Operational Management in Toyota (Essay Sample)

OPERATIONAL MANAGEMENT IN TOYOTA
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Table of Contents TOC \o "1-3" \h \z \u 1.0 Introduction PAGEREF _Toc386140767 \h 32.0 Toyota Company PAGEREF _Toc386140768 \h 32.1 Current challenges and future face of the company PAGEREF _Toc386140769 \h 52.2 Operation management in Toyota PAGEREF _Toc386140770 \h 52.2.1 TPS (Toyota production system) PAGEREF _Toc386140771 \h 62.2.2 Just in Time system PAGEREF _Toc386140772 \h 92.2.3 Lean production PAGEREF _Toc386140773 \h 102.2.4 Supply chain management PAGEREF _Toc386140774 \h 113.0 Recommendations PAGEREF _Toc386140775 \h 134.0 Conclusion PAGEREF _Toc386140776 \h 145.0 References PAGEREF _Toc386140777 \h 15
1.0 Introduction
Operational management is the maintenance of efficient production of goods that the company is developing for sale. The work of the operation manager is ensuring efficient production of good and resources are efficiently managed to minimize waste, as well as material resources. Therefore, to meet these goals, the management needs to come up with a strategy available for a given situation. According to Heizer and Render (2001, p.12), the biggest challenge for the organizations, as well as managers are to increase production by minimizing waste, which is finding a balance between increasing production of products, and at the same time maintaining the quality of the products using the resources available. Different strategies can be used depending on the needs of production. Therefore, this essay discusses operation management strategies used in Toyota.
2.0 Toyota Company
Toyota Motor Corporation is the leading the car maker in Japan. It operates in more than 170 countries across the world. It manufactures different cars including minivans, pickups, Land Cruiser, Sienna among many others (Kakuro 2004, p. 1391). Toyota is the second largest manufacure of car in the world following General Motors. The company is successful because of a number of factors, including successful brand, innovation, product development and effective marketing entry strategy. In terms of successful brand, Toyota has gradually developed its brand based of quality, first-class in performance, as well as being eco-friendly. In terms of innovation, the company is considered as in first position in regard to innovation. It was the earliest car manufacture to embrace lean manufacturing system, also called Toyota Production System (TPS) (Kakuro 2004, p. 1391). The system is quicker, more competent and produces less waste when compared to the conventional methods such as batch and queue technique of car production. It also uses other strategies such as JIT (Just in Time Manufacturing), as well as smart automation. In terms of production, the company is well known for producing efficient car that are fuel-efficient, greener, as well as first-class performance when compared to that of competitors. Monden (2012, p. 5) indicates that the answer to achievement in the car industry is the production of the latest model that enhances the brand loyalty, as well as encourages demand for the product. Additionally, the company for a long time has sought on meeting the government requirement, especially in reducing the pollutiion and economic changes brought about by the changing prices of fuel. However, it has done this through persistence production of hybrid fuel cars. According to Sako (2004, P. 281), Toyota was the earliest brand in the car manufacturing to promote the production of hybrid cars, which uses gasoline and electricity, with the introduction of Prius model in its product line. Finally, the company has increased its growth over the years through having effective entry marketing strategies. Sako (2004, p. 282) indicates that Toyota effectively entered the market with both manufacturing, as well as sale subsidiaries. In addition, the company easily gained first-mover advantages by establishing their markets in international strategic areas Monden (2012, p. 5), whereby, it closest opponent has obtained two regions, the United States and Europe. According to Monden (2012, p. 5), Toyota is strategically positioned to take the lead in the development of Southeast Asia, as well as China and India.
