Toyotas Latest High Visibility Product - Case Study Example

Business Table of Contents Introduction 3 Toyota Motor Company 3 Product 4 s 4 4V profile of Toyota 5 Process Map of Toyota 7 Lean Management10 Lean tools adopted by Toyota 12 Recommendation 13 Conclusion 14 Reference List 15 Introduction Lean management was first introduced by Toyota Production System (TPS). The TPS is build upon two major pillars such as Jidoka and Just-in-Time (JIT). The TPS house considers operational stability as the main components. This indicates that manufacturing process should maintain consistency in tasks and methods, output and workplace. With this management process, value is delivered to the customers through right choice of production system and waste management. The five main principles on which lean management follows are as follow. Firstly, it helps in creating specific value for the customers of the company. Secondly, value stream is identified as the main source of information for the whole process. Thirdly, lean management assists in assuring that the customers receive the right products. Customers pull is important and hence it is the fourth principle for lean management. Fifthly, through lean management there is continuous improvement in productivity and quality of products (Schonberger, 2007). The report explains the operational process in Toyota and how it has helped the company to prosper in the present market. The different approaches that are undertaken by the company to reduce waste, increase productivity and efficiency are also highlighted in the report. In light of this, the report also gives emphasis on the usefulness of lean management in order to satisfy the customers. Toyota Motor Company The success of Toyota is dependent on its reduction system, which focuses on just-in-time management and continuous improvement. The company has developed decentralised structure; the structure encourages team work and employee participation. It has incorporated techniques such as inventory and supply chain management for producing the high quality automobile. Through these techniques it has increased the competitive edge in a competitive automobile market at international level. The success of the company revolves around achievement of high productivity and employment of unique approaches that can solve problem. Product Toyota Motor Company manufactures vehicles which are sold in 170 countries. However, the company operates worldwide by partnering with 50 overseas manufacturing companies. It manufactures sells and even exports hybrid, passenger, four-wheel drive, sports and commercial vehicles. Customers Customer satisfaction is regarded as the top priority for the company in a competitive automobile market. It aims at building products, which reflect value and satisfy their needs. The customers are general public who have the desire to own a car. The company also encourages the corporate level customers to purchase their vehicles for their official use. The heart of the business is to ensure safety to the customers along with best quality (Toyota Motor Corporation, 2003). The complete customer satisfaction is recorded at every stage of customer experience and it starts during the purchase of cars. The stage includes greeting of the retailer and it leads to the speeches that are important for the sale. The company has hosted the European Ichiban Customer Satisfaction Award in order to identify and reward those retailers who have excelled in complete customer satisfaction (Toyota Motor Europe, 2010). 4V profile of Toyota The 4V refers to volume, variation, variation in demand and visibility. The 4V is elaborated with respect to the present condition of the market worldwide. Volume: Toyota has encountered motorization wave during 1960s and thereafter the sales of their products had increased drastically, which includes launch of Corolla in 1966 (Toyota Motor Corporation, 2012a). However, the sales of the company faltered during 1970s because of the oil crisis and the new regulations owing to emission. Thereafter, the company has encountered a number of challenges, which had affected the revenue of the company severely. Despite the hurdles, the company has concentrated on improving its sales volume for the past few decades. The production and sales volume of Toyota for the past three years (both overseas and Japan) are depicted in the graphs provided below: Figure 1: Sales Volume (Source: Toyota Motor Corporation, 2012b) From the above figure it can be stated that Toyota has encountered increase in sales worldwide; however, in Japan the volume has decreased due to the variation in demand. Moreover, the improvement in sales volume overseas is quite remarkable. The fluctuation in the sales volume for the past few years is due to the long effect on the economy, which collapsed after 1990. The fall down of the economy brought in changes in organization of the