INFORMATION SYSTEM OF TOYOTA MOTORS

[Submitted for the subject of – MIS (Management information system)]

Homi[Roll no. - 4121077]

AbstractToyota Motors uses WMS (Warehouse Management system) and SAP (System application and products) as its information systems. Otherwise its SWOT analysis is given to analyze the proper status of the Information system in the company.

Introduction of Company

Toyota Motor Corporation (Japanese) Toyota Jidōsha Kabushiki-gaisha (TYO: 7203), commonly

known simply as Toyota, is a multinational corporation headquartered in Japan and the world's

largest automaker by sales. Toyota employs approximately 320,808 people worldwide.

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his

father's company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a

department of Toyota Industries, it created its first product, the Type A engine, and, in 1936, its

first passenger car, the Toyota AA. Toyota also owns and operates Lexus and Scion brands and has

a majority shareholding stake in Daihatsu and Hino Motors, and minority shareholdings in Fuji

Heavy Industries, Isuzu Motors, Yamaha Motors, and Mitsubishi Aircraft Corporation. The

company includes 522 subsidiaries

Toyota is headquartered in Toyota City, Aichi and in Tokyo. In addition to manufacturing

automobiles, Toyota provides financial services through its divisionToyota Financial Services and

also builds robots. Toyota Motor Corporation (including Toyota Financial Services) and Toyota

Industries form the bulk of theToyota Group, one of the largest conglomerates in the world.

Introduction About Warehouseing System

A warehouse management system, or WMS, is a key part of the supply chain and primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions, including shipping, receiving, put away and picking. The systems also direct and optimize stock put away based on real-time information about the status of bin utilization.

Warehouse management systems often utilize Auto ID Data Capture (AIDC) technology, such as barcode scanners, mobile computers, wireless LANs and potentially Radio-frequency identification (RFID) to efficiently monitor the flow of products. Once data has been collected, there is either a batch synchronization with, or a real-time wireless transmission to a central database. The database can then provide useful reports about the status of goods in the warehouse.

The objective of a warehouse management system is to provide a set of computerized procedures to handle the receipt of stock and returns into a warehouse facility, model and manage the logical representation of the physical storage facilities (e.g. racking etc), manage the stock within the facility and enable a seamless link to order processing and logistics management in order to pick, pack and ship product out of the facility.

Warehouse management systems can be stand-alone systems, or modules of an ERP system or supply chain execution suite

In its simplest form, the WMS can data track products during the production process and act as an interpreter and message buffer between existing ERP and WMS systems. Warehouse Management is not just managing within the boundaries of a warehouse today, it is much wider and goes beyond the physical boundaries. Inventory management, inventory planning, cost management, IT applications & communication technology to be used are all related to warehouse management.

Warehouse management deals with receipt, storage and movement of goods, normally finished goods, to intermediate storage locations or to final customer. In the multi-echelon model for distribution, there are levels of warehouses, starting with the Central Warehouse(s), regional warehouses services by the central warehouses and retail warehouses at the third level services by the regional warehouses and so on. The objective of warehousing management is to help in optimal cost of timely order fulfilment by managing the resources economically.

Warehouse Management = "Management of storage of products and services rendered on the products within the four wall of a warehouse".

 

Essential Features to Look for in a WMS

1. Integration with advanced radio-frequency and bar coding technologies.

2. Complete back-office integration with Order Entry, Inventory Control, and PurchaseOrders modules

3. Scalability to accommodate future business growth.

4. Real-time inventory updates.

5. Hand-held interface.

6. Advanced reporting capability.7. Support for multiple picking methods.

8. Compliance labelling and ASNs.

9. Automated inventory receipt and assisted put away.

Benefits of Warehousing Management System

1. Increase customer satisfaction

Register goods as they arrive at the warehouse, so that they are visible throughout the system before they have been placed in inventory. You can reserve items for customers, including items from a specific location or batch, while entering a sales order. This reservation is recognized by all functions in Microsoft Dynamics™ AX, such as inventory counts, planning of production and others, to help ensure that customer demands are satisfied.

