Critical Analysis of Toyotas Production System - Case Study Example

Operations Management Contents Introduction 3 Discussion 4 Literature Review: Critical analysis and its relevance to contemporary business environment 4 Critical analysis of Toyota’s Production System 6 Conclusion 10 References 12 Introduction The achievement of the Toyota Motor company has resulted from the peculiar reduction system that mainly emphasizes and highlights on the development and the just in time management on a continuous basis. Toyota is able to develop and create a decentralized structure that motivates the participation of the employee and the team working of the employee in the company. Toyota has adopted and implemented the concept of inventory management as well as the theory of supply chain management for developing and improving superior quality of automobiles and gaining a competitive advantage in the global market that is highly competitive in nature. The topic mainly deals with the achievement and the philosophy related to lean management of Toyota that focuses on reduction of cost and minimization or reduction of wastages. The manufacturing philosophy of Toyota deals with the quality management undergoing improvement continuously. The practice of lean manufacturing of Toyota can be achieved through carrying out production at low cost and manufacturing of superior quality of cars at a cheap price. The topic mainly deals with the techniques of operation management which includes the inventory management and supply chain management that have lead to the increase in the profitability and efficiency of the Toyota motor company. Discussion Literature Review: Critical analysis and its relevance to contemporary business environment The author Liker (2004) has emphasized on the management that focuses on the manufacturing and production of superior quality goods and services. Operation management mainly ensures the effective management of the resources related to the production and distribution of various goods and services. The techniques such as the just in time, total quality management and the lean manufacturing are used in the Toyota motor company (Liker, 2004). Researchers Gupta and Boyd (2008) have explained the organizational structure that is linked with the functional integration in the company. It focuses on the just in time that mainly eliminates and reduces the waste and it mainly focuses on the effective utilization of resources (Gupta and Boyd, 2008). Gunasekara, Patel and Tirtiroglu (2001) emphasizes in their article on total quality management emphasizes on the philosophy of the corporate culture that is related to empowering the employees, focussing on the customer for carrying out continuous improvement (Gunasekara, Patel and Tirtiroglu, 2001). The authors Das, and Nicolae (2010) in their research paper has stressed on the supply chain management that establishes and develops relationship between the suppliers and buyers decision making for improving the continuous flow of the materials in the supply chain. The various techniques such as the just in time, supply chain management and the total quality management mainly focuses on the improvement and development of the effectiveness and efficiency of the functions that is being performed (Das, and Nicolae, 2010). Biggart, and Gargeya (2002) have focussed on the just in time production system in their research paper. The just in time philosophy is mainly based on the three important principles which includes the continuous improvement of quality, elimination and reduction of cost and working in a participative culture (Biggart, and Gargeya, 2002) . The writers Thun, Druke and Grubner (2010) have highlighted that the company that applies the principle of just in time inventory reduces the requirement of capital, inventory related to finished goods and also the work in progress. This method mainly decreases the set up time and this method and also deliveries that are connected from the suppliers for meeting the production needs. The basic and the main aim of the just in time is eliminating and reducing the wastage that does not contributing to the production process (Thun, Druke and Grubner, 2010). The researchers Hines and Rich (1998) in their study have emphasized on the Toyota production system that has resulted in the movement of lean production that mainly emphasizes on reduction of waste. The lean production is very effective for improving the quality of Toyota and it has provided and leads Toyota to gain an edge in the automobile market (Hines and Rich, 1998). The authors Fang and Cleaner (2003) have discussed about the health and safety of the Toyota production system as it mainly focuses on providing safety to its employees and it also provides importance on the various concerns related to environmental factors of Toyota and the concern towards its employees from the process of manufacturing to the process of recycling carried out at the end of the cycle. Selecting the products of Toyota is mainly environment friendly in nature (Fang and Cleaner, 2003). The researcher Amasaka (2002) in his study has explained the concept related to just in time which ensures that the materials that are required for production are procured at the right time. The process that is related to quality assurance explains the process that is related to the movement of the goods in the next stage of the production process (Amasaka, 2002). According to the author Hampson (1999), the Toyota production system generally employs fewer employees which is associated with bringing down the cost and then making the company effective and efficient (Hampson, 1999). The author Muffatto (1999) in his study has applied the framework of problem solving that mainly identifies the performance of the Total production system of Toyota and it helps or assist in detecting the variances that are related to the production process (Muffatto, 1999). According to the authors Elsey and Fujiwaraiwa (2000) and their research paper, the management of just in time inventory mainly focuses on the acquirement of the materials that is required for satisfaction of the actual demand (Elsey and Fujiwaraiwa, 2000). The writers Jones, Hines and Rich (1997) have focussed on the lean manufacturing that combines the effectiveness and the efficiency along with the quality of the work life. This theory mainly emphasizes on the monitoring and detection of the variances that exist in the process of production. The improvement and development in productivity can be achieved through the various incremental innovations (Jones, Hines and Rich, 1997). The authors White and Pearson (2001) in their article have highlighted on the concept of lean manufacturing that mainly established in the Toyota company that has resulted from the intensity of domestic competition and the scarcity of resources in the market related to the automobile industry (White and Pearson, 2001). The authors Hines, Holweg and Rich (2004) have emphasized on the supply chain management which is required and essential for increasing the effectiveness and also attaining the organizational goal and objectives of the company (Hines, Holweg and Rich, 2004). Critical analysis of Toyota’s Production System Toyota follows a specific philosophy of production system. It encompasses a manufacturing culture that is highly dependent on continuous improvement