Operations Management - Toyota Case Study Analysis (Case Study Sample)

OPERATIONS MANAGEMENT: TOYOTA CASE STUDY
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Table of Contents
TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc26210305 \h 3
Problem Statement PAGEREF _Toc26210306 \h 3
Formulation of Operations Strategy PAGEREF _Toc26210307 \h 4
Managerial Skills and Competencies PAGEREF _Toc26210308 \h 8
Operations Function and Optimum Layout PAGEREF _Toc26210309 \h 10
Other Issues Facing Toyota PAGEREF _Toc26210310 \h 13
Recommendations PAGEREF _Toc26210311 \h 14
Conclusion PAGEREF _Toc26210312 \h 15
References PAGEREF _Toc26210313 \h 16
Introduction
Operations management is defined as the administration of business practices to create high efficiency in an organisation (Kenton, 2019). Materials and labour, in this case, can be converted into goods and services to aid in profit maximisation. Operations managers must acquire, develop and offer deliverables to clients according to their needs and the capabilities of the company. It has been different for Brexit when the UK voted to leave the European Union in June 2016 leading to uncertainty (Horan, 2016). The uncertainty has become pervasive as the deal for withdrawal has not been conformed even after a long time. Businesses based in the UK and outside UK are faced with uncertainty as they do not know if there will be a deal between UK and EU and are not sure how they will deal with the changes (Kierzenkowski et al., 2016).
This report has focused on the Toyota Industries Corporation, a leading vehicle manufacturer globally. Since it was founded in 1926, the company has managed to expand its business all over the world and is currently selling in more than 170 countries. The number of employees is approximately 320,800 globally. The report analyses managerial skills and competencies that the company requires to deal with Brexit challenges towards its operational strategies.
Problem Statement
The operations management at Toyota Motor Corporations covers 10 decisions for operations both effectively and efficiently. Some of the decisions include quality management, location strategy, supply chain management, inventory management and maintenance among others. However, after Brexit, some of the company's operations were interrupted because of the imposed regulation on importation and exportation of materials. Most of the raw materials required to produce new cars are stored at the headquarters in Japan and the company used to transfer them once they are required. Due to Brexit, delays would be experienced at the customs clearance areas and extra costs would be incurred due to custom import duties. Due to these limitations, Toyota issued a notice of not producing cars at its Burnaston factory in Britain. This occurred after UK withdrew from EU, but the withdrawal was delayed (Clarke et al., 2017).
Due to the delay in Brexit, Toyota is hanging on the edge with a predicament of whether to continue with manufacturing in its UK plant. Another problem faced by the company dates to the 2000s, which is the issue of recall. A few vehicles were recalled due to manufacturing defects. The wiring was not properly crimpled which led to occasional self-acceleration. It has over time recalled some of their cars to fix problems raised by the proposed owners. This sales recall issue can make consumers lose their confidence which later drops its corporate image (Zhou, 2019). In its transformation process, the company needed to identify the issue facing all the millions of cars recalled worldwide. The company claimed that it was caused by operator error, which in most cases is the frequent cause of self-acceleration problems in automobiles. Due to the myriad of excuses over the recalls, the company made it worse by lack of a suitable explanation.
Formulation of Operations Strategy
Operations management includes certain obligations to drive success. One of these obligations is to ensure that the business operates effectively, both in terms of using the least amount of resources required as well as meeting the highest economically viable level of customer requirements (Aithal, 2016) Operations management includes the process of converting labour, raw materials, and resources into goods and services. People's rational analysis, expertise, knowledge of technology, and creativity are all essential for operations management success. Operations strategies are the mechanisms necessary for bringing change while seeking to maximise profits. They call for allocation of resources to aid in the next set plans (Kenton, 2019). Since Toyota is facing the Brexit issue and a bad reputation brought about by the recalls, it needs some strategies to go back to track businesswise.
Strategy implementation is a term used to describe all the activities and processes that ensure the successful execution of planning. In this case, Toyota needs to recount the steps of its mission and planning process of making quality cars. Some of the factors to consider in implementing operations strategies include defining the company's strategy framework (Wright, 2018) (Figure 1), building the plan, defining KPIs, establishing strategy rhythm, implementing strategy reporting and linking performance to strategy. Performance is measured through models like the Supply Chain Operations Reference (SCOR) model, the logistic scoreboard, and Activity Based Costing (ABC), Economic Value Analysis (EVA), and a balance scorecard.
Figure 1: The strategic role of operations (source Slack et al., 2010)
To solve operational issues that Toyota is facing as a result of proposed Brexit, the company should implement operational strategies that are dependable. These strategies should be flexible enough such that the company can depend on them to strive in the market even when there are delays in the production process. The company should prioritise operational strategies that would help it to make good use of the few available resources (Aithal, 2016). The primary issue that affected the company's reputation was giving excuses when most of the vehicles were recalled due to mechanical problems. The company should use operational strategies to offer a realistic explanation to customers.
Effective decisions help a company to create a balance between cost and quality. To attract more customers, Toyota should understand their strategies first before taking any action. With a better understanding of the operational strategy to be employed to get more customers in the UK market regardless of the uncertainties brought about by Brexit, the company can strive in the UK market even if Brexit is implemented. The company stakeholders should be allowed to participate in decision-making. Stakeholders are like customers, and they understand the company from an external perspective (Aithal, 2016). Hence, if given a chance to contribute to decisions, the company can come up with effective operational strategies.
Technology, which is continually changing, plays a crucial role in constant progress in driving operations management innovation. This is positively attributed to the upcoming developments such as self-maintaining smart machines (for production) and drones. Organisations that are applying innovative capabilities are more competitive as opposed to those that are not innovative. Hence, to keep up with the changing technology, Toyota Company should be more innovative in its operations. With the utilisation of creative experts, the company can avoid issues like car recalls (Prajogo, 2016, p. 244). It is recommended that the company should also come up with unique operational strategies that will help it develop long-term capabilities.
Operations Strategies Perspectives
Figure 2: the four perspectives on operations strategy (source Slack, 2018).
Due to the changing and competitive environment surrounding Toyota Company, the organisation needs to consider the four perspectives on operations strategy. The top-down perspective concerns businesses in terms of service sectors and the industry in which they wish to compete (March and Hevner, 2007). However, the approach also focuses on one autocratic leader in the business who issues deadlines, budget and plans. Toyota's dream is to always be the lead in the automobile industry. Therefore, with this perspective, it needs to consider the advice it gets on creating new models of cars to avoid such mishaps that led to recalls. Further, it needs to check the personnel it employed so that it can effectively compete in the vehicle manufacturing industry (Geerlings, Kuipers, and Zuidwijk, 2017).
Bottom-up approach observes keenly the company or product before manufacturing. It identifies problems from the lowest level towards the management. Toyota needs to strategize and make due diligence before engaging various stakeholders in its operations.
Market requirements are the specific needs of the consumers. There are specific requirements that consumers wish to find in a product. However, Toyota issued cars without understanding the market requirements and consumer needs. They, therefore, need to check what their consumers need and then concentrate on innovative manufacturing and product design, which would improve brand reputation after the recall scenarios.
Operations resources are the tools and necessities used in production. Due to the issues ranging from self-accelerating cars to pedal problems, the company should consider the required tools and machines to correct the problem. According to Chan (2009), that would enable some clients to regain trust in their cars.