Operations Management Initiatives in Toyota - Case Study Example

OPERATIONS MANAGEMENT INITIATIVES IN TOYOTA Student’s Name Professor Course Date Introduction Managing operations in an organization entails the whole process of planning, developing concepts, designing and redesigning the requisite process, as well as controlling the production of goods or services (Spear 1999, p. 16). The essence of operations management within an organization is to ensure the whole production process of goods and services utilizes minimal resources as it possibly could, while meeting customer demands and specifications. This concept deals with the process of acquisition and conversion of inputs into finished products, and their delivery to the desired destination in good time. Thus, it involves the whole process of determining the actual location of a manufacturing plant, retail or a service entity, the general structure, organization of the facilities in the location selected and the communications and networking channels with the suppliers, distributers and the markets (Daniel 2003, p. 50). Without efficient operations management within an organization, the business run by such an organization is set for failure. This is because it is through this concept that efficiency and effectiveness of production, storage, and provision of goods or service by an organization are made possible. It is also through the concept of operations management that the desired quality of goods and services is enhanced while ensuring the right quantities of such products are available to the customers whenever needed (Liker 2003, p. 80). Discussion The concept of operations management operates based on various principles. Notable of these is the principle of know your customer, which seeks to enhance the perfect understanding of customer needs by the organization, so that it can tailor made its products and services towards the fulfilment of customer needs. In addition, timely provision of goods and services to the customers, capacity management to ensure no shortages and no excesses are produced as well as quality control serves as the other major principles that guide the concept of operations management (Liker & Franz 2011, p. 57). Toyota is an automobile company, with its roots in Japan, which has ranked among the world’s best manufacture of automobiles. The company was established in 1937. Ever since, the company has experienced many drastic changes in its management and operations control, which has enabled it grow immensely and emerge as the world’s largest automobile producer by year 2010 (Liker 2003, p. 32). This aside, the operations of this company has been managed in such a way as to ensure minimal waste of resources, high quality production of automotives, efficient communication, and chain of supply as well as a make it lead in the motor industry markets. However, the success experienced by this company has not come without considerable efforts being applied, towards seeing the company rise to such higher levels. Nevertheless, the company has had its share of challenges, the greatest occurring in the period 2009-2010, when the company had to recall an estimated 8 million cars and trucks following their production with defective accelerator pedals (Liker & Franz 2011, p. 178). This occurrence served to halt the manufacturing as well as the selling process of the company, an aspect that saw the company incur huge losses. This indicates that even though the company has experienced great successes in the past, it is not immune from failures. Therefore, the need for continuous improvement and modification of processes, designs, and communication as well as supply channels is inevitable for any organization seeking to succeed. It is out of this discovery that the concept of operations management remains dynamic, always emphasizing on the need to look for better ways of doing things, adopting new technologies and processes and seeking to conquer new sources of materials as well as new markets. Thus, the concept of operations management and its application in Toyota Company forms the basis of this discussion. The concept of operations management in Toyota Company can be divided into various categories. The following are the strengths associated with each of the company’s operations management category: Process Technology Strategy/ Process Design or Layout Technology The Process design or layout technology for the manufacture of Toyota cars is complex. Various stages are involved in the operations for the production of a new Toyota car. The design process follows five stages, where there are various activities undertaken under each stage to give a complete and saleable product to the markets. Concept development is the first stage in the process design layout, where the idea of the car to be developed is generated. Under this stage, the basic considerations are the development goals, where the main goals for which the car is to be developed are considered. This entails a follow-up either to improve on an already existing make for model advancement or to develop an entirely new make (Liker 2003, p. 44). Here, the profile of the target customer plays a great role in shaping the idea of the car to be developed. Most significant aspect of this stage of process design layout is market information, where the designers’ work is based on the information generated from the markets. Such information most vital for this process includes the changes and trends in the automobile sector that the market has experienced, as well as the needs of the target customers (Daniel 2003, p. 49). Under this stage, the design team works in close collaboration with the research and marketing team, in a bid to incorporate all the relevant information gathered by these two departments of the company into the make to be produced. Other environmental factors such environmental pollution, infrastructure and ergonomics are considered to ensure that the design developed has met all the factor