Groupe K - Toyota's Operation Management System: A Detailed Report

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This report provides a detailed analysis of Toyota's operations management system. It begins with an overview of Toyota's history, its position as a leading car manufacturer, and the evolution of its production system, including the Toyota Production System (TPS). The report then explains the author's selection of Toyota, emphasizing its global presence, sales figures, and the efficiency of its production methods, particularly Toyotism, which is based on Just-in-Time and integrated quality control. The core of the report focuses on several key operations management topics: Quality Management System (QMS), Supply Chain Management, Stock Management, and Process and Capacity Design. Each topic is defined, and its importance is explained. The report then connects these topics to Toyota's practices, highlighting how the company uses TPS, lean manufacturing, and Just-in-Time inventory management to optimize its operations. Finally, the report concludes with an analysis of Toyota's success, emphasizing the impact of methods like Just-in-Time and the Kaizen method, including 5S, on the company's efficiency, customer satisfaction, and continuous improvement.

MOUCHET Clément
Student Number : 20200820
Clement.mouchet@rennes-sb.com
Groupe K
The Toyota’s Operation Management System

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Question 1 : A detailed description of the chosen company, product, or service.
The history of Toyota begins at the end of the 19th century, when Sakichi Toyoda invented
Japan's first mechanical loom, an invention which was to revolutionise the textile industry of
the archipelago.
Toyota as pioneer and leader
Toyota is the world's leading car manufacturer, with sales exceeding 10.23 million units on
five continents in 2014. With 63 production sites around the world, including a production
site in France at Valenciennes-Onnaing, Toyota produces more than 10 million Toyota and
Lexus vehicles each year, according to the group's own organisation, the Toyota Production
System, with a constant focus on the customer. Distributed today in more than 160
countries, Toyota vehicles are produced according to the values of the Toyota Way:
continuous improvement and respect for stakeholders, values that go back to the origins of
the company, 19th century Japan.
Toyota's story begins at this period, at the end of the 19th century, when Sakichi Toyoda
invented Japan's first mechanical loom, an invention that would revolutionise the
archipelago's textile industry. In January 1918, Sakichi founded the Toyoda Spinning &
Weaving Company and, with the help of his son Kiichiro, he realised his life's dream by
building the country's first automated loom in 1924. Two years later he founded the Toyoda
Automatic Loom Works.
Like his father, Kiichiro was an innovator and, during his visits to Europe and the United
States in the 1920s, he took a keen interest in the fledgling automobile industry. With
£100,000 from the sale of the patent on his automated loom, Kiichiro founded the Toyota
Motor Corporation (TMC) in 1937. From looms to cars, the Toyota experience was forged by
pushing the limits of industrial technology ever further.
Toyoda’s legacy
The most important legacy left by Kiichiro Toyoda, in addition to the creation of the
company itself, remains the Toyota Production System or TPS.

Based on the principles of Jidoka ("Just-in-Time" and "Kaizen"), a philosophy introduced by
Kiichiro to produce only the right amount from existing orders with the minimum of losses,
TPS is the key factor in the group's development. We will specially talk about them in this
report. It is applied in all of Toyota's plants around the world, including Valenciennes.
Gradually, the Toyota Production System is becoming the industry benchmark throughout
the world.
A Rapid International Expansion
After having overcome the post-war industrial crisis in Japan, Toyota is today the leading
Japanese manufacturer, with more than 40% of the market share. The desire to design and
produce cars in the countries where they are sold led the group, from the end of the 1950s,
to establish itself industrially abroad.
Toyota's presence on the major foreign markets began with the first "Crown" model
launched in the United States in 1957. Models such as the "Corolla", launched in 1966, built
the group's reputation for quality and reliability and generated sales that rivaled those of
American manufacturers. Toyota began to develop in Europe in 1963 when the first imports
arrived from Japan to Denmark.
Today Toyota is present in Europe with 9 production sites, all ISO 14001 certified, located in
France, Great Britain, Turkey, Czech Republic, Poland, Portugal and Russia. More than 72%
of the Toyota vehicles sold in Europe today are now manufactured in Europe. Toyota
employs 93,400 people there in "direct" employment.
Question 2 : An explanation of how you selected the above company, product, or service.
I chose this company because Toyota is the world's leading car manufacturer, which is a
proof that their operation management system is very sophisticated. The group has 63
production sites around the world. The Toyota group also sold more than 10 million vehicles
in 2014 for example, a real success considering that the group produces 9 million vehicles
per year. Demand now exceeds supply. Just like the French group Renault, Toyota Motor
Corporation must increase its production to cope with its reputation and growing demand.
Toyotism: a very efficient production system

