Running Head: Toyota’s Operations Strategy
Toyota’s lean manufacturing has enabled the company to focus on consistent design and responsive approach to production operation. The company’s workforce is self-directed and motivated by output based measures and customer oriented criteria. The concepts of just in time (JIT), Kanban and respect for employees together with expedited problem solving approach (automated error correcting) has enabled the company to pursue lean innovations.
Supply Chain Management
Toyota’s Supply chain management is a perfect combination of Porter’s value chain strategy, Kierestsu strategy, and Eliyahu Goldratt’s theory of constraints.
connecting warehouses and the vendors ensures that inventory management process keeps running effectively at all times (Lancioni, 2000). Currently, Toyota’s supply chain has gone a bit awry, inevitably raising a number of questions, particularly in the recent (2009/2010) failures and recalls.
In the United States, Toyota’s market leadership was molded on a competitive advantage that ran across the company’s entire supply chain. Toyota Company’s operation in the US has continued to establish a competitive advantage due to its dedicated focus on quality and innovativeness. In addition, knowledge is effectively shared across the supply chain to enhance creativity and innovation. The seamless sharing of information is however a disadvantage, the risk of spillover to competitors is high.
knowledge may spill over to competitors; they admit that some of the information will actually leak but by the time it does so, they will be several miles ahead. The company has remained committed to the integration of people, processes, resources and technology so as to add value to their customers and the society in general (Krause, Handfield, & Tyler, 2007). Toyota successfully and uniquely leverages suppliers and technologies in its lean product development strategy. The company even sometimes helps suppliers with the development of product strategy (Teresko, 2007).
Toyota’s top performance over the years has been based on the mastering of the Toyota way (Liker, 2004). However, of late the company has faced challenges where it had to recall some of its cars for safety reasons.
Toyota is a multinational success story that affects and is affected by the process of globalization. Globalization has led to localization of production and a higher level of cooperation between production units of the carmaker that are situated in different parts of the world. The benefits are evident; the company has successfully reduced financial barriers, hence affecting the conventional management of the company, particularly with regards to human resource management. The company’s human resource management practices are rather ineffective, as the traditional principle of the teams work has turned out to be counterproductive in new countries as compared to Japan. On the other hand, the expansion of the global market as stimulated by the process of globalization affects the company’s ethical issues, thereby increasing risk of cultural conflicts within the organization. However, Toyota has responded well to this by developing of universal ethical principles and corporate culture to govern the supranational units. In the face of all these challenges, the position of Toyota is still very strong, essentially due to the company’s wide implementation of technological innovations, and its mass customization as opposed to mass production, especially when it comes to hybrid cars (Sanna, 2005). This strategy has enhanced the vanguard position of the company in the global market. With this trend, Toyota demonstrates a strong trend to globalization of its production process that appropriately matching the changes in its style of management style which puts the company in number one spot in the auto industry.
Krause, D.R., Handfield, R.B., Tyler, B.B. (2007). The relationships between supplier development, commitment, social capital accumulation and performance improvement. Journal of Operations Management 25 (2), 528–545
Lancioni, R. (2000), “New developments in supply chain management for the
millennium”, Industrial Marketing Management, Vol. 29 No.1, pp. 1-9
Liker, J. K. (2004). The Toyota Way: 14 Management Principles from The World’s Greatest Manufacturer
Sanna, L. (2005). “Driving the Solution: the Plug-in Hybrid Vehicle”. EPRI Journal, p.8-17.