1.

0 Executive Summary

The importance of operations management in any kind of business organization is known to

all. The companies that did not follow planning in the operations' management were unable to
succeed as much as the companies that planned their operations and processes. The report
takes the example of Toyota Motor Corporation and establishes the fact the in spite of the
severe competition that exists in the automobile industry and in spite of the many downfalls
of the industry; the company has been able to make its mark on the globe. The company has
made its global presence felt and it could very well be attributed to the excellent operations
planning at both the assembly line and at the product and process level. The company uses
the Just in Time techniques to reduce wastage and so aims at maintaining the highest possible
quality by implementing Kaizen techniques. The Kanban which is also known as the
signboard technique is also used for maintain the lean production in the company.

Toyota has been able to perform well as they have the most efficient process technology
planning, capacity management planning, lean production techniques, continuous
improvement strategies and supplier development techniques. The company would need to
make some changes in the materials-processing, information-processing, customer-processing
and also in the process technology related to volume and variety. The future outlook for the
company appears tto be bright, but the company would have to make the
changes in the technologies accordingly. Toyota appears to be the best possible example to
demonstrate the operation's management techniques as they have mastered the art of using
the space, the capacity and also providing the highest possible quality
1.1 Introduction
Operations management would generally mean, converting the varieties of input into usable
outputs by using the physical processes. The main aim of the operation's management
procedure would be to productively utilize the available resources, create products that meet
customer requirements and efficiently handle the processes without any chaos. The
responsibility of the operation's management is to ensure that the production in the company
happens continuously and without any kind of interruptions.

The main six aspects of the operation's management that the assignment handles are process
and product design, capacity management, organizations and systems development, lean
production techniques, performance and improvement strategy and supplier development
strategy. All these six aspects are of utmost importance for all types of business organizations,
be it manufacturing industry or service or retail industry. There has to be a proper planning of
these six aspects to create a place in the market
and sometimes also to gain competitive advantage.

The operations management would need to change the strategies if there is a significant
change in the inputs that relate to material, labour, capital, information technology. The
operations management would also need to implement a change if there is a change in the
volume or variety demand of the product due to market factors. In such cases, the company
may have to make a change in the process technology, the capacity, the information
technology or in the way the processes are arranged.

This assignment aims to analyse the six main aspects of the operation's management by
putting forth the example of Toyota Motor Corporation which happens to be one of the
largest automobile companies in the world. Toyota is known for the high quality products and
for using the JIT and the Kanban techniques of operations management effectively. They
have been able to implement these techniques in the assembly line and other places to
progress.

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2.0 Company Background
2.1 Background Information
The Toyota Motor Corporation has its headquarters in Toyota, Aichi Japan. The company was
found in the year 1937 by Sakichi Toyoda. It established a plant in Honsha which began
production in 1938. The company facess financial crisis in the year 1950 and then the Toyota
Motor Sales Co ltd is established. They established another plant in Motomachi and in 1965
won the award for quality control for the first time for which it is known. It became the
world’s one of the largest and Japan’s largest car producing companies.

After the second World war, Toyota decidess to come up with a small car which was a failure
and made them suffer huge losses. After this Toyota worked towards a more comprehensive
drive and introduce land cruiser to cater to the growing needs of the taxis in the economy.
This vehicle was a huge success and changed the face of the company. Toyota also believed
in providing top quality products and services which was evident in their production systems.
They introduced many quality control techniques like Kanban, Kaizen which held them apart
from their consumers.

2.2 Main products and Customers

Toyota seeks to build in cars to cater to the needs of the people in all parts of the world. They
provide travellers safety first priority and employ the quality check for safety measures at all
possible places. Toyota produces two types of cars which include conventional engine cars
and hybrid engine cars. They aim to provide car solutions to all categories of people who
need small cars also unlike some of their competitors who would cater to the needs for
medium and large vehicles. Toyota produced approximately 8,000,000 units in a year and
provides employment to around 340000 staff members. They are mainly involved in
manufacturing of automobiles and their parts, wheel chair that is all wheel drive and vehicle
maintenance automatic lift. Apart from the automobile sector, Toyota is also involved in
housing sector, Financial services sector, biotechnology sector and afforestation, marine

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industry and e-business sector, etc.

