Toyota Motor Corporation’s Operations Management

Introduction

Companies must make strategic decisions to manage their operations effectively and ensure the appropriate flow of information. Indeed, operations management is about production process administration and efficiency promotion. On the other hand, information management is about controlling the availability and flow of information to influence decision-making. This paper is focusing on operations management. The author considers the process design and facility layout of the Toyota Motor Corporation to illustrate the importance of strategic decisions on selecting appropriate process and facility layout to manage the organization and production of goods and services.

Operations Management

Toyota Motor Corporation is among the largest and most profitable firms globally. It is headquartered in Toyota City in Aichi, Japan, and designs, produces, and sells motor vehicles. The company’s managerial practices exist in six organizational mechanisms. Three of these are mainly social and include integrative leadership, close supervision, and mutual adjustment. The other three are standardization forms that include design, work process, and skills standards (Yaser, Embrandiri & Tajarudin, 2020). Although each mechanism accomplishes very little alone, they accomplish a lot together by reinforcing each other. They give Toyota the tightly knit product development systems that ensure practical coordination and functional expertise. With this strategy, integration over time and across projects is possible in the company. The company is constantly evolving and changing its production approaches to minimize waste and increase profitability (Yaser, Embrandiri and Tajarudin, 2020). The layout had three to four sub-lines about 300 meters long (Yaser, Embrandiri and Tajarudin, 2020, p. 77). In this traditional method, engineers installed electrical components in the trim line. In the chassis section, engineers added the exhaust, motor, and drive train, among other components.

Toyota’s ongoing focus on quality improvement has led to several layout design changes. In 1992, the company conducted layout experiments at the new Kyushu assembly plant. The company split the assembly line into eleven self-contained, 100-meter long sections (Morgan and Liker, 2020, p. 17). Figure 1 below illustrates these design changes at the new assembly plant. The new design aimed to minimize waste and ensure more efficient and effective work processes.

In line with its philosophy of continuous improvement, Toyota created another layout design in 1994 at the Motomachi plant. The aim of the new design was reducing the production cost and increasing efficiency while reducing wastes. The renovation of the Motomachi plant was not as radical as the one conducted in 1992 in the Kyushu plant (Morgan and Liker, 2020). The renovation involved splinting longer segments into smaller parts as shown in Figure 2 below. The ongoing design changes culminated in better products and outcomes.

Today, Toyota uses a different design layout that represents ongoing effort at improving outcomes and its productivity and profitability. In 2014, the company created a new assembly layout at the Motomachi plant. The 2014 layout represented a significant improvement from the one from 1994. It contains 11 individual components, each containing a buffer stock with eight line segments. The blue boxes in Figure 3 below represent stations along the 2014 assembly line improvement at the Motomachi plant. The new 2014 design motivates workers and represents an opportunity to finish the assembly work faster. The assembly lines are shorter and require only 14 workers (Morgan and Liker, 2020, p. 34). The new design also improves productivity and a problem in one area does not stop the entire production process. It stops a segment only and minimizes the likelihood of error and error transfer from one segment to another.

Information Management

The recent COVID-19 pandemic wreaked havoc globally, making it difficult for businesses to make profits. Small and medium enterprises, especially those in the travel, music, entertainment, and events industry. Although the COVID problem has dissipated, SMEs still need specific information and appropriate ideas regarding technology’s potential to develop, support, and future-proof livelihoods (Kelkar, 2021). Charles and Christina, who are classical musicians and music teachers, can use technology to do social media marketing, online business accounts, maintain an updated calendar of events, and track their communication with clients. Some of the technologies they can utilize for these improvements include enterprise resource management software and customer relationship management software (Kelkar, 2021). The following section analyzes the business process model strategy that Charles and Christina can use and compares and recommends software for utilization in their business.

B1: Business Process Models and Strategy Analysis

Business Process Models

The first business process model (BPM) that Charles and Christina should consider is one that involves direct online booking. This BPM offers direct communication and will help the couple respond promptly to customers and their requests. Online booking will also help Charles and Christina monitor their business and make appropriate changes depending on demand (Kelkar, 2021). As shown in Figure 4 below, this online booking is such that the customer must sign into the online platform first before requesting and performing the booing. This first business model is advantageous because it lets the customer communicate directly with Charles and Christina (Kelkar, 2021). Thus, the model provides an opportunity for increased profitability by reducing the chances and likelihood of competition.

The second alternative is for Charles and Christina to register on popular classified websites such as Craigslist where they can list their services. Customers needing musicians or music teachers can come to that website and search for the service they desire and choose from the available options (Kelkar, 2021). As shown in Figure 5, this second business process model is straightforward, although the customer’s search will most often return numerous possibilities from which the customer chooses.

