The evolution of TOYOTA Production System
HISTORY OF THE COMPANY
CHRONOLOGY
GLOBAL VISION
Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.
MISIONOffer our customers the prestigious car brand Toyota. Based on quality delivery, after-sales tracking and quality service at reasonable prices, to meet customer needs with technological support and quality, while achieving a return for our shareholders
KEY QUESTION
How the revolutionary production system developed at Toyota during the quarter of a century after 1950 paved the way for the company’s current success?
FLIPPING AND SKIMMING
Toyota: The evolution of the
Toyota Production System
Number of Pages: 11
Autor: Charles W.L. Hill, the University of Washington
Case’s Content:
Introduction, The origins of Toyota, The evolution of the Toyota production system
Distribution and customer relations, Overseas Expansion, Transplants , Operations, Product Strategy, Toyota in 2001, 2
tables
BEGINNING OF THE CASE
ENDING OF THE CASE
Today Toyota is the worlds third largest automobile company with global production of 5.8 million vehicles and revenues of 108 billon
The best and original idea behind the founding of the Toyota motor company came from the fertile mind of toyota Takichi.
In 1993 it was able to get permission to set up and automobile department with in toyota automatic loom.
LAB
ELI
NG
GENERAL ENVIRONMENT• It is considered the most
widely rolled-out environment-friendly system in the automotive industry to date
INDUSTRY• The industry has been successful
from the day it was established.• There are several strong brands
around the world so there are High barriers of entry.
• Growing market and changing consumer’s preferences.
COMPETITION• GENERAL MOTORS• FORD• NISSAN• VOLKSWAGEN• AUSTIN• HONDA
ECONOMICAL• The innovation and lowest
costs made that Toyota has an sustainable financial situation.
LEGAL• some countries impose restriction
on foreign countries to enter their markets in order to try to sustain the export and adopt new precautions of the competition law.
TECHNOLOGY
Demand at Capacity
Operational Cycle Time
Total Product Cycle Time
Line Balancing
Kabans
PORTER ANALYSIS• Low. There are various types of suppliers in the vehicles industry,
including the cooling system, electrical system, braking system and fuel supply system distributed across the globe.
Bargaining power of suppliers
• Medium. This mean that there are a lot of consumers but there’s also a lot of substitutes or competitors so if the consumer doesn’t agreed with the automobile,
Bargaining power of buyers
• Low. The entrants cannot enter to the automotive industry easily, as automobiles are special products that require a large amount of money on the design, electronic functions, and safety issues
Threat of new entrants
• High. The top eight auto companies have occupy large part of global revenues, and these automobile manufacturers strengthened the globalization and consolidation across the worldwide range
Rivalry among competitors
• Medium. There are a lot of substitutes to the automobile industry, but the automobiles have especial advantages over the substitutes that´s why the threats of substitutes is medium
Threat of substitutes
S•Flexible Production
•Quality, durability and reliability
•Strong management philosophy
•Increased worker productivity
•Product strategy
W
• Idle time of workers while the dies are changing
•Long production creates Massive inventories and that had to be store.
•The lack of capital to build a manufacturer of automobiles in another country.
•The assemble line made that the workers had little incentive to minimize defects and if the initial machine settings were wrong, long production runs resulted in a production of a large number of defects.
•Capital expenditures in create components in- house for essential subassemblies and bodies.
O•Growing market•Changing customers preferences
•Lower wage scales in smaller firms
•Government support
•Innovative work practices
T
•Increasing maintenance and oil costs
•New labor laws •North American and Western Europe were establishing operations in Japan and Market saturation
•Japanese economy was starved of capital,that made it difficult to finance new investments.
•Unknown new markets
TOWSOPPORTUNITIES
1) Growing market2) Changing customers
preferences3) Lower wage scales in smaller
firms4) Government support5) Innovative work practices
THREATS1) Increasing maintenance and
oil costs2) New labor laws 3) Competitors and Market
saturation4) Japanese economy 5) Unknown new markets
STRENGHTSA) Flexible ProductionB) Quality, durability and
reliability C) Strong management
philosophy D) Increased worker productivityE) Product strategy
SO Strategies:5a. Apply the Kanban, a scheduling
system that helps to determined what to produce, when to produce it, and how much to produce, is a scheduling system for lean and just-in-time (JIT) production.