2.3 Current Scenario

Toyota Motor Corporations appear to have a very bright future and looks very promising. The
current sales of the company has been up topping 1,2 and 3 million marks in the years 2008,
2010 and 2011 respectively. Toyota has made its worldwide presence felt and has
manufacturing and assembly lines available at most of the developed countries in the world.
They have expanded wings into countries like Australia, US, India, UK, South Africa,
Poland, etc. They are one of the leading car manufacturers in the world and they keep the
safety of passengers as their top priority. Even though in the financial year 2011, there was no
significant increase that was noticed in the net revenues of the company but there was an
increase in the operating income by 217.4% for the overall company and for Toyota, the net
income increased by 94.9%. The positive thing to note was that the overseas vehicle sales
increased by 6.3%.

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3.0 Identification of current organisational operations practices
3.1 Process Technology Strategy
A process layout is a format where the similar equipments and functions are clubbed together
and the operations are performed according to the predefined sequence. A product layout is
the format where the operations that are involved in making of a product are arranged in a
sequence to avail optimum results. A group technology means keeping a group of non-similar
machines in the work centre to work on the products that have similar shapes and sizes. In a
fixed position layout, the product remains at a single place and the machines and processes
that are required to produce the product move to the product.

Standardised work systems are followed in Toyota so that the managers and the top
management are able to identify the loopholes and wastage immediately and make
arrangements for improvement. Depicted below is the plant layout of Toyota motor
Corporation at Miyata which handles the molding, the welded parts, the press body and
assemblyThey are all set to reduce the waste in the product design process. The product
design process in Toyota Motor Corporations has been explained below.

3.2 Capacity Management

Toyota Motor Corporation was fighting with lack of space problem when they redesigned the
and they started using “Just In Time” manufacturing system. They used the U-manufacturing
system concept and made maximum utilisation of available space and capacity. They could
not produce large batch sizes but they used the small batch manufacturing system. This would
allow Toyota to overcome the problem of space but utilise the other available capacities to the
maximum.

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In Toyota Common process lines are used for production where common machines were used
for many product lines. But after they have started using the multi machine and multi process
handling. Here the worker and the machine both handled more than one operation together to
reduce the lead times.

3.3 Organisation and Systems development

Toyota used Just in time system as they wanted to eliminate waste completely and using and
producing just the amount that is necessary. The JIT concept was so deeply rooted in the
assembly line systems of Toyota that they knew exactly how many vehicles of different
colours, types and accessories would be assembled in a single day.

The Just In time concept helps the company to reduce the wastage of time and resources in
waiting, wastage of resources in transportation, wastage of processing, wastage of inventory
and movement, wastage of reprocess and defects and wastage that occur due to over
production. They use the one-piece continuous flow for production system.

3.4 Lean Production

The application of lean concepts in the system would mean optimising the usage of time,
resources and available techniques. The various tools of Lean production are standardised
production system, Jidoka, Kanban, Kaizen, etc.

The concept of lean production concepts in Toyota Production System is implemented using
various tools. The production planning is done based on JIT and Heijunka, Quality is
maintained thorough Jidoka, pull execution using Kanban and continuous improvement using
the techniques of Kaizen. Jidoka ensures quality production and reduces the need for
continuous supervision thus saving time and resources. The word Kanban literally means sign
board where the inventory requirements are planned so accurately
that there is no extra stock of inventory remains and there is also no delay due to the non-
availability of the inventory.

3.5 Performance and Improvement Strategy

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Kaizen is a Japanese word that means continuous improvement in the process design
implementation and production systems. It involves two components which include
maintenance and improvement. The purpose of Kaizen is to maintain the technological and
operating standards and utilise the capacity to the optimum level. But the most important
aspect of the Kaizen is not only to implement the tools but also to maintain its continuity. The
management has to be committed enough to train their employees
to follow the principles of Kaizen which would be always advantageous in long-run. The
implementation of Kaizen principles would also involve some costs and so the company must
make sure that they make the optimum utilisation of the Kaizen tools and techniques.
Toyota sets an example for maintaining the Kaizan Principles. They have the top level
management committed to pursue the quality goals, they have trained the team to understand
the importance of quality services, the staff that are hired are committed and skilled, the staff
are trained continuously and they have adopted the principles of Kaizen in the manufacturing
process and the production system.

