Operation Management and Resource Simulation: Toyota Production System - Case Study Example

OPERATION MANAGEMENT AND RESOURCE SIMULATION By Name Course Instructor Institution City/State Date Table of Contents Operation Management and Resource Simulation Executive summary Operations management is concerned with managing processes or systems that generate both goods and services. It concerned with designing, improving and operating such processes and systems. Besides that, operation management handles decision making associated with productive processes in ensuring that the end products are in line with specifications, budget and timeframe. Inputs of resources, labour, and materials are utilised so as to obtain products through one or more processes of transformation, by this means, adding value. Imperatively, an operation strategy has to be created after the development of business strategy. This is to ensure that the plan is offered for the management as well as the design of the operations function, in a manner supporting the business strategy. Imperatively, the operation strategy is associated with business strategy and focuses on particular capabilities of the operation that offers the company the competitive edge. Such capabilities are known as competitive priorities. Basically, Toyota Company successes are attributed mainly to; re-engineering, Toyota Production System (TPS), hybrid vehicles, superior technology and quality, employee satisfaction and employee welfare costs. Being a big company, Toyota has a strong business strategy aimed at improving the company’s production system. The report discusses utilization of appropriate Operations Management techniques at Toyota so as to improve its efficiency. Toyota Overview Sakichi Toyoda launched Toyota Industries Corporation in 1926 with the aim of manufacturing as well as selling automatic looms, which Toyoda had created. From that time, Toyota has continued to promote diversification and its business domains scope have also expanded to include automobiles, logistics solutions, textile machinery, electronics as well as equipment for materials handling. Toyota has production bases in Asia (India and China) Europe, North America, and also has a global sales network (Nkomo, 2013). Imperatively, Toyota Industries manufactures as well as develops cars and products related to automobiles such as car air-conditioning compressors, stamping dies, engines, as well as car electronics devices and components. In the engine and vehicle businesses, Toyota has attained a world-class quality level as well as efficiency. Furthermore, Toyota uses its unmatched technological development abilities to develop automobile products such as the car air-conditioning compressor and production of quality products. Besides that, the company is producing and manufacturing car electronics devices and components like hybrid vehicles’ DC-DC converters and also produce stamping dies primarily for automobiles. Imperatively, the company automobile business has espoused the ‘safety’ themes. Operations Strategy Essentially, organizations deliver services or manufacture products by depending on the operational processes. It is the responsibility of operational functions to transform business inputs such as machines, materials, money and workers so as to get the end-product, by focusing on how to add value. Basically, Kaizen has been an integral part of Toyota production system and is crucial for continuous improvement. Kaizen is utilised for environment analysis where the company and employees collaborate to improve the production process (Monden, 2011, p. 265). Besides that, Jikoda utilised for lean manufacturing ensures that any abnormality or defect on the company’s products are detected on time with the goal of improving the process of quality control and halts the production process when a defect is detected. Re-engineering has been a crucial factor behind Toyota success. When the company model fails in the market, it is re-engineered by changing the failed model, but utilizing similar production facility. For quality purposes, all employees are expected to ensure all parts are fitted precisely and all team members carry out the inspection to ensure there is no defect on the products produces. Toyota Company ensures employees are not just satisfied, but are involved manufacturing processes so as to ensure total productive maintenance (TPM) is successful (kariuki & Mburu, 2013, p.86). Group activities are usually encouraged among team members for the productivity of work. Basically, operations strategy of Toyota concentrates on maximum reliability, production systems as well as supply chain management (Bajgoric, 2009, p.176). Toyota operation strategy focuses on ensuring less inventory as well as less man-hours, and producing highest quality automobiles that have less defects as compared to its competitors. Through their Toyota Production System (TPS), have successfully improved its business processes, their product and service quality and have also reduced costs. Initially, the TPS was developed as a new manufacturing excellence model to change its businesses processes. The Toyota production system (TPS) according to Berengueres (2007, p.29) is a manufacturing technique created by Toyota with the intention of realizing lean manufacturing processes. TPS concentrates on resources delivery when required. Basically, the TPS was developed on two key principles: Jidoka for continuous quality improvement in the company’s production system and Just in Time (JIT). Product & Service Design Product Toyota produces a number of products ranging from, minivans and passenger cars to commercial vehicles and automotive parts, accessories and components. Basically, Toyota’s vehicles may be grouped into two categories: hybrid vehicles and conventional engine vehicles. The company’s