Production Process of Toyota Company - Essay Example

Organizational Culture and Organizational Communication - Toyota Overview of Toyota: Toyota is the world’s largest automotive maker, with its operations expanding over six continents and several countries. In an economy which is on the down-swing. And, in an industry which has seen heavy weights such as Ford, General Motors and Daimler Chrysler succumbing to the fall in global demand, Toyota continues to shine. Toyota has managed to survive several crises in its sixty years of operation. As Toyota Motor Corporation President Akio Toyoda famously said “Toyota has been hit by a crisis about once every ten years," Toyoda said, "but Toyota has made it through every crisis with the constant support of all Toyota team members.” (Toyota 2009) Toyota is renowned for its production process, and its innovative management policies and culture. Toyota created and implemented the Just-in-Time method of inventory, which was revolutionary in nature. This concept has proven quite successful for the company. I am truly fascinated by this organizations managerial attributes and culture, which is why I chose to write about this organization. Culture at Toyota: The culture at Toyota, described as ‘The Toyota Way’ is the core that drives the success of this organization. It lays out clear objectives for operations, Total Quality Management (TQM), customer service, employee management. Moreover, it aims to create a harmony amongst all the objectives. Even the logo of Toyota, is a symbol of how these values amalgamate. As we know, the Toyota logo consists of 3 ovular rings. The first ring symbolises the heart of Toyotas customers. The second ring symbolises the care taken by Toyota to manufacture its products. The third ring which joins the other two rings symbolises the joining of customers with their product and creates the ‘T’ of Toyota. (Appendix) The Toyota Way, as followed by the organization consists of two broad aspects with key subsets. Continuous Improvement: Up to the Challenges: Toyota believes in creating value through their production process, and thus delivering high quality products and services to their customers. They plan on creating long term visions which can overcome possible hurdles. Moreover, they believe in accepting challenges and excelling in them through careful analysis before any decision. Kaizen: It means to improve in Japanese. This concept urges the employees of Toyota to keep improving and innovating through learning, creating sound infrastructure and, by promoting education within the organization. It believes that this will help deliver better and improved goods and services to the customer. "Something is wrong if workers do not look around each day, find things that are tedious or boring, and then rewrite the procedures. Even last months manual should be out of date." - Taiichi Ohno, former Toyota executive VP. (Liebersohn, 2009, p. 364) Genji Genbutsu: It means to go and see, or “walking around and seeing for yourself” (Werbach 2009, p. 14) The ‘Continuous Improvement’ concept further talks about Customer Satisfaction. It emphasizes on putting the customer first, understanding the customer’s needs, and empathizing with him. (Attwood 2012) Mutual Respect: Mutual Respect & Honesty: Toyota tries to cultivate mutual respect between its employees, irrespective of caste, creed race or gender. Its goal is to maximize value for shareholders, through honest communication. (Toyota Thailand 2001) Teamwork: Toyota encourages teamwork between its employees, to continually educate and develop team members. Respect each and every individual and thus, capitalize on the power of a united team rather than a bunch of individuals. Suggestions from all team members are encouraged. Eliminating waste (muda): Toyota has implemented certain key strategies to avoid wastage. Just-in-Time (JIT) Inventory is one of them. JIT helps Toyota in reducing inventory costs as well as wastage. It manages to reduce overproduction and decreases idle time. Moreover, Toyota believes strongly in defects and corrections. The Toyota Way and its effect on internal communication (with and between employees): The Toyota Way can be stated as a guideline for all Toyota employees, from workers to Corporate Heads. “Toyotas labor-management relations are based on mutual trust between labor and management. Following a labor dispute in 1950, mutual trust between labor and management was adopted as the foundation of labor-management relations in the joint labor and management declaration concluded in 1962. Since then, repeated discussions have led to deeper