2. Get complete overview of Inventory

In order to track items internally and throughout the supply chain, you can automatically have inventory stamped with a number linked to shipments and deliveries. For improved traceability, Warehouse Management system lets you create as many serial or batch numbers for the automatic numbering of items as you require. Determine the exact location of a specific item in your warehouse with inventory dimensions, which can include information regarding warehouse batch number, location, pallet ID and serial number. Inventory dimensions are also a powerful tool to track serial and batch numbers and can be used to get a clear overview of items in your warehouse.

3. Reduction in inventory paperwork

Implementation of a real time WMS can significantly reduce the paperwork traditionally associated with warehouse operations, as well as ensure timely and accurate flow of inventory and information. Receiving reports, pick tickets, move tickets, packing lists, etc., which are typically maintained as hard copies, can all be maintained electronically.

4. Improved cycle counting

Companies can use WMS to capture relevant data (e.g., frequency of movement, specific locations, etc.) to systematically schedule personnel for cycle counts. Such cycle counts not only can improve the accuracy of inventory records for planning purposes, but also can eliminate or reduce the need for complete, costly physical inventories.

5. Reduced dependency on warehouse personnel

Implementing a comprehensive WMS facilitates standardization of inventory movements, picking methods, and inventory locations. This standardization helps to minimize reliance on informal practices, resulting in reduced training costs and lower error rates.

6. Enhanced customer service

By streamlining processes from order to delivery, companies can more accurately determine product availability and realistic delivery dates. A WMS can automatically identify and release back-ordered inventory and also can reduce returns as a result of increased shipment accuracy.

7. Improved labour productivity

A WMS helps optimize material flow, typically by incorporating several inventory picks into one or by "cross docking". Cross docking is a process that routes incoming shipments to the location closest to the outbound shipping dock, thereby reducing warehouse handling.

Why Company is opting WMS:

Not every warehouse needs a WMS.  Certainly any warehouse could benefit from some of the functionality but is the benefit great enough to justify the initial and ongoing costs associated with WMS? Warehouse Management Systems are big, complex, data intensive, and applications.  They tend to require a lot of initial setup, a lot of system resources to run, and a lot of ongoing data management to continue to run.  That’s right, you need to "manage" your warehouse "management" system.  Often times, large operations will end up creating a new IS department with the sole responsibility of managing the WMS. WMS of TOYOTA is called as “T-WINS LS”.

Key Features Description

Warehousing Systems Reduce costs through effective Warehouse processes: Directed pick and put away Picking items can be performed in different ways: per order,

to stage

Putting items away either into the Warehouse or cross-dock to shipping

Replenishment of bins based on predefined maximum or minimum bin quantities

Internal Pick/Put-away Take items from or place items in inventory without selling or purchasing them

Pick or put away items without using a source document.

ADCS – Automated Data Capture Systems

Achieve cost savings by streamlining your inventory management processes:

Collect and use accurate, real-time inventory data. Simplify and speed up your data capture system using radio

frequency technology.

Increase the visibility of accurate inventory data throughout your company.

Cycle Counting Maintain and increase inventory accuracy by verifying inventory record data.

Differentiate the counting frequency per item or stock keeping unit.

Additional Application Areas of Microsoft Navision

Financial Management

Manufacturing

Distribution

Marketing and Sales

Service

User Portal

Commerce Gateway

Commerce Portal

Toyota Motors ltd.

Toyota has actively propelled growth and innovation in its information systems by incorporating new information processing technologies while responding to various changes in the external environment, including rapid globalization of development, manufacturing, and sales operations; advancements in car electronics technologies; compliance with global environmental standards; and changes in the Japanese and global economy.

Growth and innovation of information systems at Toyota in the second half of the 1980s to first half of the 1990s saw advances in office automation and in the globalization of corporate systems in the commercial systems of business application systems. In the engineering systems of business application systems, Toyota applied in-house-developed CAD/CAM systems to broader areas of activity and also extended them to supplier operations.

