Supply Chain Management

The term "supply chain" is synonymous with Toyota's management of it. It's complex understanding sets the company apart from the rest of the flock in the automaker industry. The basic network of Toyota's supply effectiveness stems from its: supplier association (hosjin kanri), knowledge sharing network, and 4vL framework.

Toyota's Supplier Support Center (TSSC) allows for the "hoskin kanri" to assert itself throughout the supply chain management by allowing a cross functional process management and the Toyota Production System (TPS) to be integrated with their direct suppliers. The effects of the knowledge sharing network aide to the coordination and supply chain/product customization by having suppliers identify themselves as part of an interdependent economic network.

The 4Vl principles of learning are homogenous throughout the Toyota supply chain management processes to create a sort of "balance. These principles consist of: variety, velocity, variability and visibility. Variety allows a balance between market demands and operational efficiency. Velocity of supply chain flows is the next key and it works through all facets of the supply chain demonstrating the efficiency and speed at which processes in the chain are achieved. Variability affects individual processes and allows the supply chains to flow with low levels of inventory which vice versa (high levels of inventory) can mask waste. Finally Visibility can be considered the dock to which the other principles are tied to, without visibility no measurement of success and compliance can be determined or rewarded.

Toyota has employed these principles from bottom to top in their supply chain with the use of the Toyota Production System (TPS). The Toyota production system is a technology of comprehensive production management the Japanese invented a hundred years after opening up to the modern world. The basic idea of this system is to maintain a continuous flow of products in factories in order to flexibly adapt to demand changes. The realization of such

production flow is called Just-in-time production, which means producing only necessary units in a necessary quantity at a necessary time. As a result, the excess inventories and the excess work-force will be naturally diminished, thereby achieving the purposes of increased productivity and cost reduction.

The basic principle of Just-in-time production simply means the Toyota production system has been developed by steadily pursuing the conformed way of production management. With the realization of this concept, unnecessary intermediate and finished product inventories would be eliminated. Although, cost reduction is the system's most important goal, it must achieve three other sub-goals in order to achieve its primary objective. They include: quantity control, quality assurance, respect-for-humanity. Automation ("Jidoka" in Japanese) may be loosely interpreted as autonomous defects control. It supports Just-in-time by never allowing defective units from the preceding process to flow into and disrupt a subsequent process. These tools allow Toyota to create a strong house for practical theories since they have been tested and are successful for not only automakers but other venues as well.

Projects

There are many different projects associated with running a company.Some examples of projects are concerts, construction of buildings, andthe production of large aircrafts. In regards to Toyota, one exampleof a project would be the production of a new line of automobiles.The production project example would be the basic form of operationsinvolved in the process.
The primary tasks that would be necessary in carrying out thisproject within Toyota would be allocating the proper resources, suchas the parts needed in the various stages of production, assigningproject leaders to oversee the process, scheduling and organizing timeand expenses in order to finish when needed and many more. The tasksinvolved in a project can be traced back into the basic principles ofmanagement including, planning, organizing, leading, and controlling.The tasks get broken down into incremental stages and carried out oneat a time.
Our company Toyota most commonly uses Gantt charts in order to carryout the project as intended. The activity description is stated alongthe rows and the estimated time along the columns. This gives theproject leaders a simplified view of the tasks at hand and how theywill be addressed. These charts are put together through specializedsoftware that is varied among different companies in the market. Itcannot be pinpointed whether or not employees at Toyota use strictlyone particular program or switch off between various types.Regardless of the fact, the software all has one priority, and that isto make the lives of project leaders easier by putting projects tasksin step by step format.
Our recommendations to Toyota would be to make sure that the projectleader is selected properly since he or she is the most importantaspect in a project. It is their job to make sure everything isrunning smoothly and according to plan.

Quality Control

Toyota is a company at the forefront of automotive and engineering innovation and quality. Quality control charts are used by Toyota but in a different manner. Since quality control receives most of the attention because of its statistical nature and the odds of error in sampling sizes are far too great to risk Quality Control is “built into the process”. That is to say that Quality Control can be assured only when it is built into the process and when said inspection provides immediate and accurate feedback at the source of the defect. Thus newer methods were added on to Quality Control that required and emphasis on inspection be it self inspection or more progressively Successive Inspection. Self-Inspection allows for the most instantaneous feedback but it is flawed; unintentional errors are compromise judgments due to work loads are presented. More effectiveness in QC lies within Successive Inspection where workers inspect products passed along from a previous operation before processing them themselves. This method improves prior methods but Toyota has aided by “enhancing” the S.I. method by providing systems and devices that allow for immediate and efficient defect detection. The Quality Control now becomes utmost reliant on Enhanced Successive Inspection in the plant itself but Toyota does not rest in the field of QC. Management sends out Q.C. agents to detect errors at the Source; Vertical and Horizontal Source Detection. Toyota possesses a penchant of trust for their employees and relies heavily on a trained and intelligent workforce. The Six Sigma practice is apparent as the company has a huge philosophy on detection and prevention of errors limiting it to the 99.999991%.