understanding and trust between labor and management.” (Toyota Japan 2003) (1) Toyota promotes ‘Mutual Trust’ between Labor and Management by helping them realize that their goals are common: prosperity for the company. “In 1996, mutual respect was added to mutual trust as a foundation of labor-management relations, and this is reflected in the current Guiding Principles at Toyota Motor Corporation.” (Toyota Japan 2003) (1) Moreover, Toyota provides its employees with a stable employment and good and safe working conditions. To this effect, Toyota began promoting ‘Good physical and sound mental health’ amongst its employee’s post 2002. (Toyota Japan 2003) (2) Moreover, Toyota is fully committed towards Human Resource Development. “In October 2002, Toyota created the booklet "Toyota — Developing People" and distributed it to all associates to create a common understanding that "the source of Toyotas competitiveness is human resources development" and to promote the creation of workplaces where personnel development takes place at all sites and at all levels.” (Toyota Japan 2003) (3) In order to further promote The Toyota Way, Toyota adopted ‘The Toyota Way 2001’ officially in April 2001, which provided guidelines to employees to promote Brand Toyota. Moreover, in January 2002, Toyota established Toyota Institute to develop and educate its employees. It also identified the Global Leaders for Toyota in the future, and, prepared them for that role. (Toyota Japan 2003) (3) Toyota promotes equal opportunities amongst it employees irrespective of color caste religion or gender. Toyota employs roughly 800 handicapped people which are 1.95%; it is more than the legally required 1.8%. (Toyota Japan 2003) (4) Moreover, Toyota holds regular Women’s Career Forums to enhance women’s network within the organization, and help them create their own paths for career success. (Toyota Japan 2003) (3) These efforts by Toyota Motors has been reflective on its Balance Sheet as well, as it continues to grow in stature and keeps adding value to its stake holders. As it can be seen in the latest quarterly results of Toyota, its Net Revenues are up 23.8% with its Operating Income recording a jump of 381.3% (Toyota Motor Corporation 2014) The Toyota Way and its effect on external communications (Public and clientele): Since its incorporation, Toyota has adopted a ‘Customer First Policy.’ This is reflected in its mantra for success over the years. Toyota’s approach to customer satisfaction has revolutionized the industry. The queries, complaints or suggestions of the customers are quickly and effectively passed on through the channels and immediate action is taken to rectify or implement these. For example, “Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles” (Cole 2011) Moreover, in the new model Caldina, underwent a complete redesign in September 2002, Toyota incorporated many ideas from customers that it had gathered earlier. (Toyota Japan 2003) (5) In addition to keeping in mind the interests and values of its customers, Toyota also engages in various campaigns for Society in general. For example, Toyota holds a Driver Safety campaign twice every year, the objective of which is to educate people traffic safety for children; and promotion of seatbelts and child safety seats. (Toyota Japan 2003) (6) These initiatives and various others by Toyota such as Satoyama Learning Institute Eco-no-Mori House, Toyota Shirakawa-Go Nature School, Toyota Environmental Activities Grant Program, Toyota Clean Net etc. are born out of the guidelines in ‘The Toyota Way’ of Mutual Respect and Continuous Improvement. (Toyota Japan 2003) (7) Moreover, we cannot ignore the impact Toyota’s working culture has on its suppliers and even competitors. Toyota’s JIT methodology is being duplicated by a few automakers worldwide. JIT is a concept aimed at eliminating wastage. It means making “only what is needed, when it is needed, and in the amount needed.” (Toyota Global) This has resulted in various ancillary units being set up by suppliers of Toyota to help them fulfil these requirements. It reduces inventory cost for Toyota, and in return Toyota helps its suppliers in every possible way. JIT is further supported by the ‘Kanban’ system or the ‘Supermarket Method’. The role of power and status in Toyota in its internal and/or external communication: Toyota has a highly centralized power centre at the top of its Management Hierarchy. Toyotas board comprises of 29 Japanese men, all of whom are Toyota insiders. Toyotas corporate structure can be described as ‘rigid’. Subordinates are scared in passing unfavourable news up the chain of