Operations and Logistics Management - Case Study Example

Table of Contents Introduction 2 Toyota 3 Corporate Strategy 4 Operation Management 4 Relationship 5 Ways in which Operation Strategy, Process Types and Layout Design, Facility Design, Capacity and Process Design are organized and activated within the operations of the company 6 Value Addition to the Delivery of Goods 8 Conclusion 10 References 11 Bibliography 13 Introduction Operation management focuses on managing the process of producing and distributing products and services in an organization. Operation management is usually taken into consideration with the overall operations within an organization. Managing of purchases, inventory control, quality control, storage, logistics and their evaluations comes under the purview of operations management. Operation management is introduced for the effectiveness and efficiency of processes in an organization. It measures and analyzes the overall process in an efficient manner. The nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, and therefore, it varies in the different segments like retail, manufacturing, wholesale, etc. Logistics is defined as a business planning framework for the management of material, service, information, and capital flows. Logistic management is the part of supply chain management. In other words, it can be defined as the effective and efficient planning, implementation and controlling of the forward as well as reverse flow of goods and services (Tseng & Et. Al, 2005). In the changing business scenario of today, the disciplines of operations management and that of logistics management have been too important. The dynamic business environment of today has compelled the business organizations all across the globe to use their resources efficiently and effectively and the role of operations and logistics management in this regard is beyond doubt. Toyota Toyota Motor Corporation is one of the most well renowned automobile manufacturers across the globe. It was founded in August 28, 1937 in Japan. Currently as per March 31, 2010 it has a capital of 397.05 billion Yen. Mr. Akio Toyoda is the President and Representative Director of the company. Within the vision and philosophy, this world leader of automobile product states that “Toyota Motor Corporation has sought harmony between people, society and global environment to create a sustainable development for the society, through manufacturing, since its foundation. Toyota has continuously worked to contribute to the sustainable development of society through provision of innovative and high-quality products and services that lead the times” (Toyota, 2010). One of the most important contributions that the company had towards the corporate world and most importantly towards the manufacturing industry has been the concept of TPS (Toyota Production System). The Toyota Production System (TPS) was established based upon two concepts, the first being the ‘Jidoka’ (often referred as ‘automation with a human touch’). The basic feature of this attribute is that when a problem occurs, the machine is stopped immediately so that defective materials do not pile up. The second attribute of TPS is the concept of ‘Just-in-Time’, in which each process produces only to the extent that is needed by the next process in a continuous flow. Corporate Strategy The corporate strategy of Toyota is to enhance the growth in production volume and reach the overseas market in order to increase the annual sales and also to maximize the market reach. The corporate strategy of the company also depicts the fact that the management is aware of the ever changing technological innovation and it provides for such research and development for continuous up gradation. The company aims to achieve the level of global production and sales by taking on the challenges for change in technological innovation. Also, the corporate strategy of the company puts due emphasis on the regional strategy for the markets of North America, Europe, Asia, China and Japan with the aim to capture the increased market share in the regions of USA, Russia, Central and Eastern Europe. The regional strategy aims to create market through new product launches, integrated manufacturing and marketing. Along with the integrated manufacturing and marketing, the corporate strategy strives to stay aligned with the market growth. Improvement of the sales channel, development of technologies and products with focus on market creation are other major aims. Operation Management Toyota has one of the major industry players in the arena of operations management. The concepts used by Toyota in various times, in the arena of operations management, have inspired the inculcation of the concept among various other organizations by and large. Toyota primarily uses the concepts of ‘Jidoka’ and ‘Just-in-Time’, for the success of operations management. The prime focus of the JIT approach is to reduce the inventory carrying cost and the increase the available space at ware house. The JIT process is basically carried through the process of Kanban. Kanban signals the requirements of an item and only then JIT produces the item. Another basic feature of the JIT system has been the lean manufacturing. This concept has made the production process at Toyota very efficient and effective as it could shed away all sorts of extra cost that a normal production system normally has to face (Johnston, 2001). The other important concept that the operations management strategy of Toyota encapsulates is that of ‘Jidoka’. This feature of the operations management focuses on the fact that once it has been identified that the production process has manufactured a defective output, the manufacturing of the product or part of the product is stopped at once so that there could be effective quality control. Also, it helps the company to manage its resources effectively. Relationship The Toyota Production System uses concepts like Just-in-Time (JIT), Judoka, Kaizen and Heijunka for the effective and efficient production of the products and on time delivery. It is quite evident that the corporate strategy of the company that aims to have more production, greater market reach and increased sales and profitability, can be reached through the proper and timely implementation of these four concepts, as Toyota has a very rich operating process. The Judoka process is famous because of implementation of various new approaches. The JIT concept is all about producing as much required and not more so as to minimize the wastage. It also has certain benefits like flexibility in price, quick responses, high quality at low cost with increasing consumer satisfaction. The relationship in between the corporate strategy and the operations management can be further elaborated with another concept of TPS i.e. Kaizen, which implies continuous improvement. It is more towards the improvement of technology as stated in the strategy. The fourth factor, ‘Heijunka’ is used to reduce the waste material. So, it can be said that there is a close interrelationship between the corporate strategy and operation management at Toyota Motor Corporation. In other words, without effective operations management in place, it might not be possible to achieve the corporate strategy so efficiently. Ways in which Operation Strategy, Process Types and Layout Design, Facility Design, Capacity and Process Design are organized and activated within the operations of the company Operations strategy provides