company as a result the sales volume steadily declined. This is the main reason why the sales volume of the company collapsed along with the asset price bubble (Toyota Motor Corporation, 2012a). Variation: Toyota has concentrated on innovating new products such as CKD and CGU vehicles. Moreover, it has brought variation in size, design, structure, chassis, engines and materials so as to different their vehicles from others (Green, 2002). Variation in demand: In order to reduce the buffers in the process of production and sales, the company aimed at reducing the variation in customer demand and also variation in the company processes. The variation in the customers demand is influenced by building a strong supply chain. When the company does not share any customer details or demand, a bull-whip effect is seen to emerge as a result of the fluctuating demand of the customers. This effect actually highlights how a small change in the demand of customers can affect the overall size of the upstream supply chain (Panview, 2014; Monden, Y., 2011). Visibility: Visibility is regarded as a critical issue with respect to management of supplier risk. The supply chain managers have the knowledge regarding the materials and components that are required by the company. Hence, Toyota has to work out on the ideal supplier from where right raw materials can be obtained and thus visibility is very crucial before the start of the production process (Ferari, 2012; Supply Risk Solutions, 2014). Process Map of Toyota Process maps are significant for describing and analyzing definite processes that are followed during the production of a product in a company. For companies like Toyota maps are very important as it ensures the production and lean managers that the products are manufactured according to the specification of the detailed process, which are identified by the managers. The fist process map of Toyota is given below: Figure 2: Process Map 1 (Source: Author’s creation) Inputs Transformation activities Output Operation management Goes through the supplier list Appropriate list of suppliers for the supply of materials Orders placed Senior level managers places the order Materials are ordered Materials are received Quality and assembly check done with the help of Jidoka and Kaizen standardization. The stativity is performed by the lower level management employees. Assure good quality of the materials Despatch of the materials from the quality control department After rigorous check up of the materials, it is despatched to the production department. Manufacturing of the products The different levels of management play a vital role in the process of production in Toyota. The process starts with the scrutiny of the list of suppliers by the operation managers. After reviewing the list of suppliers the best ones are chosen for obtaining the materials needed during the production of the vehicles. After that the senior level managers of the department places the order to the suppliers and the materials are obtained. The materials are received, it goes through a number of checking process, which ensures that the materials are of good quality and appropriate for the production. The inventory is maintained with the help of Jidoka and Kaizen standardization. The materials are despatched to the production department for the final manufacturing process. The following figure elaborates the second process of Toyota: Figure 3: Process Map 2 (Source: Author’s creation) The process map depicts that the supplies are integrated and then just-in-time process and KANBAN Card is applied in executing the production process. In order to reduce the waste during the production process, KANBAN Card is used; thereafter the assembling process is executed and the final product is obtained. Lean Management The concept of lean manufacturing or lean management better known as Toyota Production System aims at reducing and eliminating waste during the production process and give emphasis on improving continuously. Lean management is employed by majority of the business across the globe. It is a competitive philosophy that is adopted by companies globally in order to manufacture cost effective services and products. According to Paton (2002), it is the fast growing movement with regard to quality. Hence, improvement in product quality aims at delivering value to the customers. Success in the manufacturing context is directly correlated with the global competition and the ability of the company to manage it. Hence, cost effective remedies are required for achieving competitive edge in the market (Matthias, 2007); effective application of the lean management methods are helpful in improving the overall performance of the company. According to Alukal (2003), lean is defined as the manufacturing concept that is applied by the company to shorten lead time between shipment of products and customer orders. The lead