From the second half of the 1990s to the early 2000s, advancements in administrative systems made information systems more globally adaptable and also brought about reform of Toyota's overall management structure. Innovations in engineering system made engineering data more integrated and more useable on a global basis.

From the early to late 2000s, Toyota sought to globally standardize all business application systems and make better use of information. Even such IT infrastructure as IC network systems were globally standardized and shifted to TCP/IP-based systems in Japan and overseas. The economic crisis that shook the world from 2008 to 2009 also had a major impact on Toyota's information divisions. Since then, Toyota has sought to improve the efficiency of system development and maintenance and has instituted structural reform of its system development and maintenance organization.

Evaluation of the Information system:

The information systems for the Toyota Motor Company (TMC) can clearly be evaluated by using SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).

Strengths:

The biggest strength of Toyota's information systems is their ability to integrate their company goals globally by using their systems effectively. For example, Toyota reaches its customers in different markets by using different online web systems for different world regions. Although, there are multiple websites and systems for each of the world regions, such as North America and Europe, the systems all link back to a worldwide website5.

Weakness:

A major weakness of Toyota's information systems is likely the language barrier that the Japanese based company has with its international employees and customers. Sharing and using information across language barriers on the international scene poses a significant hurdle to using information systems effectively. Toyota mainly uses the English language internationally but their company is primarily based in Japan and therefore Japanese is still a significant part of the sharing of information.

Opportunities:

Toyota has created new opportunities by developing their Transportation Systems. Toyota is working globally with partners and governments to improve the ease of transportation. To accomplish this, Toyota is seeking to research current transportation systems using their customers as well as information from other companies6. Pursuing these improvements to transportation systems is a significant opportunity for Toyota, because they can increase their customer base and the satisfaction of current customers. The use of information systems and networking could be a key to helping Toyota have success in improving Transportation Systems.

Threats:

One of the threats for the development of Toyota's information systems includes resistance to information sharing between companies. To further advance their information systems, Toyota needs to integrate and share ideas with other companies such as Ford and Honda. In a competitive market, companies are less likely to share information and research with competitors. This poses a direct weakness to Toyota because the advancement of systems like their Transportation System initiative depends on the sharing of global information through the use of networks and information systems databases.

Porter Five Forces Model

Another great way to evaluate the information systems for Toyota Motor Company is to examine the Porter Five Forces Model for competitive advantages. In examining this model as it pertains to Toyota, it's important to examine (1) rivalry among existing competitors, (2) the threat of new entrants, (3) the threat of substitute products, (4) the bargaining power of buyers, and (5) the bargaining power of suppliers7. Toyota has strategically placed themselves into position to gain a competitive advantage by considering several of the Porter factors.

1) First, Toyota Motor Company exists mainly in the automotive markets which house a significant number of competitors. For example, Ford, Chevrolet, Honda, and GM are a few of their major competitors. This competition in an industry with high entry and exit costs has led Toyota to seek a competitive advantage in their information systems. One major example of an information systems competitive advantage for Toyota is their new Hybrid Synergy Drive. As the automotive industry has suffered from high gasoline and crude oil costs, Toyota has developed a computerized engine system, HSD, that monitors engine performance and makes energy usage in the automobile as efficient as possible8. Toyota has currently employed this system in their Prius and Camry sedan models, which leads the market in hybrid vehicles.

2) The Hybrid Synergy Drive also must be evaluated using Porter's model factor for threat of substitute products. Other companies could potentially enter the hybrid market by developing a similar drive and neutralizing Toyota's advantage. In fact, Nissan and Honda have developed similar technologies for their sedan models. However, Toyota continues to dominate the market for hybrid vehicles because Honda and Nissan do not have a significant impact on the market yet. In the future, Toyota may lose their competitive advantage if hybrid vehicles take a bigger market share in the automotive industry. However, currently Toyota is adding Sport Utility Vehicles (Toyota Highlander) to their

line of vehicles using the HSD. By being the first to add SUV's to the hybrid market, they have currently protected their competitive advantage from substitute products.