requirements, and thus is ripe for taking to the next stage (Liker & Franz 2011, p. 125). This is the most important stage of the process design, in that, if any mistake is made at this stage, it is apparent the final product will be unsuitable for its desired and targeted markets. Idea development is the next stage in the flow of the design process, where the idea and concept developed in the first stage is transformed into a design. This stage entails the use of free hand sketching as well as computer-aided design to come up with a sketch of the desired car (Spear 1999, p. 20). At this stage, all the components for the car to be manufactured are designed and sketched to ensure the final sketch shows all the components of the desired car make. After sketching all the desired parts of the vehicle, the design process progresses further, where the component parts are incorporated in a digital design, through a design modeller (Shigeo & Dillon 1989, p. 29). This enhances the production of a three-dimensional shaped sketch of the car to be manufactured. It is at this stage the finer details of the car, which have been conceived by the designers regarding the make, are incorporated. Most important is the integration of all specific details gathered from market information, which the customers would desire in a new or improved car make. The appeal and surface features of the car model are included in the three-dimensional model of the car giving it the appearance of a completed manufactured car at the end of the process (Spear 1999, p. 33). This is the stage at which the finest expertise is needed and all the design talent involved because this stage dictates the actual appearance of the final car product. This has a greater influence on the customers’ opinion making it another vital stage of the design process layout. The design process then proceeds to the third stage in the layout, which is the colour design stage. This stage is crucial, in that, it does not just give a car its colour, but rather gives it, its identity, and individuality (Spear 1999, p. 73). At this stage, the desired car make differentiates itself from the previous models, in that; it is given its own identity, different from the rest. At this stage, the information gathered by the research and the marketing departments is very vital, in that it serves to enable the designers create a distinctive car product, which is in line with the current world trends. Notable of this information is that obtained from the field of fashion and design in all markets of the world, or from specific markets for which the car is tailor made. The relevance of incorporating fashion and design features in the colour of a car to be manufactured is the fact that there is a great tendency for people to much their clothing, accessories and make-ups with the cars they drive (Liker 2003, p. 68). This being the case, the colour design stage becomes a relevant step of the design layout process, in that it determines the acceptability of the manufactured final product into the market, owing to the fact that the exterior appearance is the greatest point of customer attraction to a product. It is after a customer has been attracted to a product by its appearance that he/she considers its features. Without making a product attractive from its appearance, then convincing a customer to opt for it is a complex task, regardless of its characteristics (Liker & Franz 2011, p. 68). The colour design stage does not only entail the outer appearance, but also matching the exterior with the interior car decor to give it a captivating appearance. The mock-up stage follows giving the car its finished touch. This stage entails giving the car its interior design, which resembles the exact requirements generated under the concept stage. The stage starts with clay modelling where a real model of the make is produced. The designer supports the clay modeller to ensure the three-dimension physical model produced incorporates all the desired components of the design from the concept stage (Spear 1999, p. 64). The idea behind clay modelling is to allow the established sketched design take shape physically and indicate the exact state of the desired final product. At this stage, the shape of the model car is refined to the finer details in surface and lines, giving the exact model of the finished car (Liker 2003, p. 109). The process proceeds to the interior mock-up stage. At this stage, the wood modeller and plastics are used to produce the exact model of the vehicle as would be desired. Under this stage, all the major components of the car parts are modelled and fixed to their respective positions, to give rise to a completed modelled car (Shigeo & Dillon 1989, p. 43). Having fully modelled the desired car, the designers experiment on the suitability of the car and all its parts. This includes the assessment of cabin, seats, steering wheel and pedals, as well as its spaciousness, to determine the appropriateness of the make. In so doing, the designers seek to establish the accessibility of the car through its doors, its operability, control, and comfort of the car operator. In addition, the visibility of the outside world is assessed from the point of view of the driver and the passengers (Daniel 2003, p. 63). After going through all these stages, the process proceeds to the final stage of the process’s design layout strategy, which is the decision hall stage. At this stage, the most important aspect is customer decision and perspective towards the already developed car model (Liker & Franz 2011, p. 218). Here, the angle of the customer towards the developed make is assessed, where the target customers for whom the model is tailor-made are invited to look. The customers are informed of the features the modelled car incorporates, on top of the physical appearance of the exterior and the interior decor. The feedback obtained from the customers is taken for further analysis and evaluation. It is based on the information given by the