analytical tools for identifying, framing and solving strategic operational issues. Within the organization of Toyota, the discipline provides the tools like JIT, Kaizen, Judoka, and Heijunka in order to solve the operational issues related from procurement of raw materials to manufacturing to the delivery of the finished products i.e. it involves the overall process. Toyota uses the A-3 problem-solving report process type in the operations of the company. The A-3 problem solving is comprised of boxes with templates of issues related to the problems and their respective solutions. This is how the team of management makes quality solution regarding the operational activities of the company. Toyota uses the lean design along with the concept of six-sigma for reducing the cost as well as the wastage in the production process. In this way, the quality can be checked reducing the level of wastage which ultimately benefits the company in lieu of cost reduction. The facility design of Toyota can be exemplified with two of its plant situated at Tahara and Myochi. Toyota’s Tahara plant uses the casting of machine, body and assembly shop. The plant comprises of a test course, a shipping dock and a recreation area. On the other hand, Myochi plant is used in the operation of casting complex cylindrical blocks, cylindrical heads, cross members and differential carriers. These are the two facility design for the Toyota. Toyota is the third largest producing in automobile industry across the globe, behind Ford and General Motors. Headquartered in Japan, the company has 34 manufacturing facilities, with distributors, research and development facilities and training centers all over the world. Toyota uses 3P’s with in the process of manufacturing. The goals of the three P’s involves designing products for lean production, incorporate error-proofing and JIT guarantee process capacity and cycle time and that of inculcating desired level of quality into the system. Value Addition to the Delivery of Goods In a Multi - National Corporation like Toyota, operations management focuses on procurement of materials, product and service management which encompasses the factors like that of quality and inventory. The discipline of operations management also comprises the important factors attributes like that of logistics management and transportation management with special focus on distribution channels. The proper delivery of goods is possible only when the material can be procured at the right time, the goods can be manufactured with minimum defects and wastages, can be stored properly, and most importantly, can be transported through proper channels to the consumers on the scheduled time of delivery. This is a lengthy process and needs to be monitored and controlled so that the concepts of operation management are in use which ultimately benefits the whole process in the delivery of the goods. There is no denial of the fact that operations management adds value since the very first step i.e. the procurement of raw materials. It manages the vendors, who to avail resource, what resources will be availed with the particulars of time and cost, ultimately minimizing the cost and effecting on time delivery. Value addition helps in product design and creation and ensures development through the continuous improvement in the process of production with innovating thoughts. It helps in maintaining the quality of goods by continuous improvement, setting bench-mark and conducting re-engineering along with reduction in the wastage of materials with less defective items. It helps in proper way of inventory management by using succinct channel of delivery in minimizing the cost of storage and transportation. Ultimately, it makes the final products available to the consumer on time, with the desired level of quality i.e. the standard product, satisfying the consumer. Areas of Improvement Though it has been observed that in Toyota, operations management has been immensely successful, still there are certain areas where there are ample scope of development. The employees of the organization should self volunteer for being part of the quality circle. For continuous improvement of quality, all the members are required to be within the quality circle. The quality circle should be provided due focus. A quality improvement team can be introduced for particular project and quality circle. These teams should be supported by the top management with adequate resources as only then, the overall operation will work in a positive manner for efficient production and effective use of resources with standardized product for the consumers across the world. The management should also focus upon the logistics and the transportation. A team should be in place to take special care for the timely movement of logistics. A proper logistic maintenance will bring down the overall cost. Inventory management with quality assurance should be integrated for the maximum advantage of the quality maintenance which would in turn minimize the cost for inventory. Conclusion Toyota has been greatly successful in the automobile industry and currently it is the third largest producer and seller in the world after Ford and GM. The success of the company lies in their strategic approach in the global market with proper establishment of operations and logistics management. With the concepts of operation management like JIT, KAIZAN, and Quality Circle, the company has achieved new heights. The most astounding success of the company has been the fact that various operations management tools that the company used for the very first time, has been adapted by the industry and set as the benchmark mechanism. References Bizcovering., 2008. Operations Management at Toyota. Major Companies. [Online] Available at: http://bizcovering.com/major-companies/operations-management-at-toyota [Accessed July 13, 2010]. Group, E., 2005. Lean Design. PDF CAST. [Online] Available at: http://cpd.ogi.edu/LeanDesign.pdf [Accessed July 13, 2010]. Huckman, S. R., No Date. Operation Strategy. Harvard Business School. [Online] Available at: http://www.hbs.edu/mba/academics/coursecatalog/2166.html [Accessed July 13, 2010]. Johnston, S. J., The Essence of Just-in-Time: Practice-in-Use at Toyota Production System Managed Organizations - How Toyota Turns Workers Into Problem Solvers. Harvard Business School. [Online] Available at: http://hbswk.hbs.edu/archive/2646.html [Accessed July 13, 2010]. Shook. J., 2009. Toyota’s Secreat: The A3 Report. MIT Sloan Management Review. [Online] Available at: http://sloanreview.mit.edu/the-magazine/articles/2009/summer/50408/toyota%E2%80%99s-secret-the-a3-report/ [Accessed July 13, 2010]. Tseng, Y. & Et. Al, 2005. The Role of Transportation in Logistics Chain. SIAM. Online] Available at: http://www.siam.org/journals/plagiary/1657.pdf [Accessed July 13, 2010]. Toyota., 2010. Vision & Philosophy. Toyota Motor Corporation. [Online] Available at: http://www2.toyota.co.jp/en/vision/index.html [Accessed July 13, 2010]. Bibliography Colley, L. J. & Et. Al. Corporate Strategy. Mc Graw-Hill Professional, 2004. Ceder, A. Public Transit Planning and Operation: Theory, Modelling and Practice. 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The Continuous Improvement Toolkit: A Practical Resource for Achieving Organizational Excellence. BT Batsford, 1998. Rawlins, A. R. Total Quality Management (TQM). AuthorHouse, 2008. Shim, K. J & Siegel, G. J. Operation Management. Barron’s Educational Series, 1999. Read More