4 Dimensions of Quality

Quality of Design
Historically, Toyota has invested much time and money in research and development when designing the quality of its products. However, recent years have shown that Toyota’s quality of design has been falling. “In Sept 2006, Jim Press, then the company's President of North American Operations, at a Toyota Japan headquarters presentation, reported that the number of Toyota vehicles recalled had increased sharply from 2003 to 2005. Parenthetically, I note that complaints lodged against Toyota with NHTSA, increased in almost linear fashion from about 1,100 in the year 2000 to almost 5,000 in 2009”(Cole 1). Akio Toyoda recently blamed the lack of human resources for the company’s product quality failure. He believes that the company could not train its employees fast enough to keep up with Toyota’s growth rate. However, many industry analysts believe that the top priority of Toyota’s quality of design has switched from product safety and quality to high sales volumes and low costs.

Quality of Conformance
Because of Toyota’s recent lack of quality in design, production has suffered as a result. Recently, the company has experienced a large number of recalls including a sticking accelerator pedal and a floor mat recall of many Toyota Camrys produced from 2007 to 2010. Recent years have shown that many of Toyota’s products have not met the quality and safety specifications of its customers.

Abilities
As with any automobile, Toyota’s customers are looking to buy a car that is reliable and maintainable. Since the 1970s, Toyota has had a history of producing cheap cars with high MTBF. This reliability is what has made Toyota the best car manufacturing company in the world. However, this MTBF has dropped significantly in recent years, made evident of the recent recalls. Toyota has a long road ahead of them to restore its product’s reputation as reliable and maintainable.

Field Service
Toyota has always offered a number of different warranties for different cars. In reference to repairing all vehicles affected by the recall, Toyota has posted the following on their new website dedicated to the recall.
“Toyota will begin contacting customers to let them know when to bring in their vehicles for the fix, and some of them will be notified as early as this week (Week beginning, Monday, February 1). Because of the number of vehicles involved, it will take time to process and mail the instructions to all involved vehicle owners, and Toyota appreciates its owners’ patience during this time. Owners will only receive a letter if their vehicle is involved in the recall. Upon receipt of an owner notification letter that their vehicle is involved, owners will be asked to please contact a local Toyota dealership to schedule an appointment to have their vehicle fixed (Toyota).
The company has taken full responsibility for the recall situation, and will pay the all the costs of repairs.

Recommendations
Since quality starts with the design of the product, Toyota should invest more time and money into research and development. This will put a greater emphasis on creating a product that meets and surpasses customer’s expectations. In addition, the company should invest more on training its employees, as well as focusing more on inspecting each product before it is delivered to the customer. This will help limit the number of recalls Toyota experiences. Overall, the company must return to its original philosophy that emphasizes quality and safety.

Robert E. Cole is Professor Emeritus, Haas School of Business and Dept. Sociology, UC Berkeley, Executive Director, and Visiting Researcher, ITEC, Doshisha University, Kyoto, Japan

http://pressroom.toyota.com/pr/tms/customer-faqs-regarding-the-sticking-153495.aspx#link 1

Toyota's Service Design

The three elements of Toyotas service-product bundle are:
-Tangible service- The manufacturing of automobile and providing a place for the customer to purchase the car (ex. Toyota Dealership).
-Psychological benefit- The satisfaction and security of owning your own source of transportation.
-Physical good- Automobile

Toyota dealerships have a provider-routed service design in which the customer is given very little options on how the service is delivered. Customers come to Toyota dealerships and meet with sales representatives to determine the best car for them. There are no other options for customers to purchase Toyota’s cars unless they buy a privately owned dealership.

