MG4101: Toyota's Operations Strategy - A Detailed Analysis Report

This report provides a comprehensive analysis of Toyota Motor Corporation's operations strategy. It begins with an executive summary and introduction, followed by a detailed examination of Toyota's diverse business activities, including electric vehicle development, car manufacturing, and financial services. The report then delves into Toyota's renowned manufacturing process, specifically the Toyota Production System (TPS), highlighting the Jidoka and Just-in-Time philosophies. It discusses potential improvements to these processes, such as enhanced quality control, staff training, and technological advancements. Finally, the report explores the key factors contributing to Toyota's success, including long-term planning, company values like 'kaizen,' and the effectiveness of the TPS. The report concludes by summarizing the key findings and emphasizing the importance of operations management in achieving organizational goals.

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Operations Management Strategy
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Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Toyota’s business activities.............................................................................................................4
Toyotas Manufacturing process.......................................................................................................5
What can be done to improve the processes?..................................................................................7
Why Toyota is successful................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Executive Summary.
Operations management is a crucial element in any organization since it controls the
efficiency of business practices within the organization. However, operations strategies ensure
objectives as well as the efficiency of business practices in an organization are attained
effectively. This report seeks to outline the different aspects of operations strategy present
Toyota Motor Corporation, and how they can be improved. Such aspects include; business
activities present in Toyota, an analysis of the manufacturing process in Toyota, what can be
improved in the process and lastly why Toyota is successful.

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Introduction.
Toyota Motor Corporation is a multinational automotive company based in Japan. Toyota
is the second largest automobile manufacturer since it has incorporated nearly six hundred
subsidiary companies mainly involved in the production of industrial and commercial vehicles,
automobile parts and automobiles (Fujimoto, 2018, pg. 201). Toyota has remained successful
over the years particularly due to its unique operations management system. Besides, Toyota’s
decentralized structure has been instrumental in ensuring efficiency since teamwork and
employee participation are highly encouraged in the company. Toyota focusses on high
productivity; therefore, quality is a crucial issue. In addition, the company’s lean manufacturing
philosophy assists the company to minimize waste as well as reduce the cost of manufacturing.
Toyota’s business activities.
Toyota Motor Corporation is engaged in various business activities since it has
diversified and invested broadly. However, the automotive business is still primary to Toyota
since it makes up the main revenue for the company. To begin with the business activities, we
have the development of electric technology. Toyota is among the world’s leaders in pioneering
the development of hybrid electric vehicles. Besides, Toyota was the first automotive company
to introduce hybrid electric vehicles such as Toyota Prius in the year 1997 (Toma, and Naruo,
2017, pg. 572). The hybrid models have sold out globally, and as at January 2017, the hybrid car
sales crossed the ten million line. Toyota has also been at the forefront of creating all-electric
vehicles, and in May 2010, the company collaborated with Tesla in coming up with about thirty-
five fully electric RAV4s as an evaluation program. Toyota project known as Harmonious
Mobility Network is also another activity in which the company is testing different electric
vehicles concepts so as to ensure it competes well in the market.
Secondly, we have the manufacturing of cars and buses. Toyota manufacturers over
seventy car models due to its massive manufacturing capability. In addition, Toyota also
focusses on luxury car models under the Lexus brand including crown, century and crown
majesta. In the history of car sales in Toyota, the Corolla brand has remained the fastest selling
car for decades. For example, about every thirty-seven seconds, a Corolla is sold. Toyota
produces nearly nine to ten million vehicles every year, and the company is believed to be the
most profitable carmaker globally. Toyota also designs buses such as Hino, but due to

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competition from other automotive companies, the buses are not as profitable as compared to
other car models. Thirdly, we have the development of pleasure sailing boats. In a previous
partnership with Yamaha Marine in the year 1997, Toyota came up with the Toyota Marine.
Since then, Toyota has been building private motorboats primarily sold in Japan. As at now,
Toyota sells luxury crafts under the Toyota Ponam series.
Lastly, Toyota also has incorporated a financial services segment which mainly provides
financing to dealers and customers particularly for the lease or purchase of Toyota vehicles
(Reuters Editorial, 2018). Toyota runs the financing segment through various subsidiaries. To
begin with, we have the Toyota Financial Services Corporation in which it oversees the
management of other Toyota financing companies globally. Secondly, we have Toyota Motor
Credit Corporation which provides financial services including retail leasing, retail financing,
insurance, and wholesale financing. Toyota vehicle dealers primarily benefit from wholesale
financing since they are able to finance the inventory of Toyota vehicles as well as other used
Toyota vehicles (Reuters Editorial, 2018).
Toyotas Manufacturing process.
Toyota Motor Corporation has implemented a globally renowned vehicle production
system referred to as the just-in-time system or lean manufacturing system. This production
control system has undergone continuous improvements with the objective of manufacturing cars
quickly and efficiently as ordered by customers (Chiarini, Baccarani, and Mascherpa, 2018, pg.
31). Besides, the Toyota production system includes specific objectives. One, cost-effectively
offering the best quality vehicles. Two, provision of job satisfaction and fair treatment to all
Toyota members. Lastly, flexibility in regards to market changes as well as cost reduction
activities to ensure long-term prosperity.
Toyota Production System basis its production on different philosophies including Jidoka
and Just-in-time. These philosophies ensure the TPS can effectively and quickly produce
vehicles that satisfy customer requirements. Beginning with the Jidoka concept, more focus is on
quality (Toyota Motor Corporation Global Website, 2018). In Japanese, Jidoka means
automation and therefore in this process, in case a defective part is discovered or an equipment
malfunctions, the machine affected automatically ceases to operate until the problem is
corrected. Jidoka is crucial in just-in-time production since it ensures quality standards are

