The Global Production Network of Toyota - Case Study Example

THE GLOBAL PRODUCTION NETWORK OF TOYOTA By (Name) Name of Class (Course) Professor (Tutor) Name of the Institution (University) City and State The Date The Global Production Network of Toyota Global production Network is the production and distribution of a specific product and service in which its development functions, operations and transactions are interconnected all over the world until it gets to the consumer (Coe et al., 2004). It is a production network whose links are connected across the boundaries transforming inputs into demanded services and goods. One of the best Global Production Network is the Japanese automotive industry that produces cars all over the world (Dicken, 2015). These cars include Toyota, Mitsubishi, Suzuki, Mazda, Honda, Subaru and Nissan but this essay will only focus on the Global Production Network of Toyota. In 2012 the Toyota Company produced 10 million automobiles making it the third largest automotive producer in the whole world. This means it produces 30% of the automobiles in the world. Japan’s production of cars started growing in the 1960s and gradually developed from the 1970s to 1990s (Kaisha, 1996). During this time it was already selling its products both domestically and internationally. In the 1990s it overtook The United States to become the leading country in production of cars worldwide (Marksberry, 2013). The Toyota Company has a globally integrated structure in the Global Production Network, this means it has different plants all over the world that assemble and produce cars but import the different vehicle parts from different countries in order to come up with the automobiles. This is because of some complex vehicle parts like the engine, which some of the company’s plants cannot make and have to import. In locational strategy Toyota has a vertical transnational integration since the company does a research about a region before producing a certain car (Chiarini, 2014). Furthermore, parts are made at different locations where they are easily found. Toyota also assembles its automobiles in places where there is cheap and skilled labour. Toyota’s success is as a result of committed employee collaboration and participation in production. It focuses on supply chain and inventory management which has led to the creation of high quality automobiles (Fuchs, 2014). It has also focused on educating employees and using unique approaches in solving different kinds of problems. Apart from that it has majored on the lean manufacturing philosophy which mainly concentrates on cost reduction and minimizes wastage (Newsome et al., 2015). In the past 50 years Toyota found its way into the global world to over 170 regions (Monden, 2012). The company mostly produces its cars in Japan but has wedged on the policy of producing vehicles where there is demand for them. It had 51 bases in 25 countries and regions and 53 manufacturing bases in 28 countries and regions by 2016 making sales to more than 170 regions (Monden, 2012). The company has also established R&D and design bases overseas in nine locations, presenting from development to production. The company has ensured that no matter where the vehicles are made, they are of high quality since it values quality assurance. Its cars are labelled “Made by Toyota” to help spread the company’s manufacturing philosophy to all its overseas bases. Most of the Toyota’s overseas bases are independent, which helps in minimizing support from Japan. Toyota focuses more on educating people which has led to the establishment of a Global Production Centre in Motomachi in 2003 (Fujimoto, 1999). Furthermore, it also established similar centres in countries like The United States, The United Kingdom and Thailand to help in carrying out correspondent activities in Europe, North America and the Asia-pacific region. The Toyota Production System in all its production plants worldwide has three forms of structures which are Kaizen, Just in Time Toyota Production and Jidoka (Toyota, 2015). Kaizen is a Toyota production system whose goal is eliminating inequality and waste in different areas in order to ensure workers do their jobs efficiently (Rainnie et al., 2015). This production system is intended to ensure a safe production process with best quality and better efficiency. The system requires both human and mechanical labour to accomplish its goals (Dyer-Witheford, 2015). In this system Toyota employees are responsible and follow these standardized work guidelines as they improve. The daily improvement of workers to their work practice and equipment means there is progress in the activities of the company. Just in Time production is a system that allows the regulation of the entire production process by the natural law of supply (Toyota, 2016). This means that goods are produced according to demand. In this structure, the link between production and demand is met by tact time, which measures the pace of sales in relation to the manufacturing capacity; if the manufacturing capacity is reduced, more resources are allocated. The mechanism where production is regulated is known as the Kanban (Toyota, 2016). This helps to reduce paperwork and maximize efficiency. Those in charge are the members themselves meaning Toyota has trained, flexible and highly skilled labour force. The last structure is Jidoka which stands for automation with a human touch (Toyota, 2015). The first automatic loom was invented in 1902 by Sakichi Toyoda but it was not very efficient since it would immediately stop if any of the threads snapped (Suh, 2015). This structure adopted Henry Ford’s principle of breaking down work into simple steps and distributing them among employees who are in charge of their own particular jobs (Hiraoka, 2013). The company also has its worksites run by teams of skilled professionals which helps them identify opportunities for improvements and implementation with the help of the management. This was evident in the Altoona plant where team members are allowed to intervene in the production process and could stop production if they saw an abnormality. This was done through the Andon cord (Bellgran, 2014). Suppliers also work together with Toyota operations in production flow. The customer is the only participant in the Toyota Production System who does not answer to anyone because he/she just selects the car, which is the product, at the marketplace. Suppliers also get the same benefits that Toyota gets from this production system. Those suppliers who follow the Toyota Production System also report improvement in the employee management relationship. It also helps employees manage their own work and enhances their relations with the management in pursuit of better quality, productivity and working conditions (Bair, 2009). Toyota automobiles undergo various processes to reach the customer. Starting with the engine which is mostly produced in its main plants in Japan. Most are produced in-house while some are from the suppliers. The press then follows where the steel panels are produced; this plant is found in Australia and was