3.6 Supplier Development strategy

Suppliers are very important stakeholders for any company. He model below describes how
an enterprise can create value by satisfying all the stakeholders.

At Toyota, the company is very successfully using the V4L framework which means variety,
velocity, variability and visibility to maintain the suppliers. In the Variety steps, before
placing an order with the supplier, the company has to ensure that the supplier provides the
right kind of product variety and the components provided by that particular supplier ensure
quality manufacturing. During the velocity step, the company has to ensure that the supplier
has to make the component availability match with the requirements of the assembly line.
Variability concept ensures that since the company is using the JIT concept for inventory and
logistics, the suppliers are able to manage the variation in orders. The visibility ensures that
the supplier and the manufacturers have a transparent relation and they have discussed their
problems first and both of them are well informed about each other. By using the V4L
techniques, Toyota has been able to create a very good relation with the supplier who have
been constantly supplying them top quality products.

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4.1 Process Technology Strategy
Toyota has been implementing the following model. They have firstly concentrated on
creating a continuous flow of operations with the help of standardisation.
The manufacturing process that is used in Toyota is very high tech and they are using the best
possible technologies available. So, they have made and defined their processes properly.
They have integrated the manufacturing technology with the processes and the systems. They
have developed the general capabilities to handle the processes and the technologies. They
have developed the holistic Decision-making process to handle the operation and the designs
at the process and the product level. They have been utilising the workforce and machine
capabilities to enhance production. They use the pull technique for logistics and work on the
minimum lead time concept.

4.2 Capacity management

When ratio of operation which means the number of hours when the machines are put into
work are analysed in Toyota, it could be observed that the ratio comes to about 100%. This
means that Toyota has been utilising all the available capacity. They are well aware of the fact
that excess capacity is an economic loss to the company. So, they do not give any way to the
losses. Therefore, at the production hours some of the machines are seen idle, this is not
because the capacity has to remain idle, but may be because the machines’ ratio of operation
has surpassed the desired level. There is always a continuous flow of operation in the
production system and with short lead times and small batches. They operate on zero
inventory level. The U-Configuration of equipments help them to operate many machines in a
much smoother way.

4.3 Organisations and systems development

The JIT system that has been employed in Toyota Motor Corporations has been depicted by
the picture below.

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The new JIT technology that has been employed at Toyota emphasise on improvement of
quality while reducing the storage. TMC is planning to increase the level of quality from
product quality to business quality and then finally to corporate management Quality. This
new model shows that sales, productions and engineering are placed in the front line of the
Toyota Production System and the manufacturing system is planned accordingly. The new
JIT system emphasises on quality control not only on the Toyota Production system but also
in the Toyota marketing system and Toyota Development system. They are trying to develop
and implement a scientific TQM techniques so that the production is not delayed at any point
of time and also the quality of the product and the services is also not compromised.

4.4 Lean Production

The production system at Toyota ensures that they use lean production concepts to maximise
its production.

The model above describes the lean production system that is followed at Toyota. For Toyota,
they have made all arrangements to bring out more from less. They have been employing
procedures to simplify the procedures, eliminate the wastage and speed up the production.
The five main areas of lean production that Toyota is concentrating on are cost, safety,
delivery, commitment and quality. By using the Just In time technique Toyota is saving on
time and cost and also ensuring timely deliveries. Because of this, the company also follows
activity based costing. The JIT concept also reduces wastage. By 0using the people and the
teamwork, they are all set to work on the morale of the employees and make them all the
more committed towards organisation goals. By using Jidoka and Kaizen techniques, the
company wants to maximise the productivity while ensuring top quality at each and every
step. So, it could easily be said that when it comes to the lean production operations
management technique, Toyota leads the way and sets examples for many other companies.