Toyota deals with customer contact be separating their manufacturing and selling. Manufacturing has very low customer contact, and employees are not required to possess strong communication skills. Technology is used to create an efficient assembly line flow. At Toyota dealerships, however, customer contact is very high. Employees are required to have excellent customer service and communication skills. Here, technology is used for communication and order processing.
The Company offers a service recovery in the form of warranties. Customers are able to purchase a warranty coverage plan with every new car purchased from Toyota. For example, the 60,000-mile Powertrain warranty, which protects the customer if the engine, transmission, airbags, or front/rear wheel drive fails before 60,000 miles, may accompany the purchase of a Toyota Camry. All of Toyota’s warranty coverage plans can be found at: http://www.toyota.com/toyotaSearch/search?keyword=warranty&locale=en

Process Selection

Toyota has long been recognized as a leader in the automotive manufacturing and production industry. Toyota Production System uses the Continuous Process. Toyota creates continuous process flow to bring problems to the surface and uses the “pull” system to avoid overproduction. The Toyota Productions system (TPS) calls for the end product to be “pulled” through the system. This is to make sure the right parts reached the assembly line at the right place, just as they are need and with no excess. The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly. By using the TPS system Toyota has been able to reduce lead time and cost, while improving lead time. In 2007 Toyota became the largest company manufacturer. The 14 Principles of the Toyota way management philosophy used by the Toyota Corporation that includes TPS, is also known as Lean Manufacturing.

Toyota produces made-to-stock (MTS) customer orders in which cars are produced in a standard continuous process flow called the Toyota Productions system (TPS). Productions start when management forecasts customer demand. Once data is gathered, operations management redesigns and improves the TPS in ordered to meet customer demand. Once the cars are off the assembly line and are finished goods inventory they are shipped from the plant to a number of different dealerships across the country. The process is complete when the customer buys the car at the dealership.

The TPS falls into the Continuous and Assembly line cell in the process characteristics matrix. Workers assemble cars sequentially through the assembly line in high volume. Low labor skills are required, and the continuous process is repetitive. Although this standard process keeps costs to a minimum, there is low flexibility as a result. Historically, Toyota has prided itself in producing high quality automobiles at a low cost. However, recently the TPS has been challenged as a result of a mass recall on the accelerator pedal of eight major models including the Toyota Camry. The Company quickly responded by engineering a steel reinforcement bar for the pedal, and informing customers on how they can get their car fixed. http://pressroom.toyota.com/pr/tms/toyota/toyota-consumer-safety-advisory-102572.aspx

One of the major factors influencing Toyota’s process selection is being able to balance and maintain proper inventory within the company. Toyota noticed the market conditions and saw a demand for gas efficient vehicles, especially in the United States. Despite the high cost, Toyota had the required capital to execute their process selection. Whether it is auto parts, personnel, or simply space, Toyota makes sure to stay aware of their amount of inventory in relation to the amount of products they intend to sell. The company follows the guidelines of lean manufacturing. This embodies the principles that there is no need to overstock the warehouses with parts or cars unless they know where their products are heading. They build through the stages of production based on the demand for the materials needed to continue to the next step.

Toyota can certainly adopt some of the mass customization methods discussed. We live in a time where every company seeks to please the consumer on a personal level in order to get an edge over the competition. What better ways to do this than have your customers select cars and features to their personal liking? Toyota implemented this idea into their manufacturing process by allowing this new age of technology we live in to become a part of the production process. The company has included many features that accommodate the gadgets and gizmos being flooded into the consumer market. Toyota even has a policy where a customer can order a car online with all the bells and whistles he or she wants, and the car will get delivered to that individual within five business days.

Toyota’s Inventory Management

Inspiration can be found in the least likely of places. It was while shopping at a supermarket that the minds over at Toyota created the Toyota Production System, or more commonly known as “TPS.” The idea for this system was sparked when examining a vending machine with the simple process of a customer buying a drink, and the machine simultaneously replacing it. The Toyota Production System was originally called “Just-In-Time Production,” and fuels off of ideas composed by the founder of Toyota, Sakichi Toyoda, his son, Kiichiro Toyoda, and engineer, Taiichi Ohno.
The primary goals of the TPS are to find solutions to overburden, inconsistency, and to get rid of waste. This systems philosophy is to produce intelligently and eliminate aspects like over-production, waiting, and correction, so that inventory is not needed. One principle under the Toyota Production System is Small-lot production. Finding a way to make setups shorter and less expensive, gave Toyota the freedom to economically produce a variety of things in small quantities.
Another principle under the TPS is the process known as “Pull Production.” The intention of this process is to cut down inventory holding costs, as well as lead time. Toyota developed this idea so that the quantity of work performed at each stage of the developmental process is determined strictly by the demand for needed materials in the following stage.
These methods of cost cutting and inventory management are all becoming mimicked within different companies all over the world. Toyota was one of the pioneers to first adopt these unique methods and continue to do so today.