products include compact and subcompact cars such as Vitz and sedan, sports, luxury and specialty cars, sport-utility and recreational vehicles, minivans, pickup trucks, buses as well as trucks (Reuters.com, 2014). The company product-line include Hybrid electric vehicles (Camry, Prius, and Lexus); Plug-in hybrids (Toyota Prius); All-electric vehicles (RAV4 EV and Scion iQ EV); Hydrogen fuel-cell (Toyota Mirai); Cars (Yaris, Corolla, Scion and Sienna); SUVs and crossovers (Land Cruiser and Prado); Pickup trucks (Hilux), and Luxury-type vehicles). Services Toyota offers services through its subsidiary, Toyota Financial Services Corporation, which is tasked with managing Toyota’s finance companies across the globe as well as expansion in product areas associated with automobiles. The company main financial services subsidiary is the Toyota Motor Credit Corporation located in the U.S. Furthermore, the company offers financial services in more than 32 countries by means of different financial services subsidiaries. The company’s subsidiaries offers different financial services, which include wholesale financing, retail leasing, retail financing, insurance housing loans and credit cards. Other operations offered by the company include; manufacturing of prefabricated housing; operates GAZOO.com, a language Website; offers automobile tracking service; and theft detection service. Without a doubt, the company is good at developing products and services since it uses lead manufacturing and uses different models for different psychographic and geodemographic market segments so as to meet the needs/wants of customers within such segments. Importantly, Toyota has changed its marketing efforts to be in line with the local cultures so as to make sure that they understand its brand. Furthermore, the company markets and promotes its products through media (TV and newspaper) and public relations. To ensure success in the market, Toyota always measures the impact of design and new product development through instructive supervision in all the company’s functions. In this case, higher-level managers as well as supervisors are deeply engaged in the engineering design processes. All proposed designs must be approved by the supervisor before they are developed into a final product. In view of this, Toyota relies on supervisors so as to create a profound functional expertise on newly recruited engineers, and this expertise ensures coordination all through the product development process. Besides that, the companies integrate a system that is highly formalized with twists so as to ensure that all projects are flexible and can gain from other projects. The company’s Research and Development Centre carries out the advanced fundamental technologies development, which are crucial for future products. The centre is also used to carry out an advanced research for new products and materials’ development for new businesses as well as development of materials and other technologies, which help the company produce quality products that meet the needs of the customers. Process Design Product design at Toyota involves: the making of the concept, whereby the process of car design starts by gathering ideas and thoughts that focus on the target customer profile as well as development goal. For success, the company’s designers conduct a research on the market as well as examine the themes that could meet the needs of the customer needs and still maintain the emerging trends. After that, the designers brainstorm until they agree on an overall concept. Then the designers make freehand sketches with the intention of delivering a wide graphic sense of the design goal as well as its future development possibility. After the concept has been made, the next step is development of the ides, whereby designers use computers to analyse the design ideas as well as complicated expressions in a short period of time. In this case, digital modellers are expected to transform the sketches into three-dimensional shapes (Clifford, 2014). This is followed by the development of colour, where colour is assigned with the goal of offering individuality as well as to visually influence the expected vehicle character. According to Lefebvre et al. (2012, p.51), coordination of colour is an important design process element; therefore, Toyota through its R&D centre conducts research on interior design and fashion trends before choosing the best colour palette for the new cars. After the colour has been developed, the company creates a clay model, which normally need the designer’s extensive input to ensure proportions and shapes are completely comprehended. With consideration of the interior, craftsmen who are highly skilled utilise fabrics, plastics, wood and metal as well as other materials so as to create a standard model that meets the concept presented by the designer. After the creation of the model, the company now meets at the decision hall to deliberate on how the model can be created into a real car. In this case, the model is examined to ensure that the can sustain environmental conditions such as rain, sun and other conditions. With regard to manufacturing facilities, the company has R&D as well as design bases in countries like United States and Belgium. Besides that, the company has a number of assembly plants considering that Toyota manufacture vehicles that suit all its markets. As of 2014, Toyota had more than 54 manufacturing companies in 28 countries. Currently, the company sells it vehicles in over 170 countries and its success has been steered by Toyota Production System, which has been developed in two main principles: Jidoka as well as ‘Just-In-Time’ production. With regard to IT technologies, Toyota can use RFID technologies that facilitate consistent reads and can bring about remarkable productivity gains all through the