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adhered to and all parts supplied meet predetermined quality standards. Besides, the Jidoka
concept makes it possible for technical problems to be easily detected hence being resolved
quickly. The concept also brings in the idea of human touch in automation since team members
are well able to scrutinize any abnormality in manufacturing as well as propose an improvement
in the production system by seeking cooperation and guidance from the management.
Since Jidoka is primarily focused on automation, machines are also able to detect
problems on their own through the problem display board also known as the “andon” hence
preventing defective products from being manufactured (Toyota Motor Corporation Global
Website, 2018). Toyota is heavily dependent on this production concept due to the high number
of vehicles produced in their facilities. This ensures quality is a constant measure hence
maintaining customer satisfaction.
Secondly, we have the just-in-time production philosophy. This concept focuses on
making only what is needed which translates to the production of quality products through the
elimination of waste, unreasonable and unrequired requirements on the production line, and
lastly inconsistencies (Toyota Motor Corporation Global Website, 2018). In Toyota, the idea of
Just-in-time inventory management has undergone continuous improvement hence ensuring
productivity and efficiency. The principle of just in time is dependent on the idea that
manufacturing processes are regulated by laws of demand and supply. This means that
production of any vehicle is dependent on the demand by customers.
Toyota follows a particular process in order to ensure the just in time concept is effective.
To begin with, immediately a vehicle order is received, a production instruction is given which
prompts the beginning of the vehicle production line (Toyota Motor Corporation Global
Website, 2018). Secondly, the assembly line is stoked up with the required parts needed for the
assembly of the ordered vehicle. Thirdly, the assembly line is replaced with the same parts used
in assembling a particular vehicle hence reducing the time taken to gather the parts. Lastly, the
next process must be stocked with the exact parts needed since only the parts needed are
produced.

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What can be done to improve the processes?
Toyota Production System can be improved by considering various aspects. To begin
with, Toyota can adopt quality control activities whereby everyone participates including
seasonal workers, permanent employees, and parties involved so as to ensure all customer
inconveniences are prevented. Since Toyota is focused on the slogans “customer first” and “zero
defects”, the company should also continually pursue quality under strong leaders. This will
ensure the production process is flawless and all employees participate in ensuring
manufacturing follows specifications. In addition, Toyota can embrace rigorous training for its
staff so as to cultivate quality professionalism globally. For example, Toyota recalled eight
million vehicles majorly due to problems associated with accelerator pedals, jam pedals and floor
mats (Nakata, 2018). Training will ensure the just-in-time production concept is also flawless
hence reducing losses that arise due to lawsuits filed by customers due to their dissatisfaction of
the vehicles.
Secondly, since the Jidoka concept is more focusses on ensuring quality, Toyota can
ensure quality is easy to improve. Complexity is an enemy of effectiveness and improvement.
Toyota should make its quality improvement efforts as simple as possible so that when
employees undergo training, they can learn as quickly as possible hence ensuring much
productivity. Making it complex may affect the employees since remembering complex
instructions is not realistic (Von Krogh, Netland, and Wörter, 2018, pg. 54). Besides, by making
quality easy to improve, Toyota can reduce vehicle recalls since the production process will be
much easier to incorporate changes.
Lastly, Toyota can improve production through advancement in technology. Due to the
fast-moving new technical advances, more automotive companies such as Volkswagen have
increased their production capacity as well as quality (Von Krogh, Netland, and Wörter, 2018,
pg. 55). As at now, Volkswagen is the number one automotive company in terms of production.
New technology will ensure production is much quicker as well as addressing of automotive
problems is easier. Besides, new technology will ensure both manufacturing processes and
products are benchmarked efficiently hence being able to capitalize on the interests of the
company. New technology will also ensure the efficiency of communication with both dealers
and customers thereby enabling quicker transactions as well as relationships.