3) Porter's five forces model also considers Toyota from the vantage point of bargaining power of their suppliers. Suppliers can exert influence on a company by using pricing of key components. If large suppliers raise prices, Toyota may suffer as a result, so to stay competitive they must have strategy. To stay competitive in this area, Toyota keeps a large database of small business suppliers for their operations in North America9. Via this database, Toyota puts an emphasis on using smaller businesses for suppliers in order to gain a competitive advantage.

Overall, Toyota has done an excellent job following Porter's five forces model for gaining a competitive advantage. By using is Hybrid Synergy Drive in their revolutionary hybrid vehicles, they have cornered the market on hybrids and gained a significant advantage that boosts sales. Also, Toyota's addition of the Highlander SUV to the hybrid drive market has successfully maintained their advantage. Moreover, the use of smaller businesses as suppliers allows Toyota to protect themselves from pricing shifts. These factors have all led to Toyota successfully using their information systems to gain a competitive advantage.

Toyota has a unique business model and the way it approaches the automobile production, with its inherent quality controls, revolutionized the industry. Toyota's "just-in-time" supply-chain concept has become a model for manufacturers around the world, and not just for automakers. The Toyota Production System (TPS) calls for the end product to be pulled through the system. This means the right parts reach the assembly line at the right place, just as they are needed, and with no excess. This approach represented a radical departure from conventional manufacturing systems, which require large inventories in order to push as much product as possible through production lines, regardless of actual demand. The idea of TPS, on the contrary, is to produce only the products required in the precise quantities desired at a given point in time. This creates a 'pull' production system as opposed to a 'push' system. By basing production on demand rather than simply on capacity, Toyota manages to keep inventories, of both parts and of finished goods, to a strict minimum. But this is only one of the more obvious advantages of Toyota's unconventional approach.

By focusing on smaller production lots and producing only what customers require when they require it, Toyota has developed a flexibility and responsiveness that continues to set the standard for the industry. Because of its Attention to continuous improvement, Toyota has attained die-changeover and machine-set times that are a fraction of its competitors'. Thus its capacity for reacting quickly to new market trends makes TPS an ideal system in today's rapidly changing global business environment. Toyota believes that it is important in ensuring quality control, and the delivery of reliable and dependable products to customers.

If a problem arises at any stage of production, Toyota's automatic error detection system, called "Jidoka", flags the defect and enables line employees to take the necessary steps to resolve it on the spot even if that means bringing production to a halt. By calling attention to the equipment when an error first occurs, the Toyota system makes it easier to identify the source of the problem and prevents defects from progressing to subsequent stages of production. Only a system as agile and quality-oriented as TPS could make such measures economically possible. This approach not only helps eliminate waste, which makes TPS more respectful of the environment, it also means that customers can rest assured that Toyota products will conform to the highest standards of quality, reliability and durability.

By taking this unconventional approach, Toyota is rising from the ashes of industrial upheaval in post-war Japan, becoming the largest vehicle manufacturer in its home country, gaining more than 40% of the national market. By 1980 Toyota in Japan had rolled out its 30 millionth car, and by the turn of the century the figure had risen to 100 million. Outside of Japan, Toyota first started making inroads into foreign markets in the late 1950's. The first Toyota Crown models arrived in the USA in 1957, and by 1965, with cars like the Toyota Corolla, the company had steadily built both a reputation for customer service and satisfaction and sales figures to rival those of domestic automakers. In 2004, annual Toyota car sales in the U.S. surpassed the 2 million mark, with 1.4 million vehicles and almost 1.3 million engines manufactured in the U.S. In due course, the Toyota Production System, with its emphasis on continuous improvement, the value of employee commitment and superior quality, would be recognized as a true benchmark in the eyes of the global automotive industry.