Toyotism is the name given to the production system created and used by Toyota. Toyotism
is based on two axes: "just-in-time" and integrated quality control. Just-in-time" is a specific
organisation of the supply chain which is based on production very close to demand,
whether it be for vehicles or spare parts. This method allows for a high degree of production
flexibility but also limits waste and therefore saves money.
At the same time, Toyota imposes quality control at every stage of production. Just like the
just-in-time method, quality control limits waste. It also optimises customer satisfaction and
builds customer loyalty.
The Kaizen system
The Kaizen system is one of the management tools available to companies. It was created by
the Toyota group, which still uses it today in all its factories and production sites. The Kaizen
method is based on continuous improvement of production and quality control. It is a very
comprehensive method that uses various management tools such as Single Minute
Exchange of Dies (SMED), Total Quality Management (TQM), Lean Management and the 5S
method.
In order for the Kaizen system to be effective, it must be applied to every employee. This is
why at Toyota, and in all companies that apply this management method, working groups
are created. They are made up of employees of all ranks, employees and managers. All are
involved when the company sets its objectives or looks for new ideas.
The 5S method
The 5S method is a method created by Toyota which belongs to the Kaizen system. It is
based on 5 operations, all of which have a Japanese name and are associated with specific
actions. They are as follows:
SEIRI: work optimisation by sorting and organising its tools according to its needs.
SEITON: filing and storage adapted to limit unnecessary movements and gestures.
SEISO: cleaning of work areas and rapid repair of tools and machines.
SEIKETSU: organising and informing so that a job can be taken over without difficulty.
SHITSUKE: respect of working methods and rules every day.
The 5S method is very beneficial. It makes it possible to guarantee a company's productivity
and the well-being of its employees. Since its creation, the 5S method has been used
successfully at Toyota and in many other companies.

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So the presence of these operations management systems, the popularity of toyotism and
the ranking of the company on the worldwide car manufacturing market have oriented my
choice.
3. The Operations Management (OM) topic(s) that you selected: define it and explain why
it is important.
SQM: quality management system
A Quality Management System, QMS, is the set of actions implemented by a company that
wishes to have a quality or continuous improvement approach in order to increase the
quality of its production and its organisation.
Quality management has become a priority for companies. Quality management can be
found at all levels of the company:
• communication, marketing,
• production,
• sale,
• human resources,
• logistics.
Quality management is dealt with in two ways:
• in each department,
• in a global way.
The company establishes its quality approach, the departments are then trained and
responsible in the application of quality techniques.
The supply chain management
Supply chain management refers to all the methods, means, resources and processes
designed to manage and improve the performance of the supply chain. The objective of its
manager is to estimate his or her needs at each stage, from the start of production to the
delivery of the goods to the end customer. Large companies implement very complex and
sophisticated processes to offer the best service to their customers, combining speed,
quality and efficiency.

The objective of any supply chain improvement initiative is to better manage all flows, and
in particular cross-flows. The opening up of markets and the acceleration of exchanges
forces companies to be more flexible and responsive. But the most complex remains to
formalise all the ideas in a well-defined process. It is therefore essential to pay attention to
the method used to drive your supply chain.
Stock management
Inventories are similar to all goods involved in the operating cycle of a company either for
consumption or to be sold as they are or at the end of the production process. Good
inventory management will enable future needs to be met.
Good stock management is a factor of flexibility for the company. Indeed, stocks represent a
financial burden and a capital asset. The management of stocks within a company concerns
the following items:
• The stock of goods: resale of goods at a profit, without prior processing.
• The stock of raw materials: products purchased for processing.
• The stock of semi-finished products: these are products in the course of
manufacture.
• The stock of finished products: once the processing of the raw materials has been
completed, the product is ready to be sold.
• The stock of packaging: this is empty packaging such as boxes, pallets, etc.
Process and Capacity Design
Design capacity limit is the greatest yield of a structure, facility, measure, machine,
apparatus, or segment dependent on its design. The capacity can be accomplished under
ideal conditions with limitless assets, for example, work, force, materials, and parts.
It is also is the maximum output of a system in a given period under the best conditions. For
many companies designing capacity can be straightforward. Effective capacity is
the capacity a company can achieve given its current operating limits.
4. How does the chosen OM topic(s) relate to your company, product, or service?
Quality Management

