Analysis on the Operations Management of TOYOTA

Toyota’s Operations Management, 10 Strategic Decision Areas

Toyota Motor Corporation is a Japanese multinational automotive manufacturer

headquartered in Toyota, Aichi, Japan. Toyota is the second largest automobile manufacturer in
the world. Toyota Motor Corporation’s operations management (OM) covers the 10 decisions for
effective and efficient operations. With the global scale of its automobile business and facilities
around the world, Toyota uses a wide set of strategies for the 10 decisions of operations
management, integrating local and regional automotive market conditions.

1. Design of Goods and Services

Toyota addresses this strategic decision area of operations management through
technological advancement and quality. The company uses its R&D investments to ensure
advanced features in its products. Toyota also integrates dealership personnel needs in designing
aftersales services.

2. Quality Management
To maximize quality, the company uses its Toyota Production System (TPS). Quality is
one of the key factors in TPS. Also, the firm addresses this strategic decision area of operations
management through continuous improvement, which is covered in The Toyota Way, a set of
management principles.

3. Process and Capacity Design. For this strategic decision area of operations management,
Toyota uses lean manufacturing, which is also embodied in TPS. The company emphasizes
waste minimization to maximize process efficiency and capacity utilization. Thus, Toyota
supports business efficiency and cost-effectiveness in its process and capacity design.

4. Location Strategy. Toyota uses global, regional and local location strategies.

5. Layout Design and Strategy. Layout design in Toyota’s manufacturing plants highlights the
application of lean manufacturing principles. In this strategic decision area of operations
management, the company aims for maximum efficiency of workflow.

6. Job Design and Human Resources. The company applies The Toyota Way and TPS for this
strategic decision area of operations management. The firm emphasizes respect for all people in
The Toyota Way, and this is integrated in HR programs and policies.

7. Supply Chain Management. Toyota uses lean manufacturing for supply chain management.
In this strategic decision area of operations management, the company uses automation systems
for real-time adjustments in supply chain activity.

8. Inventory Management. In addressing this strategic decision area of operations management,

Toyota minimizes inventory levels through just-in-time inventory management. The aim is to
minimize inventory size and its corresponding cost. This inventory management approach is
covered in the Toyota Production System.

9. Scheduling. Toyota follows lean manufacturing principles in its scheduling. The company’s
goal for this strategic decision area of operations management is to minimize operating costs

10. Maintenance. For decades, Toyota developed a network of strategically located facilities to
support its global business.

The Toyota Way 2001

It is a set of principles and behaviors that underlie the Toyota Motor Corporation's
managerial approach and production system. It consists of principles in two key
areas: continuous improvement, and respect for people. The Toyota Way has been called "a
system designed to provide the tools for people to continually improve their work. The 14
principles of The Toyota Way are organized in four sections:

Section 1 – Long Term Philosophy

Principle 1 - Base your management decisions on a long-term philosophy, even at the expense
of short-term financial goals.

Section II — The Right Process Will Produce the Right

Principle 2 - Create a continuous process flow to bring problems to the surface. Work processes
are redesigned to eliminate waste through the process of continuous improvement.

Principle 3 - Use "pull" systems to avoid overproduction. The pull system produces only the
required material after the subsequent operation signals a need for it.

Principle 4 - Level out the workload. This helps achieve the goal of minimizing waste, not
overburdening people or the equipment, and not creating uneven production levels.

Principle 5 - Build a culture of stopping to fix problems, to get quality right the first time.
Quality takes precedence . Any employee in the Toyota Production System has the authority to
stop the process to signal a quality issue.

Principle 6 - Standardized tasks and processes are the foundation for continuous improvement
and employee empowerment. It empowers the employee to aid in the growth and improvement
of the company.
Principle 7 - Use visual control so no problems are hidden. Included in this principle is
the 5S Program (Sort, Straighten, Shine, Standardize and Sustain).

Principle 8 - Use only reliable, thoroughly tested technology that serves your people and
processes. Technology is pulled by manufacturing, not pushed to manufacturing.
 Section III — Add Value to the Organization by Developing
Principle 9 - Grow leaders who thoroughly understand the work, live the philosophy, and teach
it to others. Employees must be educated and trained: they have to maintain a learning
organization.

Principle 10 - Develop exceptional people and teams who follow your company's philosophy.
Teams should consist of 4-5 people and numerous management tiers. Success is based on the
team, not the individual.

Principle 11 - Respect your extended network of partners and suppliers by challenging them and
helping them improve. Toyota provides cross functional teams to help suppliers discover and fix
problems so that they can become a stronger, better supplier.

Section IV — Continuously Solving Root Problems Drives Organizational Learning

Principle 12 - Go and see for yourself to thoroughly understand the situation. Without
experiencing the situation firsthand, managers will not have an understanding of how it can be
improved.

Principle 13 - Make decisions slowly by consensus, thoroughly considering all options;

implement decisions rapidly.

Principle 14 - Become a learning organization through relentless reflection and continuous

improvement