ST Strategies:5e. Learn about the needs of the
new markets and redesigned several of its models based on feedback of consumer surveys and road test.
WEAKNESSESA) High cost of specialist
workers.B) Massive inventories C) The lack of capital to expandD) The assemble line E) High cost of create
components.
WO Strategies:5d. Place a cord above every
workstation and instructed workers to stop the assembly line if a problem emerged that could not be fixed. So the workers learn to identify and resolve problems.
WT Strategies:3c. Joint venture with a competitor
that provided a chance to find out whether it could build cars.
SUMMARY
TOWS Apply the Kanban Redesigned models according to new
markets Identify and resolve problems before
ending of the assemble line Joint venture with competitors
IFE-MATRIXWEIGHT RATING SCORE
STRENGHTS
Flexible Production 0,12 4 0,48
Quality, durability and reliability 0,12 4 0,48
Management philosophy 0,05 4 0,20
Worker productivity 0,14 3 0,42
Product strategy 0,10 4 0,40
WEAKNESSES
High cost of specialist workers. 0,05 1 0,05
Massive inventories 0,05 2 0,10
Capital to expand 0,13 1 0,13
Assemble line 0,15 1 0,15
Cost of create components 0,09 2 0,18
TOTAL 100/100 2,59
EFE-MATRIXWEIGHT RATING SCORE
OPPORTUNITIESGrowing market 0,13 4 0,52Changing customers preferences 0,10 3 0,30
Wage scales in smaller firms 0,12 2 0,24
Government support0,08 2 0,16
Innovative work practices 0,09 4 0,36
THREATSIncreasing maintenance and oil costs
0,07 3 0,21
New labor laws 0,05 3 0,15Competitors and market saturation 0,12 4 0,48
Japanese economy 0,12 2 0,24Unknown new markets
0,12 3 0,36
TOTAL 100/100 3,02
SUMMARY
IFE – EFE The Internal – External Matrix shows that
Toyota is a strong company in the automobile industry and the analysis recommended that Toyota should keep growing and building to reach the Vision. The Toyota Company should take advantage of its efficient production system, innovation, brand internationally known and the growing market situation
SPACE-MATRIX Internal Strategic Position External Strategic Position
Y
FINANCIAL (FS)+6 best, +1 worst(+6) Work Strategy(+4) Market Share(+3) Capital to expand(+5) Total Revenue(+3) Export SalesAvg. = 4.2
ENVIRONMENTAL (ES)-1 Best, -6 Worst(-2) Demand Variability(-4) Competitive pressure(-3) Competition Price(-3) Barriers to entry(-1) Growing demandAvg. = -2.6
X
COMPETITIVE (CA)-1 best, -6 worst(-3) Low Price(-2) Variety(-2) Control over supplier(-1) Productivity(-1) Product QualityAvg. = -1.8
INDUSTRY (IS)+6 best, +1 worst(+6) Growth potential(+6) Profit potential(+2) Ease of entry(+5) Productivity(+6) Resource UtilizationAvg. = 5
SPACE-MATRIX
SUMMARY
SPACE Toyota is has a strong competitive
position in the market with rapid growth. It needs to use its internal strengths to develop a market penetration and market development strategy. This can include product development, integration with other companies and acquisition of competitors.
ALTERNATIVESALTERNATIVE PROS CONSKanban system Determined what to
produce, when to produce it, and how much to produce
Disruptions with workersCost of capacitating
Joint venture with General Motors
Facilities to expand to America and build quality cars.Deal with American Union
Trust Issues
Redesigned models according to new markets
Successful enter to new marketsIncrease revenues
Additional invest in technologyHigh cost of market research
RECOMMENDATION Toyota has to keep the same innovation,
productivity and commitment level as they did at the beginning, the
Toyota model of production has been globally recognized because the strategies that had applied are correct and it success and utility taking advantage of all their recourses and with a low general cost.
The vision is too ambitious and the people who work in TOYOTA believe in it, that’s why they work so hard to reach it.
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