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Why Toyota is successful.
Over the years, Toyota has grown to be very successful due to various reasons. To begin
with, Toyota is good at long-term planning. Toyota tries to come up with products that last as
well as remain competitive in the market. The company does not run into or respond to trends or
fads rather the company develops products that resonate with the common people (Newman,
2008). For example, the Toyota Prius hybrid has remained an icon brand due to its efficiency in
the gas intake. Gas prices are going high, and this has become a top concern for many people.
The Prius has become a great choice for many hybrid lovers thereby allowing Toyota to make
huge sales on the model.
Secondly, we have Toyota’s company values. Toyota has embraced values known as
“kaizen” which refers to continuous improvement. Through these values, Toyota makes sure it
makes incremental innovations rather than quick game-changing ideas that may bring
inefficiencies (Collins, 2017). Through Kaizen, each employee has his or her responsibility to
undertake. Therefore, Toyota gets millions of ideas from its employees that are implemented
within the organization. Besides, Toyota considers its employees in its major decisions hence the
employees are encouraged to provide their best. The Kaizen culture also ensures mass production
takes place effectively. In addition, through the Kaizen, team members, as well as team leaders,
focus on improving their work practices on a day to day basis. Waste is also eliminated while
superior quality is ensured through the companies’ values.
Thirdly, Toyota Production System is a factor that has ensured Toyota’s success for
decades. TPS also known as lean manufacturing is designed for the purpose of getting most out
of every resource hence ensuring waste is eliminated (Collins, 2017). Waste in this context may
refer to employee idleness or the misuse of resources. Lean manufacturing came into play in
Toyota due to the scarcity of resources, and it has assisted control inventory, labor, and the
supply chain management. According to research, lean manufacturing ensures human effort is
reduced by about 50% while at the same time improving financial performance (Rinehart,
Huxley, and Robertson, 2018, pg. 87)
Lastly, Toyota’s products are more reliable due to their design simplicity. As compared
to other brands such as BMW’s, Fords, and Cadillac’s, Toyota has few problems since the other
brands incorporate more cutting-edge designs that are complex (Symes, 2017). The conservative

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nature of Toyota vehicles has allowed more people to prefer them since they don’t have many
problems. In addition, Toyota is critical about the parts manufactured for producing the cars
hence the company makes sure the parts are effective.
Conclusion.
Toyota Motor Corporation is a company that promises more success in the future due to
continuous improvement. This success depends more on the company’s operational strategies in
which the company heavy relies on. Toyota understands if all operations elements are well
considered, making sales and remaining competitive will be possible. Besides, Toyota’s new
concept cars are promising, but the company will be forced to embrace advanced technology so
as to be able to compete effectively in the market. For example, Tesla deems a challenge to
Toyota due to how customers embrace electric cars since the future.

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References
Chiarini, A., Baccarani, C. and Mascherpa, V., 2018. Lean production, Toyota Production
System and Kaizen philosophy: A conceptual analysis from the perspective of Zen
Buddhism. The TQM Journal. pp. 11-49.
Collins, D. (2017). The Key Factors of Toyota's Success. [online] Bizfluent. Available at:
https://bizfluent.com/info-8444139-key-factors-toyotas-success.html [Accessed 19 Dec. 2018].
Fujimoto, T., 2018. Evolution of Organizational Capabilities in Manufacturing: The Case of the
Toyota Motor Corporation. In Industrial Competitiveness and Design Evolution (pp. 191-221).
Springer, Tokyo.
Nakata, H. (2018). Toyota takes steps to improve image | The Japan Times. [online] The Japan
Times. Available at: https://www.japantimes.co.jp/news/2010/03/31/business/toyota-takes-steps-
to-improve-image/#.XBpOj1wza00 [Accessed 19 Dec. 2018].
Newman, R. (2008). 5 Secrets to Toyota's Success. [online] US News. Available at:
https://money.usnews.com/money/business-economy/articles/2008/05/27/5-secrets-to-toyotas-
success [Accessed 19 Dec. 2018].
Reuters Editorial, (2018). Toyota Motor Corp (TM). [online] U.S. Available at:
https://www.reuters.com/finance/stocks/companyProfile/TM [Accessed 19 Dec. 2018].
Rinehart, J., Huxley, C. and Robertson, D., 2018. Just another car factory? Lean production and
its discontents. Cornell University Press. pp. 67-98.
Symes, S. (2017). Why Toyotas Boast Superior Reliability. [online] GrabCAD Blog. Available
at: https://blog.grabcad.com/blog/2017/08/28/toyota-boasts-superior-reliability/ [Accessed 19
Dec. 2018].
Toma, S.G. and Naruo, S., 2017. Total Quality Management and Business Excellence: The Best
Practices at Toyota Motor Corporation. Amfiteatru Economic Journal, 19(45), pp.566-580.
Toyota Motor Corporation Global Website. (2018). Toyota Global Site | Production System.
[online] Available at:
https://www.toyota-global.com/company/vision_philosophy/toyota_production_system/
[Accessed 19 Dec. 2018].

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Von Krogh, G., Netland, T. and Wörter, M., 2018. Winning with Open Process Innovation. MIT
Sloan Management Review, 59(2), pp.53-56.