established in 1980 (Gross & McInnis, 2003). It produces body panels for its own plant and others around the world. The panels are then welded together by both robots and workers (Newsome et al., 2015). This is a complex process that takes 145 people per shift. The next process is painting which is done by the workers who clean and spray them afterwards. It is finally taken to the assembly points which are in every plant around the world where they are assembled and fully tested. They are then sent to showrooms sale. Through this production system and good relations with labours and suppliers, Toyota’s Global Production Network has been a success and has led to the growth in the production of Toyota cars in its overseas plants over the years. It has eight plants in UK, France, Poland, Czech Republic and Turkey which have more than 55,000 workers (Toyota, 2015). In 2003 it recorded 4.4% market share which increased in 2004 producing 1.3million vehicles bringing more investment and creating over 200,000 new jobs (Toyota, 2015). Toyota vehicles started being produced in Russia in 2007 after which they entered the European market since it had been recording increase in sales due to its understanding of the needs of the consumer. They made better, efficient and affordable cars and this was achieved by working hand in hand with the employees. In the United States Toyota also thrived and brought in huge profits. Toyota surpassed Ford in 2007 becoming the second largest producer of vehicles and a world leader in car sales (Hiraoka, 2013). From 2007 to 2009 Toyota produced and sold more cars than Grand Motors and in 2006 the sale of a cars by Toyota was $2,123 more than at Grand Motors (Chiarini, 2014). These profits were an increase from the previous year which was $1,175 to $1,977. Europe may be a steady Toyota company market but most Toyota vehicles are still sold in North America. In Australia Toyota made 10,000 units of electric cars making it the first company to produce hybrid vehicles (Broadwell, 1993). This was triggered by the increasing fuel prices and rise of temperatures due to global warming; producing cars powered by electricity in bulk. In a Global Production Network, labour is the most important thing and The Toyota Company made a labour-management relationship that relied on trust between the management and the employees. These concepts were: First, with the prosperity of the company then the welfare of the employees would improve meaning that there was a common value between the management and the labour sector on goals of companies’ prosperity. Management would consider stable employment conditions and improve the working environments to ensure corporation of employees with the company’s policies to promote the company’s prosperity (Newsome et al., 2015). In 1996 a 21st century labour and Management resolutions was signed and mutual respect was added to labour-management relations (Newsome et al., 2015). This reflected in the guiding principles at The Toyota Motor Corporation. The company also practices Tylorism which views its labour as knowledgeable force so it invests heavily on its capabilities and its workers, from the field, to the management that are responsible for the product (Marksberry, 2013). Toyota Company has the best production strategies and works on the basis of supporting and encouraging its workers. The company has developed into a multi-global cooperation through coming together between the management and the workers. It has concentrated in giving the best environment for its labourers to work. It also motivates workers by giving incentives. This has led to the quick growth of the company. Motivation of the workers has led to the increase in workplace productivity, little to no absenteeism and increased turnover, rise in creativity and innovation, good relations between customers and employees, better company profile, best quality products and less financial problems (Knox and Agnew, 1998). This is why it became the largest producer of cars even in the United States. The Toyota Company is also giving post-retirement benefits to the old. Profits gained are shared down to the workers making Toyota employees the highest paid car maker employees. Countries that have Toyota firms in them benefit through their sale; the firm produces the cars to the country’s preference, e.g. the U.S.A Toyota orders automobiles from Mexico; Toyota Motor Manufacturing de Baja California, then sell them to franchised Toyota dealers, who deliver them to the customer (Marksberry, 2013). Despite all that success, The Toyota Company has recently been subjected to problems as some of its plants started cutting down on labour expenses. The retirement benefit for the old was viewed as an extra expense to the plant and was eliminated. The company has also started cutting on costs of training and retaining labourers. Toyota plants in Japan started having issues with employees and their operations could be compared to human trafficking and slavery. Toyota is also known for targeting less developed countries in order to take advantage of lower wages (Takeuchi et al., 2008). The company is one of the most profitable organizations but still pays low wages. It used to pay its employees better to attract talented workers but that came to an end and the workers are poorly paid. The capture of value distribution throughout the Global Production Network of Toyota is not evenly distributed. Most of the value goes to the management only. As Toyota Company is making huge profits it is establishing its activities in countries where there is cheap labour and production is still high. This means most of the unskilled labourers do not get fair dues (Takeuchi et al., 2008). The company is also cutting down on expenses on labour. The complaints of mistreatment of labours are on the rise. Incentives for good working teams have declined to a great extent but production is still high. Most of the plants that benefit from this structure are those in Japan and the other main branches in developed countries. The Global Production Network of Toyota has helped it grow and succeed internationally. The company’s ever intensifying globalization of production activities has changed its relations with the suppliers, host countries and its spatial structure. The company’s transplants are no longer just assembly points since the production processes are becoming more localized in these host regions or states. Toyota has an internationally integrated Global Production Network structure and follows regional production strategies and has so far successfully transferred its production activities to the host countries which have managed to adapt to the company’s national production methods. Toyota focuses on growing its overseas plants to satisfy its good production unit. By increasing the overseas production, the company has further developed its international division of labour. The use of specific skills and collaborative forms of manufacturing have resulted to the transfer of technology internationally and efficient product development. 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