Additionally, Monden (2012, p. 5) indicates that Toyota has developed a model that focuses on developing cars worldwide. Establishing a car manufacturing site is very costly because it requires high fixed cost investment. However, to reduce the cost, the company has effectively moved it premises to places that do not require huge fixed cost without compromising on quality. It also manufactures many parts of cars and it has assembly locations in different parts of the world. Furthermore, the company has been gaining cost efficiencies from assembling the car in different regions than using one location (Lander and Liker 2007, p. 1383)
2.1 Current challenges and future face of the company
According to Mehri (2006, p. 23), the car industry is under pressure from the governments and consumers to produce cars that are eco-friendly, meaning that they are fuel-efficient. Saturation and overproduction in the developed market has led to the companies look for alternative market such as China and India, where income is mounting. However, as Lander and Liker (2007, p. 1383) indicates, these countries have their brand which they are also gaining a reputation. Furthermore, the increasing oil prices are also hurting the industry. Mehri (2006, p. 23) also indicates that consumers handling the cars are also declining. The fixed cost is also increasing, and consumer also using less money on car than per household. Other challenges have also emerged in Europe where the government is encouraging car-share, as well as substitute form of transportation. As a result, the demand of car is reducing. Monden (2012, p. 8) indicates that, in the developed nation, which is the main markets for car manufactures, the size of the household is also reducing. However, this has led to a reduction in the demand for car, and at the same time, an increase in demand for fuel-efficient care. Therefore, the next section discusses the operation management strategies Toyota uses in order to make its business profitable, as well as maintain the customer loyalty.
2.2 Operation management in Toyota
Operations comprise the second pillar that supports production activities. As mentioned above, operations are associated with the flow of equipment, as well as operator. Toyota has for a long time emphasized the improvement of its production system. As Mehri (2006, p. 24) indicates operations have three fundamental components, which include preparations and after adjustments, principle management, as well as marginal allowances (Benders and Morita 2004, p. 34). According to Kakuro (2004, p. 1394), these are a well known operations that are done after every the production of every lot, and are considered as very useful operation in the company. The earlier productions, majority of production took place in a large lot because a lot of time was spent during changeovers. Under such condition, it was possible to produce under low labor cost, but there was also a problem of undesirable upscale in in-process stocks.
However, the pressure to be competitive has led to the emerging of numerous operational paradigms, and some of the significant ones include Just in Time, Total Quality Management (TQM) and Supply Chain management. JIT is an operational paradigm that focuses on eliminating wastes and at the same timer rescue the setup time (Monden 2012, p. 34). The system focuses on controlling the material for effective utilization of resources. On the other hand, TQM focuses on the development of corporate culture that empowers employees and also seeks continual improvement. Finally, supply chain management is a system that links the supplier and the buyer decision making in order to improve the flow of material in the chain (Benders and Morita (2004, p. 435).
2.2.1 TPS (Toyota production system)
According to Lander and Liker (2007, p. 1381), leads to lean production that emphasis on the elimination of waste in the production system. The system is highly standardized and has buffers that are controlled through various pull signals. The system is very efficient enhances the quality of products, and that is the reason Toyota has gained a competitive edge in the global market (Kakuro 2004, p. 1392).Benders and Morita (2004, p. 435) argues that TPS should be seen as a philosophy described by set of principles of managing, as well as organizing enterprise.
One of the reasons that Toyota has become a successful global market is the ability to establish a unique production system. Abdulmalek and Rajgopal (2007, p 232) indicates that TPS is based on principles of continual improvement regarded as Kaize. The Company's workforce is highly decentralized and takes part in decision making in the organization. As Hertzberg's theory of motivation indicates, the workforce is highly motivated, and this lead to the success of the enterprise. Furthermore, TPS consists of the most successful production, as well as work practices. Sakichi Toyoda, the founder of Toyota established this system. On the other hand, it is Taciichi Ohno who created Just in Time Production system (Lander and Liker 2007, p. 1383). The JIT production system made the company more efficient, furthermore, the techniques used in the system also incorporated total quality control, quality circles, as well as statistical process control. As a result, Toyota has become more efficient than its competitors. Toyota has also introduced new system of employee relation with one of the trade unions, whereby, the companies aims at providing flexible work in order to be effective in responding to demand based production Monden (2012, p. 13)
Ideally, the company’s manufacturing systems comprises of a continu...