and focuses on eliminating waste by involving all team members. The production system of the company is also known as the Toyota Way. It is able to deliver higher levels of customer satisfaction through respecting people and continuous improvement (Kennedy, 2003). JIT or Just In Time can be stated as the first and most essential pillar of the system. This approach is inclined towards delivering and producing right parts at the right time in right amount. JIT approach always aim towards utilizing minimum resources possible in order to deliver maximum output (Daisuke, 2010). Build in quality or Jidoka can be stated as the second important pillar of Toyota’s production system. Jidoka can be efficiently divided into two parts such as enabling separation of human beings from machine in business environments and developing quality along the process. Jidoka is a Japanese term which basically means automation or automatic. This kind of automation enables prevention of injury, limits machine damage, etc (Kumar, 2007). Toyota’s production system is further elaborated in figure1. Figure 1: Toyotas Production System (Source: Bowersox, 2011) Toyota Way is at times regarded as socio-technical aspect. This factor is continuously changing manufacturing environment. It is not about procedural knowledge but tacit knowledge. 4P model can be divided into four major parts like philosophy, process, people or partners, and problem solving. According to philosophy approach, the company’s leaders consider it as a vehicle for adding values to community, society, customers and associates (Leeman, 2010). The process factor states that right process yields right results. Toyota leaders have learned through their experience and mentorship. Right partners and people are provided training and are given challenges to grow. A challenging environment enables team members to grow learn and think critically. Problem solving mechanism is incorporated within the system where employees are given problems in order to solve it efficiently (Chopra and Meindl, 2007). Toyota is considered to be a number one automaker in context of various categories from supplier’s perceived opportunities to trust. The company works in collaboration with struggling or new suppliers for enhancing speed. It makes long-term commitment with suppliers in the initial stage of product development (Patton, 2006). Toyota is an appropriate company in terms of balancing cost with quality. The internal capabilities of the firm are sustained through keiretsu. It is a Japanese term that is used for interlocking corporations. Toyota has been able to set professional trust with its wide base of suppliers. Lean approach is followed by Toyota and it is all about setting a time line where customer’s order is placed and cash is collected (Wincel, 2004). This time line is reduced by the company by eradicating any form of non value-added wastes. All the production related activities are centred towards identifying and simultaneously eliminating any kind of wastage. Continuous flow forms the central component of lean manufacturing (Voortman, 2004). The elapsed time is shortened between raw materials and finished goods, and this leads to lowest cost, shortest delivery time and best quality. In this organization continuous flow is enabled through preventive maintenance and quality development. Toyota’s lean process supports the firm to accomplish tasks within few hours (Waters, 2010). Continuous flow of operations in the company has been outlined in figure2. Figure 2: Continuous Flow (Source: Chan and Lee, 2005) As per figure2, if problem occurs in any segment of manufacturing process then entire production procedure stops. When production mechanism stops every team member needs to solve problem immediately and in turn critical thinking develops better team members. Toyota Way gives proper training to associates and employees for performing well in critical scenarios. In manufacturing process there exist two approaches for ordering parts (Monden, 2008). First is push system in which at regular intervals parts are received by customers. This is on basis of predetermined quantity, previous delivery consumption, etc. Pull system denotes customers paying premium price for demand delivery. Toyota adopted the concept of pulling inventories which is highly dependent on customer demand. Kanban system carefully coordinates and monitors thousands of tools and parts internally (Kelemen, 2003). The internal production of Toyota is totally based on kanban pull system. 5S program incorporated within business operations of Toyota can be classified as Seiri, Seiton, Seiso, Seiketsu and Shitsuke. These elements mainly represent sorting out things which is needed, orderliness or placing things at its right place, shine or cleanliness throughout production process, standardize or creating rules in order to develop procedures and systems, and sustaining a proper discipline in workplace for continuous improvement (Greasley, 2013). Though the production process is relatively faster at Toyota but there are fewer technologies for safety or quality related checks. An advanced technology based equipment needs to be utilized which identifies such defects before it is passed on to wide base of vehicles. In crisis situation the middle management often deviates from the philosophy of ‘customers first’ (Bamford and Forrester, 2010). The production system of Toyota is well known for its low inventory levels but in recent years due to faults in vehicles the company had to significantly reduce production volume resulting into huge financial loss. Conclusion As per this study, Toyota has been able to develop an efficient production system. There are various approaches that are incorporated by the company within its system. Its philosophy of keeping customer first makes the organization number one automaker. Lean approach is implemented by the company for eliminating any unnecessary process and focusing on major objective. This even helps to reduce the overall lead time between production and delivery of products to end customers. Toyota was the first organization who had implemented the concept of just in time. Through this approach customer’s demand is efficiently fulfilled in least time possible. In this study there are different theoretical frameworks used for outlining the production system of Toyota. These frameworks comprise of lean system, just in time and total quality management. Quality and addressing market demand are two essential aspects of Toyota. This company is inclined towards maintaining product quality and reducing wastage in entire production process. Toyota’s continuous improvement process helps to reduce production related wastage. It is essential for manufacturing companies to reduce time in overall production process. References Amasaka, K., 2002. New JIT a new management technology principle at Toyota international journal of production economics. 80(2). pp: 135-1442. Bamford, D. R., and Forrester, P. L., 2010. Essential guide to Operations Management: concepts and case notes. New York: John Wiley Biggart, T. B., and Gargeya, V. ., 2002. Impact of JIT on inventory to sales ratios. Industrial Management & Data Systems. 102 (4) pp: 197 – 202. Bowersox, R., 2011. Supply chain logistics management. New Delhi : Tata McGraw-Hill Education. Chan, C. 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