To expand quality, the organization utilizes its Toyota Production System (TPS). Quality is
one of the vital factors in TPS. Additionally, the firm addresses this strategic decision area of
operations management through persistent improvement, which is shrouded in The Toyota
Way, and more precisely, in the frame of a bunch of the executives standards.
Supply Chain Management
Toyota utilizes lean assembling for supply chain management. In this key area decision, the
firm utilizes mechanization frameworks for continuous changes in flexibly chain movement.
Thusly, Toyota limits the bullwhip impact in its supply chain.
Inventory Management
In tending to this vital choice zone of activities, Toyota limits stock levels through a just-in-
time inventory management. The point is to limit stock size and its comparing cost. This
stock administration approach is used a lot in the Toyota Production System.
Process and Capacity Design
For this strategic decision area of operations management, Toyota utilizes lean assembling,
which is likewise incorporated in TPS. The organization wants to minimize the waste to
maximize process efficiency and capacity utilization Subsequently, Toyota supports business
proficiency and cost-viability in its cycle and capacity design.
5. Provide a detailed analysis, including a listing and explanation of any findings,
suggestions, or recommendations for improvement.
Since 2007, Toyota has been the world's leading car manufacturer. This success is not due to
chance, it is the result of a long and successful experience demonstrating Toyota's
commitment to its customers through the constant search for innovation in its range of
products, but also in the improvement of its processes, particularly in its operation
management. Indeed, production is based on principles and methods that have proven their
effectiveness and which have inspired many companies. Among these methods and
principles, there are two that have stood out over time and are responsible for such a
reputation in terms of their management, the "Just in Time" and the kaizen method or the
5S we mentioned earlier. Just-in-Time", whose acronym is "JIT", is a flow management

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method. More than a theory, specialists consider this method invented by Toyota as an
approach aimed at reducing stocks to a minimum, sometimes even eliminating them or
transferring the storage load to suppliers who must in this case supply the client company in
continuous flow (this is called just-in-time). The JIT logistics concept was invented by Taiichi
Ōno, an industrial engineer who developed it at Toyota Motor Corporation in the 1950s.
It is therefore very difficult to make recommendations on management methods that are
old, since they have been subject to a process of continuous improvement for more than 50
years.
This continuous improvement is because of the car manufacturing market, which is a
sector where competition is fierce, maintaining this leadership position is very difficult.
Toyota must always look for the most that allows it to remain competitive on the market,
but above all to keep its advantage over others, which lies notably in its operation
management which has succeeded in giving it a real competitive advantage.
However, if Toyota has to improve itself on one point of the operations management. it
could be on the waste. So how could Toyota improve its waste management ?
• By avoiding the use of unnecessary transport and travel.
o Transport includes the movement of people, tools, stocks, equipment or
products further than necessary. Excessive movement of materials can
damage the product and cause defects. In addition, excessive movement of
people and equipment can result in unnecessary work, increased wear and
tear, and exhaustion.
• No need to overstock
o It is often difficult to consider surplus stocks as waste. Indeed, in accounting,
inventory is considered an asset and often suppliers give a discount for bulk
purchases. However, having more stock than is necessary to maintain a
smooth workflow can lead to problems such as: defective or damaged
products, longer lead times in the production process, inefficient allocation of
capital and hidden problems in stock.
• Avoid waiting time, delays
o Waiting losses include people waiting for material or equipment and inactive
equipment. Waiting time is often caused by inequalities in production
stations and can lead to excessive stocks and overproduction.
• Only necessary gestures
o This waste includes any unnecessary movement of people, equipment, or
machinery. This includes walking, lifting, reaching, bending, stretching, and
moving. Tasks that require excessive movement need to be redesigned to
improve the work of staff and increase health and safety levels. In the office,
lost movement can include walking, searching for materials, searching for

files, sorting through inventory to find what is needed, excessive mouse clicks
and double data entry.
6. Conclusions
If we consider the starting conditions and the goal set by the president of TOYOTA at the
end of the Second World War, the Toyota system is at the origin of the methods that
developed in the second part of the 20th century. They were developed and adopted to
reach the goal under all constraints; just-in-time, autonomation, lean manufacturing.
Certain methods were adopted/adapted and incorporated into what was to become a
coherent whole; the methods of quality control, SMED, TPM, Kaizen.
The gradual approach of this construction is typical of the Kaizen philosophy. This strategic
vision is transmitted to all staff in order to federate their efforts, thus improving overall
efficiency.
The TPS (Toyota system production) has followed a "spiral" trajectory, in the idea of PDCA
cycles (plan-do-check-act), aspiring on it the methods that will enable it to achieve its
objectives. In TPS's maturity phase, these methods were redistributed, to suppliers and
subcontractors in particular, notably through dissemination to other departments.
As it was the different "Japanese" philosophies and methods that made the TPS a success,
and that the TPS redistributed them. It can be said that the Toyota Production System is
both the origin and the outcome of these methods, and that their current operation
management is the result of a long process of improvement.
7. Bibliography
https://global.toyota/en/mobility/toyota-brand/features/emblem/
https://www.researchgate.net/publication/245330904_Changes_in_Toyota_Motors'_operations_m
anagement
https://businessteacher.org/reports/toyota-operations-management-logistics-and-supply-chain.php
https://ivypanda.com/essays/operations-management-for-toyota/
file:///C:/Users/Thomas/Downloads/538d833ec3d7e.pdf
http://chohmann.free.fr/lean/tps3.htm
https://ivypanda.com/essays/operations-management-for-toyota/
https://myassignmenthelp.com/free-samples/operations-management-of-toyota