4.5 Performance and Improvement Strategy

The principles of the Toyota Production System are to reduce set uptimes, make the
production in small batches, skilled employees and employee empowerment, quality
maintenance and check up points established at every possible place, high level of technology
usage and maintenance, pull production which means reduced lead times and less holding

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costs and finally supplier involvement in the Kaizen techniques. In order to succeed in the
present competitive world, Toyota has to train and empower its employees to put in efforts
and make small changes to implement the quality control techniques. All the employees in
the company are dedicated to work towards maintaining and improve their work
environment.

The 4ps model is the model that is used by Toyota to improve continuously. The four steps of
the model involves making strategies firstly, then eliminating all kinds of wastage. Then they
have to assign authorities and powers to the people and the partners who are strategic assets
to the company and finally following up on all the processes.

4.6 Supplier Development Strategy

Toyota has been taking many proactive steps like the CCC21 program which ensures
reduction of wastage and increase in the efficiency. The following are some of the steps that
Toyota has taken with the help of the suppliers to comply to the highest quality needs of the
company. The steps are:
• They have created quality awareness amongst the suppliers to ensure quality product
components with the help of innovative programs like Jishuken.
• They have developed a supplier support centre to ensure that suppliers queries are given due
respect and the relationship with the supplier is cordial which would maximise the impacts.
• At Toyota, customer needs are aligned with the production system. So, the suppliers have to
support the flexible planning system to ensure the best possible services to the customers.
• The suppliers are made aware of the general systems of work and the work flow of the
company so that they can match their supplies accordingly.
• Communication level is very high with the suppliers to ensure that there is no scope for any
misunderstandings.
• Suppliers are supported during low times to make the relationship a stable one.

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5.0 Main Factors affecting change in Operations management
Operations management mainly cosist of three process, that include input, processing and
output. Any significant change in the inputs would certainly result in a change in the
processes and also in the output, thus a total change in the operations management procedure.
The inputs to the operations are materials, labour, capital, physical machines and information
technology, etc. Also, when the company is operating in an international arena, there are
sometimes when the company has to make changes in the operations to adjust to the national
culture.

5.1 Material processing technology

There are various types of material processing that are Robotics, Automated Guided Vehicles
(AGV), Flexible Manufacturing systems (FMS), Computer Numerically controlled machines
(CNC), computer integrated manufacturing (CIM), etc. With the advent of technologies, the
companies are using more and more advanced technologies. This innovation feature is going
to continue in the coming years. Any change in the material processing technology would
certainly cause a change in the entire process and so,
the companies are trying to choose their material processing technology carefully.
For Toyota, they are using the all possible technologies as they have one of the most
advanced manufacturing systems for the cars in place. Also, they are using the JIT concept in
their materials procurement method. So, they would have to have updated technology and
processes so that they do not lose out on time. In the coming years, as the customers would be
needing more and more advanced features in the cars, there would be a serious need for
Toyota to make arrangement for the advanced accessories and the relevant technologies to
handle them. For example with the new norms for carbon emissions for the automobile
industry, there would be a need to change the materials processing technology as hybrid
technologies would be required to handle the new regulations.

5.2 Information-Processing technology

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The information technology is experiencing a dramatic shift in the recent times. All the
companies are trying to use high-tech solutions to aid the workings and also aid to the
comforts of the employees. For this purpose the companies are conducting workshops for
training and support. All the stakeholders that include customers, suppliers, employees,
management and Government, require updated information about the company. The
employees do need to have proper technologies to handle all types of information
and generate the required results.

For Toyota, they have been using the most advanced technologies for telecommunications
and Information technology. Since, Toyota has a global presence and they have to support the
customers and employees that are present in global arena. The demands for high tech and
instant support is going to continue in the coming years and therefore Toyota would need to
support the demand by making appropriate updations in the technologies. Due to a rise in the
fuel prices and economic slowdown there was a downturn that was witnessed in the industry.
The customers are demanding Green cars and energy cars for which the company has to make
suitable arrangements.

5.3 Customer-Processing technology

In the present world of competition, there is a serious need to have customer processing
technology, as it is of utmost importance to retain the customers. So, there would be a need to
have an appropriate customer-processing technology Also, in the internet world, the
customers are demanding 24 hours support. So, there is need for the companies to use the
latest technologies. Any change in the Information-processing technology would cause a
major change in the work practices of the employees and the way the customers interact with
the company. So, companies would have to plan and choose the technologies accordingly and
then they need to train the employees to handle the technology and provide super assistance
to the customers worldwide to handle the updation.