enterprises’ different functional areas. RFID technology has turned out to be a revolutionary supply chain management element, and Toyota can use it to ensure the right goods are accessible in the right place without inconsistencies as well as zero errors. By adopting RFID technologies, Toyota will be able to makes its supply chain significantly accurate; thus, improving reliability and efficiency of the whole supply chain. Through RFID, Toyota can as well gain from increased information based on maintenance as well as repair of their equipment and machines. In consequence, Toyota will be able to have perceptibility into valued information; for instance, the machines that have been repaired or undergoing maintenance. Such information is crucial because it can help the company plan schedules for maintenance. Therefore, maintenance may become a crucial part of the company’s production planning as well as assist in preventing costly breaks in production. Planning & Control Toyota has no plans to construct a new factory, but will focus on existing plants as well as capital investments. Besides that, Toyota intends to achieve more from its growth investment, and seeks to use Mazda Motor Corporation to produce over 50,000 annually (Greimel, 2014). The company-short term plan is reforming its corporate culture by revitalizing their spirit of venture through consciousness reformation as well as through other efforts like joint ventures. Besides that, the company is also concentrating on the areas of procurement, design, and development; for instance, by developing an innovative development and design synthesis by means of a novel car-making policy intended for developing better automobiles. Besides that, the company seeks to strengthen its supply chains so as to reduce risks associated with parts procurement, and is also intends to change its conscientious manufacturing (monozukuri) structure for structure innovation as well as production technology. Moreover, the company intends to increase its global sales share by introducing cars that meet the needs of the local in emerging markets. So as to respond to periodic fluctuations in demand, Toyota has set its production ability at a lower demand level and manages demand fluctuations through capacity as well as load levelling. The company seeks to launch an innovative assembly line in the coming years so as to resourcefully meet demand fluctuations. In this regard, the new assembly lines will utilise smaller equipment that is easy to install, which will be installed at Mexican and Chinese factories. Besides that, Toyota uses final assembly schedule (FAS) to coordinate production plan and other manufacturing processes through specification of the exact build sequence (Ineak.com, 2009). For this reason, the company makes a check so as to determine whether the detailed planned build aggregate is the same as the volume that had been planned by the MPS. Basically, the control systems are used for purposes of manufacturing and technology, since they are normally rooted on the feedback principle. The company has adequate feedback and control since they use control system to compare controlled signal and the intended reference signal to find the existing discrepancy so as to ensure the right corrective control action is computed. In this case, the role of control engineer involves the designing of fixed plants control systems as well as choosing and configuring hardware by examining the performance of the systems. Through the feedback theory, has managed to come up with good designs as well as know when the performance objectives cannot be realised. Innovation and improvement Innovation is the main foundation of Toyota considering that its decade-long Prius sub-brand investment was eventually successful in strengthening the reputation of the company. Toyota is a known product innovator thanks to its hybrid category that is fast-growing. Analytics and data have made it possible for Toyota to refine as well as test policies prior to executing them. Based on the researchers’ findings, the IT firm is now implementing a permanent reward structure. Toyota innovation ranges from interconnected safety systems alternative energy sources to robots. The company continually concentrates on future development. Through their Integrated Safety Management Concept, the company is pursuing an improved safety level by connecting all safety technology systems connected to the vehicles (Toyota Global, 2014). Through innovation, the company seeks to produce a vehicle that cannot cause accident through implementation of safety technologies as well as manufacturing automobiles capable of communicating with surrounding vehicles as well as road infrastructure. Besides that, Toyota intends to achieve its goal so as to manufacture a car that cannot cause accident that one that helps the driver in all driving stages. Currently, Toyota is the leading lean exemplar across the globe bearing in mind that its dominant success proves the power of lean company (Lean Enterprise Institute, 2011). Toyota continuous success has in the last two decades generated an increased demand for improved understanding concerning the lean thinking. Toyota has adopted the principles and tools of lean not just in manufacturing, but also in distribution and logistics, maintenance and services. Lean Enterprise Institute (2011) argues that lean methods and consciousness have started taking root amongst leaders and senior managers in different industries. Innovation at Toyota can be increased through increasing the company’ investment on idea generation; generate a deep customer understanding; offer incentives for innovation; partner with its suppliers for innovative ideas; dedicate more resources; create a company culture that is conducive; and increase top management focus. Through the company’s Global