command, in fear of rebuttal, and this leads to misleading information at the top of the hierarchy, where this news should be reached in order for it to be quickly rectified. Like most cases of family businesses, challenging the boss can be viewed as an act of betrayal or disloyalty. Toyota has a policy of hiring within the organization, which makes it lack perspective sometimes. It is a company where loyalty is greatly appreciated and rewarded. We need to closely examine the recall in 2010, and we realize that the power and status problems arose within the organization, which prevented them to act swiftly in this particular case. Owing to improper communication within the organization, the company had, initially refused to acknowledge anything wrong with its hybrid cars. Then owing to further miscommunication especially by the low and mid level management to their bosses, they came up with an excuse of badly fitted floor mats as the problems arising in the brakes of the hybrids, which was quickly dismissed by legislators in the USA. After many days and severe criticism did the company formally acknowledge the defect and its Chairman Akio Toyoda apologize. Critics believe that the source for a weak Japanese Corporate Governance is its highly centralized power circle. They say that since only the top officials in Japan were authorized to order a recall of cars, has this caused an embarrassment to the world’s largest automaker. Critics say that though America has its fair share of American executives in Toyota but they all have Japanese bosses with the command centre itself being in Japan. (Economist 2010). If this is true, it would be in sharp contrast to the philosophy of Toyota or ‘The Toyota Way’ which promotes equal opportunities irrespective of caste creed race or country. The culture at Toyota says it encourages feedback, but there is a fear of backlash when it comes to reporting ‘unfavourable news’ up the chain of command. All in all maybe a close scrutiny of the Toyota Way needs to be examined by the heads at Toyota. For now though, Toyota continues to dominate the automotive industry, and continue to marvel with its managerial innovations and policies. References: Attwood G (2012) Toyota - a fascinating corporate culture retrieved on February 23 2014, http://www.grantattwood.com/2012/04/toyota-fascinating-corporate-culture.html Cole E.R (2011) What Really Happened to Toyota? Retrieved on February 23 2014, http://sloanreview.mit.edu/article/what-really-happened-to-toyota/ Liebersohn, A. (2009), World Wide Agora, Lulu.com Toyota (2009), Financial Crisis and Toyota Motor Sales Co., Ltd.s Foundation retrieved on February 23 2014 http://www.toyota-global.com/company/toyota_traditions/company/dec2009_feb2010.html Toyota Thailand (2001), The Toyota Way retrieved on February 23 2014 http://www.toyota.co.th/en/about.php?page=path Toyota Japan (2003) (1), Labor Management Relations retrieved on February 23 2014, http://www.toyota.co.jp/en/environmental_rep/03/jyugyoin.html Toyota Japan (2003) (2), Safety and Health retrieved on February 23 2014, http://www.toyota.co.jp/en/environmental_rep/03/jyugyoin02.html Toyota Japan (2003) (3), Human Resource Development retrieved on February 23 2014, available at http://www.toyota.co.jp/en/environmental_rep/03/jyugyoin03.html Toyota Motor Corporation (2014) FY 2014 Third Quarter Financial Results retrieved on February 23 2014, retrieve don February 24, 2014 from: http://www.toyota-global.com/investors/financial_result/2014/pdf/q3/presentation.pdf (pg 6) Toyota Japan (2003) (4), Diversity and Equal Opportunites retrieved on February 23 2014, http://www.toyota.co.jp/en/environmental_rep/03/jyugyoin04.html Toyota Japan (2003) (5) Relations with Customers retrieved on February 23 2014, http://www.toyota.co.jp/en/environmental_rep/03/kakawari.html Toyota Japan (2003) (6) Initiatives toward Traffic Safety retrieved on February 23 2014, http://www.toyota.co.jp/en/environmental_rep/03/anzen.html Toyota Japan (2003) (7) Philanthropic Activities retrieved on February 23 2014, available at http://www.toyota.co.jp/en/environmental_rep/03/anzen03.html Toyota Global Just-in-Time — Philosophy of complete elimination of waste retrieved on February 23 2014, available at http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html The Economist (2010) Toyota Accelerating into trouble retrieved on February 23 2014, http://www.economist.com/node/15498249 Werback, A (2009) Strategy for Sustainability: A Business Manifesto, Harvard Business School. Appendix: Image Courtesy: Toyota Thailand, Available at: http://www.toyota.co.th/en/about.php?page=path Read More