Toyota Essay
Introduction
As companies grow and make its way into the global business environment, profound challenges and opportunities are encountered. Such endeavor necessitates companies to focus on developing strategies to respond to the growing threats posed by the internal and external environment and to explore the opportunities that the contemporary business environment provides. Strategies are central to the achievement of sustainable development. These are the driving force of practically every organisation that are motivated to grow fast ahead of the competitors, grow in line with the industry or to simply catch-up and defend an existing status, all of which are evident in the case of Toyota and specifically highlighted by the lean production system.
Background
The automotive industry, for instance, has been the only industry with high industrial output worldwide, with a broad scope of interconnection and with a long production chain (Yu 1999, p. 152). An assembly industry in essence, the automobile industry is comprised of a variety of components many of which are manufactured by independent firms in other industries. Prior to becoming a volume business thereby the automotive industry embraces a producer-driven production chain, a strategy that emerged in the 1950s (Nairn and Nairn 2001, p. 382; Dicken 2003, p. 371). Integrating a production chain in the automobile industry is crucial since there are needs to maximise return on investment and to leverage the quality of the products in cost-efficient manner.
Governed by the philosophies of ‘just-in-time’ production and ‘jidoka’ (visualisation of problems), Toyota developed own production systems. Toyota production system (TPS) purports on producing vehicles of sound quality, one at a time and will fully satisfy customer requirements. The company believes that quality must be built-in during the manufacturing process and produce only what is needed, when it is needed and in the amount needed. For the company to achieve such purpose, all of the parts are subjected to inspection in order to meet predetermined quality standards and wherever defective parts and equipment malfunction was discovered, the production process automatically stops and the problem will be corrected before proceeding. As such, within the company, complete elimination of waste, inconsistencies and unreasonable requirements on the production line are priorities (Morgan and Liker, 2006).
A process called lean manufacturing (or lean production), it refers to the optimal way of goods production by means of eliminating waste and implementing flow. Originally designed for Toyota Production System (TPS), lean manufacturing removes ‘seven wastes’ and other potential waste for organization. These are: defects – prevent customers from accepting the products produced, overproduction – production and acquisition of items prior the actual requirement, transportation – the risks of being damaged, lost or delayed, waiting – the time spent by the workers and customers in terms of delivery, inventory – in the form of raw materials, work-in-progress (WIP) or finished goods, motion – the producer, worker, or equipment, and overprocessing – using more expensive yet valuable resources. Others are skills, safety, information, material and breakdown (Morgan and Liker, 2006).
Along the TPS are several, distinct activities and functions that contributes to the competitive edge that Toyota now enjoys. Through jidoka and just-in-time production, the company achieves flexibility and demand management as well. On the other end of the spectrum, the challenge for the automotive industry, however, is that impose by globalisation. The onset of globalization has prompted businesses and its leaders to think and act globally to be able to gain competitive advantage. The primary issue is that of standardisation where products are being standardised in a sense that they all become ‘one’ versus divergence where products are diversified.
Analysis
As such, the lean production system prompted Toyota, being the master of cost reduction strategies, to outsource and keep up with international completion which is also perceived as a response to the challenge of globalisation. Toyota is using a functional outsourcing model wherein certain services are trusted toward partners or providers. This advents Toyota of superior leveraging of market as well as maintaining control over production processes (Morgan and Liker, 2006). Nonetheless, although reducing costs is the primary goal, quality must not be sacrificed.
Improving quality management is another response strategy for Toyota. Toyota well understands the need to eliminate poor management practices through outsourcing functional areas into suppliers (Morgan and Liker, 2006). A relative degree of pressure and risk will be alleviated and dispersed, resulting to sufficient control to core business. In this way, the company would be also able to focus on core functions also. Strategy-related issues will be also prioritised while also avoiding heavy investments.
In lieu with this, Toyota perceived its supply chain to be a key contributor to the products and services and the processes. Important to business processes is the supply chain management (SCM) as an important tool of securing a large market share. As the basis of providing superior service, through effective management of the supply chain the organisation should obtain cost leadership, differentiation and focus on specific niche in terms of procurement, distribution strategies and delivery strategies (Morgan and Liker, 2006).
Conclusion
In sum, the motivation of Toyota is always inclined at lowering costs while strengthening the competitive advantage through quality enhancement.
References
Dicken, P 2003, Global Shift: Reshaping the Global Economic Map in the 21st Century, Sage Publication, Inc.
Morgan, J M & Liker, J K 2006, The Toyota product development system: integrating people, process, and technology, Productivity Press.
Nairn, S and Nairn, A G 2001, Engines that Move Markets: Technology Investing from Railroads to the Internet and Beyond, John Wiley and Sons.
Toyota Production System, Toyota website, retrieved on 7 June 2010, from [http://www.toyota.co.jp/en/vision/production_system/].
Yu, Q Y 1999, The Implementation of China’s Science and Technology Policy, Greenwood Publishing Group.
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