up against the further expansion of Toyota in the United States. Such
criticism can hamper the sustainability program of the Toyota Company. They have developed

7TOYOTA AUTOMOTIVE COMPANY
their goals for 2050 to be sustainable; however, this depends majorly on how the company
progresses towards its goals.
To recommend, Toyota should bring in products relevant to the target customers. If there
is any recall issue, then this must be dealt with effective communication. This will help to
minimize the losses. Additionally, Toyota should put its focus more on Electric Vehicles (EVs) if
it intends to attain its goal set for 2050.

8TOYOTA AUTOMOTIVE COMPANY
References-
Analysis of Toyota Motor Corporation 2017. Analysis of Toyota Motor Corporation. [online]
Scholar.harvard.edu. Available at:
https://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf [Accessed 3 Dec. 2017].
Annarelli, A. and Nonino, F., 2016. Strategic and operational management of organizational
resilience: Current state of research and future directions. Omega, 62, pp.1-18.
Austen-Smith, D., Austen-Smith, D., Diermeier, D., Diermeier, D., Zemel, E., Zemel, E.,
Diermeier, D., Diermeier, D., Merkley, G. and Merkley, G., 2017. Unintended acceleration:
Toyota’s recall crisis. Kellogg School of Management Cases, pp.1-16.
Business Insider. 2017. The 2020s could be the 'decade of the electric car'. [online] Available at:
https://www.businessinsider.in/The-2020s-could-be-the-decade-of-the-electric-car/articleshow/
51146615.cms [Accessed 4 Dec. 2017].
Business-improvement.eu. 2017. Toyota returns to the roots of the Toyota Production System
after recalls. [online] Available at:
https://www.business-improvement.eu/lean/Toyota_recall_and_Toyota_Production_System.php
[Accessed 3 Dec. 2017].
Chiarini, A., 2012. Lean organization: from the tools of the Toyota production system to lean
office (Vol. 3). Springer Science & Business Media.
Čiarnienė, R. and Vienažindienė, M., 2012. Lean manufacturing: theory and practice. Economics
and management, 17(2), pp.726-732.

9TOYOTA AUTOMOTIVE COMPANY
Costantino, N., Dotoli, M., Falagario, M., Fanti, M.P. and Mangini, A.M., 2012. A model for
supply management of agile manufacturing supply chains. International Journal of Production
Economics, 135(1), pp.451-457.
Fackler, M. 2017. In Toyota Mess, an Economic Lesson for Japan. [online] Nytimes.com.
Available at: http://www.nytimes.com/2010/02/09/business/global/09toyota.html [Accessed 4
Dec. 2017].
Ford, A.L., Williams, J.A., Spencer, M., McCammon, C., Khoury, N., Sampson, T.R., Panagos,
P. and Lee, J.M., 2012. Reducing door-to-needle times using Toyota’s lean manufacturing
principles and value stream analysis. Stroke, pp.STROKEAHA-112.
Fortune. 2017. Toyota Is Recalling 2.9 Million Vehicles Worldwide. [online] Available at:
http://fortune.com/2017/03/30/toyota-recall-corolla-rav4-airbags/ [Accessed 4 Dec. 2017].
Gao, S. and Low, S.P., 2014. The Toyota Way model: an alternative framework for lean
construction. Total Quality Management & Business Excellence, 25(5-6), pp.664-682.
McCurry, J. 2017. We contribute billions to US economy, Toyota politely tells Trump. [online]
the Guardian. Available at: https://www.theguardian.com/business/2017/jan/06/we-contribute-
billions-to-us-economy-toyota-politely-tells-donald-trump [Accessed 4 Dec. 2017].
Milne, M.J. and Gray, R., 2013. W (h) ither ecology? The triple bottom line, the global reporting
initiative, and corporate sustainability reporting. Journal of business ethics, 118(1), pp.13-29.
O'Grady, P.J. ed., 2012. Putting the just-in-time philosophy into practice: a strategy for
production managers. Springer Science & Business Media.

10TOYOTA AUTOMOTIVE COMPANY
www.toyota.co.jp. 2017. Toyota Global Site | Toyota Environmental Challenge 2050. [online]
Available at: http://www.toyota-global.com/sustainability/environment/challenge2050/
[Accessed 4 Dec. 2017].