prospective customer assessors, that the decisions regarding the fate of the make are made (Shigeo & Dillon 1989, p. 59). The customers place the car in the decision hall for evaluation whereas the visual displays of all its components are displayed on screens to enable the customers give their angle based on full information of the car make and its integrated features. The decision hall is designed in such a way the customers can view the model in natural lighting when the roof is opened and through artificial lighting when the roof closes, to allow them gain a full picture of the car appearance in different contexts (Spear 1999, p. 69). Through visual display of the car components and features, the customers involved in assessing can evaluate even the very fine details of the make. This serves to ensure that no single issue is left un-catered for during final decision-making. With the customers’ opinion and angle regarding the make to produce, the company determines whether to continue with the process, to alter some aspects, or to do away with the model all together (Spear 1999, p. 29). Capacity Management Toyota Company has employed this aspect to enhance efficiency and effectiveness in its car manufacturing, storage and selling. Capacity management refers to the organization and planning of the production process to ensure there is sufficient to supply customer needs, while at the same ensuring there is no overproduction, which would call for storage space and other expenditure, such as security and maintenance (Liker 2003, p. 112). Through suitable capacity management, an organization benefits by ensuring it reduces the risk involved in bulk storage such as theft and fire. Thus, with this knowledge, Toyota Company applies a capacity management program that enhances its operations and reduces unnecessary expenditure. Considering it has limited space for use, the company has devised a production system that allows it to utilize the minimum space available for manufacturing and storage of cars, yet fulfilling all the customer’s demands. Notable of this system is the equipment-space capacity management where the company has developed its manufacturing equipment in a U-shaped configuration allowing them to occupy minimal space (Shigeo & Dillon 1989, p. 60). This configuration also improves on the labour-space capacity, in that it allows the workers to operate the equipment while occupying the spaces between the equipments, as opposed to leaving specific spaces for workers to operate. The configuration also serves to enhance time-capacity, in that the workers can effectively operate multiple equipments because they are placed between them (Daniel 2003, p. 76). Another aspect of Toyota’s capacity management is the development of a small batch system of manufacturing. This means they manufacture cars in small batches, reducing the requirement for storage space, while at the same time ensuring no resources are tied up in stored inventory. This aspect of operations management has seen the company emerge among the most efficient and profitable globally. Organization and Systems Development (Planning & Control) Planning and control aspect of the Toyota Company operations management is founded on two pillars. The first one is the Just-In-Time system of production, where the company commits itself to produce what is needed, at the time it is needed and in the quantities desired (Spear 1999, p. 17). This system serves to ensure the unnecessary requirements are eliminated in the production process, while ensuring no waste of material occurs. Additionally, this system serves to eliminate the inconsistencies associated with untimely production, such as prior production, which may lead to waste because the customer demands preferences change with time, or the faults, and mistakes associated with late production, which could cause greater wastes (Liker & Franz 2011, p. 305). Under the system, the production commences immediately an order has been received, and the assembly line is stocked with the required number of all car parts at all times. On the event that a production occurs, consuming the parts that were place d on the line, equal number of parts replaces the used ones. This enhances the efficiency and effectiveness of the production process. Jodika is the other pillar of Toyota Production system, under control and planning, which entails the stoppage of the production process, the moment any fault is discovered, and overhauling the manufacturing until the defective part is replaced and all the problems corrected (Spear 1999, p. 25). The manufacturing process is set to allow the machines stop safely after completing the production process. In case a problem arises, the operator stops the machines and assigns the production to a different one, allowing for correction of the problem as well as discovery of the problem source (Liker 2003, p. 73). This serves to improve highly the efficiency of the production system. Lean Production This refers to a system of manufacturing where an organization produces more with fewer resources. Considering that Toyota Company has been so efficient in applying the system, its Toyota Production System (TPS), has become synonymous with Lean Production (Spear 1999, p. 71). This system seeks to utilize less resource and yield more output, thus reducing the cost of production. TPS applies this system through configuring its production equipment in a U-shape, allowing them to consume less space. This reduces the space requirement for placement of the manufacturing equipments, reducing the costs involved in renting and maintaining premises for manufacturing purposes (Liker 2003, p. 91). The application of the Lean Production system by Toyota Company also enhances the requirement of less labour, in that the same worker can operate several machines because they are placed in close proximity and are configured U-shaped to allow the workers operate from the spaces between the machines. This serves to reduce the costs