time is shortened by eliminating all forms of waste. The process helps in reducing cost, non-valued activities and cycle times apart from waste reduction (Levison, 2002). From the perspective of a customer, who actually uses or consumes the product, value is important as he/she is willing to pay for the products based on the perceived value. Hence, it can be stated that lean aims at preserving value for the customers with the help of reduced work and waste. There are various lean concepts that help in reducing waste and incising the efficiency of the company. These are takt time, 5S, Andon, Heijunka, Jidoka, Bottleneck, Just-in-time, kaizen, Kanban, Poka-Yoke, Muda and root cause analysis. Among all the techniques, just-in-time, Jidoka and Kaizen are significant for the companies (Alukal, 2003; Cook, Fang and Hauser, 2006). Jidoka: This technique of lean management helps in identifying any problem in the production process or even prevents from developing any defect in the production system. This principle is well known as the autonomation. It is divided into few steps that are described below: 1) Discover any abnormality in the process of production of the system. 2) If there are any defect or abnormality the process is stopped. 3) Fix the problems and defects immediately without hampering the production process. 4) Investigation and elimination of the root causes (Lean Manufacturing Tools, 2014). Hence, the main benefit of the process is to eliminate problems from the production system. Just-in-Time (JIT): JIT manufacturing is implemented successfully by the Japanese companies in the past 20 years. Its philosophy is to guide the manufacturing company for managing their business effectively, control and plan its operation efficiently. The approach tries to smooth the flow of materials to the customers from the suppliers; thereby it increases the speed of manufacturing process. Hence, the approach helps in responding to the demands of the customers, develop good communication between the suppliers and departments, achieving good quality and reduce the production cost (Yeh, n.d.). The main benefit of the approach is that it reduces inventory level and improves the cash flow. It also assists in reducing the space requirement of the company (Allada and Srinivasaraghavan, 2006). Kaizen: Muda (non-value added) is related to the existence of material, facilities, production set up and people. Kaizen is defined as the set of activities through which the Muda are eliminated at a minimal cost. In this process, the workers pool their wisdom and intelligence and enhanced the efficiency of production process in a timely basis. The activities give emphasis on the manual work rather than usage of any equipment. This approach is not necessarily performed by the specialist rather it is executed by the employees. The employees work proactively in a group in order to achieve the incremental and regular improvement in the production process. Lean tools adopted by Toyota Just-in-time: It is one of two main pillars of TPS. It helps the company to manufacture those products which have been demanded by the customers. In this process, the raw materials are obtained from suppliers to the factory floor of the company. These materials are previously ordered by the senior level managers of Toyota after scrutinizing the supplier list. The concept ensures the company that the valuable raw materials are not wasted in the process of production, and all the units are manufactured properly. The goods are manufactured on the basis of the orders placed; thus the manufactured goods are sold. Therefore, the stock is minimal in the inventory (Univertsity of Kentucky, 2014; Monden, 2011). Jidoko: The inventory management system of Toyota is also characterised by features such as Jidoka. Jidoka aims at preventing passage of products, which are defective, during the manufacturing process. The defects are identified during the production process and are rectified immediately (Kannan and Tan, 2005; Univertsity of Kentucky, 2014). Hence, it prevent the company from facing any disastrous situation. If the defects are identified at the initial stage then it is easy to eradicate the difficulties but if identified at the last stage then it becomes almost impossible for the management to rectify the mistakes. The errors are easily rectifiable if they are identified as they occur. The approach also prevents the error from occurring repeatedly (Kannan and Tan, 2005). Jidoko is regarded as another important pillar of TPS after Just-in-time. Through this approach, Toyota ensures the capability of the production lines that should be ceased if there is any abnormality in the production process. The problems are quality or equipment malfunction and even the abnormality pertaining to the work. The ability of the workers is also judged whether they can push the line-stop button. This help in preventing the