Toyota International Business Case StudyIMPROVEMENTS:Toyota is company that prides itself on its operations and supply chain strategy, revolving around the JIT and lean manufacturing principles. In saying that, the company has had to re-evaluate its strategies after a spell of bad luck and breakdowns over the past decade. Despite it’s previous success, Mr Toyoda has acknowledged that the lean philosophy has been stretched in the company’s pursuit of growth and expansion, and that the CEO himself has become “confused about some of the principles that first made it great: its focus on putting the customers satisfaction above all else and its ability to stop, think and make improvements. “ (The Economist, 2010)
In January, Mr Toyoda received a letter from a top US company in North American that it has signed.
He complained that the letter said that Toyota’s emphasis on a lean product line and lean manufacturing was giving up on its ambition to become the world’s best-selling carmaking company.
“Today I received from an unknown group of companies that they have signed this letter stating that Toyota intends to introduce its JT series of semi-trucks that are more than 10 per cent lighter and, with greater capability, produce a lower-cost but better value vehicle,” Mr Toyoda wrote on Twitter. “This is what we are talking about. This is the message I want to send. We need to rekindle their passion and drive better.”
One of the three brands that is currently being held by Toyota is the Audi brand, which has made its name with its high-quality luxury cars and has successfully made its own products, as well as with its range-topping Smart cars.
The letter from a Japanese company, sent to Toyota by a Toyota subsidiary, says the firm decided to stop marketing its Smart cars in the US and other regions of the world in the early 2000s because its customers in those areas had become dissatisfied.
For instance, Toyota said it expected that its customers would find it difficult to purchase from Toyota’s US dealers, meaning that consumers in those markets did not want their Toyota products to sell as cheaply as they might like, leading to an exodus.
The letter shows Toyota’s frustration with its customers in those markets on both coasts of the US – it claims to be aware of the complaints but does not report their names.
But on the other hand, at least four other Japanese companies – Hitachi, Nissan, and Honda – have successfully made their own products in US markets, such as the Mitsubishi Focus and Focus and the Kia Insight. Toyota, according to the letter, has also been trying to get Japanese consumers to buy its products using its own brand. Japan is China’s second-largest market after the US and one of the most competitive in the world.
“In short, the goal of Toyota’s JT2 is to break barriers and make JOKER-LINGUALLY AMAZING cars available to both those who aspire to drive in JOKER-LANGUALLY in the US and those who want to drive JOKER-LANGUALLY in Japan,” Toyota’s letter quoted Toyota’s Chief Executive Kim Toyoda as saying.
Toyoda’s concerns are not over the US or other parts of the world – it is also looking to North America where it makes the car, and China, where it is the car producing car. The Toyota letter indicates as a result that
Toyota has recognised that there are obvious flaws within their operations and supply chain strategy, and in response it has evidently improved its processes by incorporating models such as Plan-Do-Check-Act (PDCA), Toyota New Global Architecture (TNGA) ‘Leagile’ strategy and adopting new information management systems, feedback techniques and updated technology so as to further reinforce the JIT and lean manufacturing principles. Essentially, Toyota has promised to strengthen supply chains by “minimising parts procurement risk, and in the area of production we are also reforming our monozukuri (conscientious manufacturing) structure as the basis for production technology and structure innovation…To achieve our goal, we design parts with good features and standardise these for each region, spanning different platforms. This provides better efficiency, cost reduction, with the resulting savings used to improve products further. This virtuous cycle for building better cars leads to sustained growth… A global vision” (Toyota Annual Report, 2012 p.10-11)
Traditionally, Toyota collaborated with minimal suppliers, developing mutual long-term relationships, allowing for cost reduction and a JIT approach to be achieved in the delivery of parts and components. Its success and performance over the decades has been based upon the foundation of the “Toyota Way” (Liker, 2004). Although revolutionising the supply chain management in the automotive industry, its increasing dependence on single source suppliers placed a great strain on their operations supply chain. This lean approach left Toyota susceptible and vulnerable to any issues faced by their suppliers and has been criticised by many academics. In particular, Yusef & Adeleye (2002) argue that organisations that place emphasis on volume flexibility, new product development, technology leadership and response to market are more successful than those organisations that focus on low cost and quality, thus gaining a competitive advantage. (Doolen & Hacker, 2005 p.55).
Despite the numerous recalls and natural disasters