Toyota International Business Case Study

IMPROVEMENTS:

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 customer's satisfaction above all else and its ability to stop, think and make improvements. “ (The Economist, 2010) http://www.economist.com/node/15576506

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) http://www.toyota-global.com/investors/ir_library/annual/pdf/2012/p10_15.pdf#page=2 ‘

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