passage of defects in the production process. Elimination of defects ensures that there is improvement in quality of the products and process (Univertsity of Kentucky, 2014). Kaizen: Toyota adopts Kaizen approach in their inventory management system. It basically focuses on the continuous improvement pertaining to the operational system. The employees of Toyota believe that there is no system which cannot be improved further. The continuous improvements and innovation is effective enough to reduce the cost of the process and costs and thereby achieving the competitive advantages. Recommendation The approaches help the company to reduce waste and increase the efficiency of Toyota to a great extent. The approaches are implemented in such a manner that it aligns with the goals of the company and delivers quality products. The Jidoka and just-in-time helps in reducing the cost of the company as well as helps in increasing the productivity of the same. Therefore, it is quite understandable that the strategies adopted by the company in the inventory management process are directed towards related goals. Conclusion Toyota introduced the lean manufacturing system for the first time and presently, the approach is being used by different companies operating worldwide. The approach not only helps in reducing the cost of production but also assists in improving the quality of the products. Hence, it can be concluded that the lean approaches are efficient enough to deliver value to the customers and this in turn increases their expectation. Reference List Allada, V. and Srinivasaraghavan, J., 2006. Application of mahalanobis distance as a lean assessment metric. International Journal of Advanced Manufacturing Technology, 29, pp. 1159-1168. Alukal, G., 2003. Create a Lean, Mean Machine. Quality Progress, 36(4), pp. 29-34. Cook, R., Fang, N. and Hauser, K., 2006. Work in Progress: An Innovative Interdisciplinary Lean Manufacturing Course. 36th ASEE/IEEE Frontiers in Education Conference M4H-13. Ferari, B., 2012. Toyota’s Latest High Visibility Product Recall Prompts Fundamental Questions. [online] Available at: < http://www.theferrarigroup.com/supply-chain-matters/2012/10/12/toyotas-latest-high-visibility-product-recall-prompts-fundamental-questions/ > [Accessed 6 December 2014]. Green, R., 2002. Bare Bones Production. Lean: What it is, where it started and where it might be going. Quality Digest, 22(2), p. 64. Kannan, V. and Tan, K., 2005. Just in time, total quality management, and supply chain management: understanding their linkages and impact on business performance. Omega, pp. 153-162. Lean Manufacturing Tools, 2014. Jidoka. [online] Available at: < http://leanmanufacturingtools.org/489/jidoka/ > [Accessed 6 December 2014]. Levison, W., 2002. Lean Manufacturing: Made in the USA. Quality Digest, 22(2), p. 64. Matthias, H., 2007. The genealogy of lean production. Journal of operations management, pp. 420-437. Monden, Y., 2011. Toyota production system: An integrated approach to Just-In-Time. New York: CRC Press. Panview, 2014. Finding Mura (variation) in your Process. [online] Available at: < http://www.panview.nl/en/lean-production-toyota-3m-model/finding-mura-variation-your-process > [Accessed 6 December 2014]. Paton, S., 2002.Thin is in. Quality Digest, 22(2), p. 4. Schonberger, R., 2007. Japanese production management: An evolution—With mixed success. Journal of Operations Management, pp. 403-419. Supply Risk Solutions, 2014. Why Visibility of Supply Chain Subtiers Is Critical. [online] Available at: < http://www.supplyrisk.com/subtier-visibilit/ > [Accessed 6 December 2014]. Toyota Motor Corporation, 2003. Relations with Customers. [online] Available at: < http://www.toyota.co.jp/en/environmental_rep/03/kakawari.html > [Accessed 6 December 2014]. Toyota Motor Corporation, 2012a. Sales Volume in Japan. [online] Available at: < http://www.toyota-global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_volume/japan/1950.html > [Accessed 6 December 2014]. Toyota Motor Corporation, 2012b. Toyotas Japan and Overseas Production and Sales Volumes. [online] Available at: < http://www.toyota-global.com/company/history_of_toyota/75years/data/conditions/volume_records/sales_volumes.html > [Accessed 6 December 2014]. Toyota Motor Europe, 2010. Our Customers. [online] Available at: < http://www.toyota.eu/society/Pages/customers.aspx > [Accessed 6 December 2014] Univertsity of Kentucky, 2014. Toyota Production System (TPS) Terminology. [online] Available at: < http://www.lean.uky.edu/reference/terminology/ > [Accessed 6 December 2014]. Yeh, D., no date. Just-In-Time Manufacturing. [online] Available at: < http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBwQFjAA&url=http%3A%2F%2Fwww.lancer.com.tw%2Fattachments%2F367_ErpBook%25288%2529.pdf&ei=NNKCVPf5BIK0uQSgyYHwBA&usg=AFQjCNEvYXmRqOqvkZlIPXSte7crERfyUg&bvm=bv.80642063,d.c2E > [Accessed 6 December 2014]. Read More