SWOT Strategic Analysis

In order to assess the business situation in the company more objectively, it is necessary to conduct a SWOT analysis. It is one of the most important stages of marketing planning and consists in determining the strengths and weaknesses of the company’s activities, potential external threats and favorable opportunities for the company and assessing them relative to strategically important competitors. The strengths of Toyota are as follows:

1. Strong credibility, the brand name is associated with quality and history;
2. A first-class culture of personnel management, with the ability to critically assess the factors necessary to maintain excellence (Morgan and Liker, 2020);
3. Complete elimination of losses in production thanks to the “just in time” system,
4. First-class internal information system and dealer coordination system;
5. Numerous capital reserves that provide the company with funds for investment, as well as making it possible to finance a strategy for expanding the business into new markets with high potential;
6. Competitive advantage, which consists in innovative technological development;
7. Moderate pricing policy;
8. Contribution to environmental protection.

In turn, the company has a number of disadvantages:

1. Lack of experience in the European segment of mini-cars compared to the experience of aggressive local competitors (Morgan and Liker, 2020);
2. Lack of experience in working with Generation X consumers who have established preferences within the framework of the products of European automakers;
3. Concentration of the main production capacities in Japan and the USA, which hinders the effect of “scale economies” in European countries.

The increase in market share, which other Japanese automakers in Europe have not achieved, can be explained by the fact that Toyota has a unique production system. However, with the creation of a European joint venture with PSA Peugeot Citroen, the effect of owning a unique production system will be partially offset. The concept of a joint venture is an agreement between two or more companies from different countries on the exchange of capital and resources, as well as on the risks and rewards of forming a new jointly controlled legal entity.

However, it is clear that it was economic efficiency that prompted Toyota to join forces with PSA, as this strategic approach allowed the company to enter European markets without the need for financial leverage. In addition, this joint venture will not only provide Toyota with the necessary “know-how” to operate in Europe, but will also strengthen distribution channels and increase dealer learning (Morgan and Liker, 2020). Through the analysis of advantages and disadvantages, it is possible to identify the current business situation in the company, which mainly consists of both opportunities and threats.

Current Business Situation based on the Existing BPM and SWOT

Based on the analysis above, it turned out that Toyota lacks mobility in closing deals. The fact is that the industry is designed for a specific consumer who studies the issue on his own in advance. This negatively affects potential buyers who do not have sufficient knowledge in this area. This is the main disadvantage of the company, because generation X is gradually becoming the target consumer. A feature of representatives of this age group is the lack of knowledge of the product provided by Toyota. In order to solve this problem, corporations need to modernize their production and service delivery by adding new software. This solution will allow to realize two advantages at once – to establish contact with a potential client and control the business through flexible pricing. It is necessary to analyze in detail several software that will help the company achieve its goals.

B2: Software Comparison and Recommendation

In order to identify the software required for Toyota, it is necessary to identify the characteristics on which the study will be conducted. It is based on four aspects that affect the vital elements for a large-scale company. The Table 1 below demonstrates the comparison of such aspects as efficiency, maintainability, portability, and code in regards to four types of software.

Table 1. Definition of Complex Indicators of Quality.

As a result of comparative work, the most suitable option for Toyota was identified. This is the popular LastPass service, an online storage of passwords and dynamic data. The service created LastPass Enterprise for corporate clients, which allows you to combine all corporate passwords into a common vault. The software is suitable for a large company that creates and fills websites. The ability to create large quantities of access for content managers and other specialists from one place saves the project manager’s time, which increases the efficiency and profit of the company (Yaser, Embrandiri and Tajarudin, 2020). Thus, it is content managers who will be able to direct the spectrum of attention to generation X, identifying their habits and interests, thereby attracting customers to Toyota.

Conclusion

Based on the foregoing, it must be emphasized that business processing is one of the most difficult areas of doing business. The fact is that this area is extremely extensive and is responsible for many processes. At the same time, it is thanks to the control and perfection of management in this area that the corporation can maximize the efficiency of its activities. In order to make it easier for entrepreneurs and organizations to implement projects, third-party firms create software. In turn, these products greatly facilitate the control of business processes.

Reference List

Kelkar, S. A. (2021). Business process management. A concise study. Delhi: PHI Learning Pvt. Ltd.

Morgan, J. and Liker, J. K. (2020). The Toyota product development system. Integrating people, process, and technology. Oxfordshire: Taylor & Francis.

Yaser, A. Z., Embrandiri, A. and Tajarudin, H. A. (Eds.). (2020). Waste management, processing and valorization. Singapore: Springer Singapore.