associated with hiring labour (Liker 2003, p. 76). Through its application of the JIT concept of production, TPS ensures there is timely production of cars and timely delivery of the same to customers. It also serves to eliminate tying up resources on inventory unnecessarily, making resources available for other company operations. The application of the concept of Jodika under TPS serves to eliminate waste of materials, as any fault or defective part noted in the production line is replaced immediately and the causal problem addressed, to eliminate any chances of producing finished products, which are faulty and defective (Liker & Franz 2011, p. 421). In this respect, Lean Production serves to ensure the Company operates with minimal resources, while enhancing the efficiency of its processes. This way, Toyota has managed to emerge as one of the most efficient manufacturing company, placing it among the giants in the automotive industry. Performance and Improvement Strategy (Quality Control) Jodika is the system applied by Toyota Company in its quality control concept under operations management strategies. Here, TPS applies this concept to detect any defect, fault, or problem in the manufacturing process (Shigeo & Dillon 1989, p. 53). The production process is set such that it only stops safely when the production is accomplished successfully. In case of any problem during the production process, the operator stops the machine and the whole production process by the machine ceases, until the defective part has been replaced and any associated problem corrected (Spear 1999, p. 22). This serves to allow the operators discover any problem that may occur, the earliest possible, and address it before proceeding with further production. This serves as a major step towards ensuring the finished products are produced with no defects (Daniel 2003, p. 65). This quality control process ensures the company gives quality products to its customers while matching all their specifications. Supplier Development Strategy Toyota has established an effective Supplier development strategy, where all the suppliers to the company are taught its production systems, as well as its quality control systems (Liker 2003, p. 50). The company has a policy that requires that any supplier nominated by the company should function, not as a supplier but as a part of the Toyota Company partners. This way, any supplier to supply to the company has to deeply understand its operations and systems, as well as commit to adhering to them. On its part, Toyota commits to work with its nominated suppliers without replacing them, to enhance mutual relations (Spear 1999, p. 34). Thus, the company started offering its employee training courses to its suppliers as early as 1950s to enhance the understanding of its operations by the suppliers. This serves to create a smooth transaction between the company and its suppliers, as they completely understand its operations and schedules, eliminating any chances of shortage or late delivery of supplies to the company (Liker 2003, p. 85). This goes a long way in enhancing the efficiency of the company’s operations and manufacturing processes. Weaknesses in Toyota Company Management Operations Aspects Notwithstanding that the company has one of the most efficient operations management systems, it has some notable weaknesses. Among them is the fact that because it has been treating its suppliers as a part of the company, by teaching them all its systems and operations, there is the risk of such suppliers conveying the same to its competitors in the industry (Spear 1999, p. 60). The other weakness is observable in the fact that its Process design or layout technology is a complex one with many stages, which cannot be easily replicated. Finally, lean production system, as a characteristic of Toyota Production System (TPS), is full of uncertainties, and can lead to loss of customers’ goodwill. This is because lean production entails the production of commodities when an order arises, adding to the risk of failure to deliver, in case a problem occurs that can delay the production process (Liker & Franz 2011, p. 96). The main factors that affect operations management and cause it to change include customers’ trends, as well as their dynamic tastes and preferences. Changes in technology also serve to influence operations management, causing it to align towards the recent technologies (Daniel 2003, p. 61). There are likely to be some changes in the next decade, which will transform the whole concept of operations management towards making it more applicable in all organizations, based on the new technologies that are developing each day and the changing consumer demands. Conclusion Management operation is a key aspect for any organization to succeed, whether in the manufacturing, service, or retail industry. Toyota Company is one of the organizations that have applied this concept in its car manufacturing processes. Among the notable components of operation management applied by the company include capacity management, lean management, and quality control. This has enabled it to emerge among the giants in the automotive industry. References Daniel, T 2003, Lean thinking: banish waste and create wealth in your corporation, revised and updated, HarperBusiness Liker, J 2003, The toyota way: 14 management principles from the world's greatest manufacturer, First edition, McGraw-Hill. Liker, J & Franz, J. K 2011, The Toyota way to continuous improvement: linking strategy and operational excellence to achieve superior performance, Mc Graw Hills. Shigeo, S & Dillon, A 1989, A study of the Toyota production system from an industrial engineering viewpoint (Produce what is needed, when it’s needed). Portland, OR: Productivity Press. Spear, S 1999, The Toyota Production System: An Example of Managing Complex Social/Technical Systems – 5 Rules for Designing, Operating, and Improving Activities, Activity-Connections, and Flow-Paths, Harvard University. Read More