For Toyota, they are one of the most customer-oriented companies in the world. So, they do
have a proper technology and process to handle the customer queries. In the coming decade
this feature would need further advancement as the customers are becoming more and more
demanding and are getting access to higher and higher technologies. The graph plotted below
denotes the new car registrations in EU countries. So, the may not be as large as in the

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previous years, still the database of customers for the company is increasing and so the
company would need to have proper technology support to handle the customers.

5.4 Process-Technology related to Volume and variety

The process-technology that is used in the manufacturing and also in service industry has to
be chosen with utmost care. If there is a major fluctuation in the volume and variety of the
products and also in the services, then the changes have to be implemented accordingly.
There are also some products and services where the demand is seasonal. So, in those places,
arrangements are done accordingly. When, there is a major change in the demand, either the
capacities have to go idle or the capacity becomes short. So, the companies have to make
arrangement accordingly.

For Toyota, since they are using the JIT concept there would not be much change in the
process technology when the volume and variety changes as they are already operating at
zero inventory. The graph below shows that there would be a major change in the demand in
a particular variety of vehicles and people would be interested more in hybrid and electronic
cars than in the traditional fuel running vehicle.

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6.0 Conclusion
Toyota has been able to manage all front of operations management very effectively. The
process technology that Toyota uses ensures a continuous flow of production. The process
design and the facility design layout have been planned and the arrangements have been
made to use multi machines for a single product very effectively. They have been using the
standardised ways of operations management.

For capacity management, they use the U-shape of machine arrangement as they want to
make the optimum usage of space. The machine usage ratio for every machine is generally
100% if not more, which speaks highly of the maximum capacity utilisation.
For Lean production techniques, the company has been using the Jidoka and the Kanban
techniques. They are making production in small batches and operate at zero level of
inventory which means the products are manufactured as and when demands are placed.
For organisation system and production techniques, the company is using the JIT concept
which means that they are more concerned about maintaining the quality of the products and
do not want to go in after quantity.

The performance and improvement strategy of the company concentrates on the 4 important
Ps of the business. These P’s are philosophy, process, people and problem solving. Toyota has
made appropriate strategies and designed appropriate processes by involving the people and
empowering them to handle the problems.
Finally the suppliers of the company also form an important part and at Toyota the suppliers
development is done through supplier relationship management. The suppliers are chosen
carefully and they are made to feel a part of the company and make sure that they adhere to
the company quality and time norms.

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So, it could be easily concluded that Toyota could be the best possible example to understand
the importance of the operation's management procedures.

7.0 Reference

https://en.wikipedia.org/wiki/Toyota_ND_engine

https://www.toyota-global.com/...toyota/.../automotive.../japan/.../toyota_motor_kyush...

https://www.amazon.com/Essentials-Capacity-Management...Yu-Lee/dp/0471207462

https://books.google.com.my/books?isbn=0905927443

www.scirp.org/(S(lz5mqp453edsnp55rrgjct55))/reference/ReferencesPapers.aspx?...

https://books.google.com/books/about/Operations_Management.html?id=-kI...

https://www.researchgate.net/.../31288054_Sources_of_Public_Service_Improvement_A...

https://www.researchgate.net/publication/307828048_An_automotive_supply_chain_model_for_a
_demand-driven_environment

https://www.researchgate.net/publication/242175800_A_Hayes-
Wheelwright_framework_approach_for_strategic_management_of_third_party_logistics

Source: (Obara and Wilburn, n.d.)

(Japan management association, n.d.)

https://www.researchgate.net/publication/297678103_New_Japan_Quality_Management_Model_I
mplementation_Of_New_JIT_For_Strategic_Management_Technology

Annual Report 2011

(Liker and Franz, n.d.)

https://trove.nla.gov.au/work/27995356

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https://www.emeraldinsight.com/doi/10.1108/01443570810903122

https://www.researchgate.net/publication/241568394_The_Importance_of_National_Culture_in_Op
erations_Management_Research

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1591129

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