Case Study: Toyota's Operations Management and Productivity Analysis

This case study provides an in-depth analysis of Toyota's operations management, focusing on the ten strategic decision areas that contribute to its global success. The study examines how Toyota integrates technological advancements and quality in its product design, utilizes the Toyota Production System (TPS) for quality management and lean manufacturing for process and capacity design. It explores Toyota's global, regional, and local location strategies, efficient layout designs, and human resource practices based on The Toyota Way and TPS. The case also investigates Toyota's lean manufacturing approach to supply chain and inventory management, cost-minimization strategies in scheduling, and its global network for maintenance. The study highlights productivity measures, such as product units per time, revenues per dealership, and batch cycles per time, illustrating Toyota's commitment to operational efficiency and continuous improvement. The analysis is supported by references to relevant academic literature and Toyota's own publications on its guiding principles and production system.

Toyota’s Operations Management, 10 Decisions, Productivity
Toyota Motor Corporation 10 strategic decisions areas of operations management and productivity case
study and analysis
Toyota Motor Corporation’s operations management (OM) covers the 10 decisions for effective and
efficient operations. With the global scale of its automobile business and facilities around the world,
Toyota uses a wide set of strategies for the 10 decisions of operations management, integrating local
and regional automotive market conditions. Toyota is an example of successful operations management
at a global scale. These 10 decisions indicate the different areas of the business that require strategic
approaches. Toyota also succeeds in emphasizing productivity in all of the 10 decisions of operations
management.
Toyota’s approaches for the 10 strategic decisions of operations management show the importance of
coordinated efforts for ensuring streamlined operations and high productivity at a global scale.
Toyota’s Operations Management, 10 Strategic Decision Areas
1. Design of Goods and Services. Toyota addresses this strategic decision area of operations
management through technological advancement and quality. The company uses its R&D investments
to ensure advanced features in its products. Toyota also integrates dealership personnel needs in
designing aftersales services.
2. Quality Management. To maximize quality, the company uses its Toyota Production System (TPS).
Quality is one of the key factors in TPS. Also, the firm addresses this strategic decision area of operations
management through continuous improvement, which is covered in The Toyota Way, a set of
management principles.
3. Process and Capacity Design. For this strategic decision area of operations management, Toyota uses
lean manufacturing, which is also embodied in TPS. The company emphasizes waste minimization to
maximize process efficiency and capacity utilization. Thus, Toyota supports business efficiency and cost-
effectiveness in its process and capacity design.
4. Location Strategy. Toyota uses global, regional and local location strategies. For example, the
company has localized manufacturing plants in the United States, China and Thailand, as well as official
dealerships in all markets except Mongolia and some countries in the Middle East and Africa. Thus,
Toyota addresses this strategic decision area of operations management through a mixed set of
strategies.
5. Layout Design and Strategy. Layout design in Toyota’s manufacturing plants highlights the application
of lean manufacturing principles. In this strategic decision area of operations management, the company
aims for maximum efficiency of workflow. On the other hand, Toyota dealership layout design satisfies
the company’s standards but also includes decisions from the dealers.

6. Job Design and Human Resources. The company applies The Toyota Way and TPS for this strategic
decision area of operations management. The firm emphasizes respect for all people in The Toyota Way,
and this is integrated in HR programs and policies. Also, Toyota has training programs based on TPS to
ensure lean manufacturing practice.
7. Supply Chain Management. Toyota uses lean manufacturing for supply chain management. In this
strategic decision area of operations management, the company uses automation systems for real-time
adjustments in supply chain activity. In this way, Toyota minimizes the bullwhip effect in its supply chain.
8. Inventory Management. In addressing this strategic decision area of operations management, Toyota
minimizes inventory levels through just-in-time inventory management. The aim is to minimize
inventory size and its corresponding cost. This inventory management approach is covered in the Toyota
Production System.
9. Scheduling. Toyota follows lean manufacturing principles in its scheduling. The company’s goal for
this strategic decision area of operations management is to minimize operating costs. Cost-minimization
is maintained through HR and resource scheduling that changes according to market conditions.
10. Maintenance. For decades, Toyota developed a network of strategically located facilities to support
its global business. The company also has a global HR network that supports flexibility and business
resilience. Thus, in this strategic decision area of operations management, Toyota uses its global
business reach to ensure optimal and stable productivity.
Productivity at Toyota
Toyota’s operations management uses productivity measures or criteria based on the area of business
considered. For instance, some of these productivity measures are as follows:
1. Number of product units per time (manufacturing plant productivity)
2. Revenues per dealership (Toyota dealership productivity)
3. Number of batch cycles per time (supply chain productivity)
References
Kachwala, T. T., & Mukherjee, P. N. (2009). Operations management and productivity techniques. PHI
Learning.
Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An
Integrated Perspective. INTECH.

Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in
operations management: a framework for executive decisions. International Journal of Management
and Decision Making, 9(3), 310-327.
Toyota Motor Corporation (2015). Guiding Principles at Toyota.
Toyota Motor Corporation (2015). Toyota Way 2001.
Verdaasdonk, P. (1999). Defining an information structure to analyse resource spending changes of
operations management decisions. Production Planning & Control, 10(2), 162-174.
Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management
decisions. Production Planning & Control, 12(6), 605-620.