Vision, Toyota should promote development of responsible and safe means of transport (Toyota, 2012). This is in view of the fact that Toyota is passionate about the environment and safety, and is a leading innovator both in safety and green technology. Even though the company has no plans for increasing the number of factories, its future growth plans focuses on shifting half of its vehicles into new cost-saving platforms, which will offer the company ability to expand beyond 10 million units annual sales. Through its Toyota New Global Architecture (TNGA) initiative, the company intends to realize 20 per cent decrease in the resources required for making of new vehicles. Supply Chain Toyota Supply-chain management is a key part of the company’s operations strategy, and is rooted in the Toyota Production System (TPS). Presently, Toyota is one of the model companies globally in scores of aspects of carrying out an effective business practice, which includes supply chain management (Dudovskiy, 2012). The principles of Kaizen, lean manufacturing, just in time as well others offers Toyota a competitive edge as well as offer efficiency in most of its business functions, which includes supply chain management. In 2014, the company started emphasizing on R&D so as to eliminate redundancy at Toyota Motor and more work was handed to the suppliers so as to allow the company to focus on new technologies. Information technology (IT) can be used to simplify Toyota’s supply chain management; thus, enabling the company to operate more efficiently, be able to control its inventory, as well as reduce operational costs. Through Computerized Shipping and Tracking the company can reduce shipping errors as well as make the supply process simple. Because of the increased visibility offered by the RFID chips, the company’s supply chain efficiency can be improved substantially by detecting any inconsistencies when they take place; thus, allowing the company to correct mistakes immediately. Supply chain at the company can be improved through differentiating their supply-chain as well as corporate strategies. Collectively, the company product-development and supply-chain functions can help Toyota create innovative products that can meet the consumer needs and still ensure the costs are controlled. Besides that, the company should create an end-to-end, contemporary supply-chain organization. Competitors The main competitors of Toyota include, Honda, General Motors, Volkswagen, Ford, Hyundai among others automakers in Asia, Europe and America. Toyota has remain competitive because of its corporate philosophy, which is the main policy guiding every activity and decision of the company. The company has remained competitive because of the Toyota Production System (TPS), which has enabled the company to produce goods synchronously to meet the needs of the customer. The TPS has helped the company design out inconsistency and overburden and eliminate waste brought about by overproduction, as well as redundant waiting times and transports. The company also sources its competitive advantage from lean manufacturing whose main intention is eliminating waste as well as incorporating less inventory and human effort. Other source of competitive advantage includes production lines improvement, Continuous improvement by means of Kaizen as well as the concept of reengineering. Even though the company has no plans for increasing the number of factories, its future growth plans focuses on shifting half of its vehicles into new cost-saving platforms, which will offer the company ability to expand beyond 10 million units annual sales. Through its Toyota New Global Architecture (TNGA) initiative, the company intends to realize 20 per cent decrease in the resources required for making of new vehicles (Corporate Newsroom, 2015). Conclusion and Recommendations In conclusion, the report has discussed utilization of appropriate Operations Management techniques at Toyota so as to improve its efficiency. As argued in the essay, the company’s production system is integrated with lean manufacturing system aimed at eliminating waste in all its production processes and bringing about less human effort and inventory and reducing the product manufacturing time. Basically, just-in-time is one of Toyota’s philosophies and is utilised to reduce waste and decrease levels of inventory. Toyota’s techniques for lean manufacturing concentrates on waste reduction, reducing defects, cycle times, inventory, as well as added activities that are of no value. The company also utilises lean techniques in services where process improvements can be achieved. TPS has led to improved capacity, less idle time, wastage and reworks, high efficiency and flexibility as well as and improved lead times in responding swiftly to customer demand changes. The company should create analytical teams, which can support the company in decision making as well as identifying concealed opportunities and risks in unstructured data. Furthermore, Toyota should set performance standards by offering incentive to its supply-chain organization so as to ensure value is delivered to the business, and the company is protected from risks. Besides that, the company should create a culture for continuous improvement, which integrates good business practices aligned to the organizational goals. Through RFID, Toyota can achieve increased information based on maintenance as well as repair of their equipment and machines. References Bajgoric, N., 2009. Always-On Enterprise Information Systems for Business Continuance: Technologies for Reliable and Scalable Operations: Technologies for Reliable and Scalable Operations. Delhi: IGI Global. Berengueres, J., 2007. The Toyota Production System Re-Contextualized. London: Lulu.com. Clifford, J., 2014. 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