Toyota Manufacturing Policies

Abstract

This study involved the evaluation of manufacturing policies adopted by Toyota manufacturing company. It also explores on the different strategic plans used in manufacturing processes by Toyota Company. The company uses the lean manufacturing strategy with the Just in time philosophy. Toyota also embraces the continuous development provisions and it is much focused on quality assurance (Toyota Global, 2003). Toyota has adopted the use sand cone model as opposed to the tradeoff decisions during the uncertainties of make or buy. The company has the capacity to forecast its demands and have a rough idea of the expected production capacity.

Products/services

Toyota is recognized because of its manufacture of the range of vehicles across the world. Although the company is based in Japan, it manufactures automobiles and sells them globally. The Toyota Industries Corporation is not only limited to the manufacturing of automobiles, but it also manufactures material handling equipment and textile machinery. The manufactured automobile and its related products are the vehicles, car air-conditioning compressors, engines, stamping dies, and car electronics (Toyota Global, 2003). The material handling equipment includes the lift trucks and other equipment related to transportation, storage, and sorting of goods. The textile machinery produced are the spinning machinery and the weaving machinery. 

Markets and customers

Toyota has global market since the company has international wings. Their customers are across the world. The company adopts the philosophy of “customer first.” The Toyota market has stretched to Europe, USA, and other continents. In 2002 the company registered a sale of 760000 units in the European market (Toyota Global, 2003). The Toyota market in Japan has about 280 dealers who have employed approximately 33000 sales personnel. Fifteen of those dealers are owned by Toyota while the rest operates independently. Toyota has observed that the customers of its motors have increased their revenue by around 12.81% within the first quarter of the 2017 year on year. The Toyota’s customer in the miscellaneous manufacturing industry has registered the highest revenue growth of 58.02% while its customers from consumers financial services industries have registered the lowest revenue growth of -18.68% within the first quarter of 2017 (CSIMarket, 2017).

Suppliers/vendors

Toyota engages multiple suppliers throughout the supply chain. The different suppliers adopted by Toyota, delivers the specific materials required by the company. Despite having several suppliers, Toyota tries to establish strong relationships with these suppliers to ensure there is timely delivery of the right material. The supplier is obliged to get it right the first time when dealing with Toyota. According to CSIMarket (2017), General Electric Company is the main supplier with the highest market capacity in supplying the materials to the Toyota. However, there are other numerous suppliers that Toyota engages in the supply chain. 

Facilities/distribution centers

Toyota does not believe in the long storage of material that will reduce the efficiency of production. However, the company does not operate without the physical premises. Toyota has the plants where it conducts the manufacturing of its product. According to CSIMarket (2017), the company also has about 15 dealers of its own. These dealers are used in distributing the Toyota products to the relevant destinations. Toyota holds that the establishment of extensive sales network has contributed to the growth of the Japanese market. It has been acknowledged that the increased volume of sales in Japan has been achieved through the established salesperson that sells to the end customers after visiting them to their homes or offices (CSIMarket, 2017). This is an indication of the importance of the distribution networks which reach out to the customers as structured by Toyota. 

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Toyota strategic planning

Toyota Company is widely recognized as using the lean manufacturing strategy (Coetzee, Merwe & Dyk, 2016). This strategy helps to reduce the waste within the manufacturing processes. Lean production focuses on what adds value and then neglects or minimizes any waste might lead to the added cost without adding value. According to Ruttimann and Stockli (2016), the use of lean by the Toyota Company has made the lean to be named as the Toyota Production System (TPS). Lean is grounded on the provisions of the TPS. The company believes that holding excessive stock which does not add value will contribute to tying capital in that stock which could be used for better investments (El-Namrouty and AbuShaaban, 2013). However, the lean production does not discourage the holding of stock, but it discourages the excessive stock that will deprive the company of performing efficiently.

There are several types of waste that lean production strives to minimize. El-Namrouty and AbuShaaban (2013) identified the seven major wastes which lean manufacturing aims at minimizing. They include; overproduction, inventory, transportation, waiting, motion, and over processing. The waste of overproduction involves producing more products than the demanded number by the customers and also producing the product early before the customer asks for it.  Overproduction leads to obsolescence of stock and causes shortages of required materials thus creating excessive idle time for human the work in progress. The unnecessary materials are attached to financial implications (El-Namrouty and AbuShaaban, 2013). They also require a large space for storage which could be occupied by other materials and also they are more prone to the defects when still in the store. According to lean manufacturing, this is an unnecessary waste. The transportation waste explores on the movement of materials within the organization. This is an aspect of material double-handling which increases the risk to the materials. The transportation also consumes take for the employees who should be engaged in other activities in the production line. Lean manufacturing aims at having reduced transportation within the organization. This can be achieved by putting the material in the right place for the first time (El-Namrouty and AbuShaaban, 2013). The waste of waiting for stems from the failure by machines which makes the employees have idle time within the organization. The waiting waste also affects goods since they will not move at the required pace. The waiting slows the production process thus effective proactive measures need to be in place. The waste of motion is associated with unnecessary frequent movements by the workers within the organization (Toyota Global, 2003). Such movements deprive the organization of the energy that could be spent in the production process. Lean production seeks to ensure the employees are at their right place and have minimal movements to help increase their productivity in the organization. The last waste of over processing involves adding unnecessary features to a product that what was demanded by the customer. It involves providing extra complex solutions when a situation demanded simple solutions. This will be a waste of time and resources, and therefore the employees will be propelled to overproduce as a way of recovering such losses (El-Namrouty and AbuShaaban, 2013). The lean manufacturing aims at reducing all those seven wastes to reduce their cost of production to help increase the profitability.

The use of lean production makes the company adopt the philosophy of make to order and not the make to stock. Lean discourages the accumulation of stock, and it stipulates that a product need to be assembled when there is a placed order. According to Ibrahim (2005), increased inventory not only leads to increased storage costs but also leads to incorrect lead times. The Toyota Company employs the technique to ensure the stock is held at the minimum levels. Therefore, the aspect of make to stock is not present in Toyota. However, Toyota does not impose policies on order frequency restrictions. What guides the company is the customer orders. A customer can place an order from Toyota as many times as they wish regardless of the quantity levels. The number of the customers defines the frequency in which Toyota will as well place the order of the raw materials from their suppliers (Briody Trotter & Meerwarth, 2016). What lean production discourages is the duplication of efforts especially within the organization, but it does not limit the number of orders the customer can place with a period. In improving its operations, Toyota has employed the continuous improvement and lean production strategy. Continuous improvement is popularly known as the Kaizen. The Kaizen supports the lean production since any improvement aims at reducing the waste. 

The Toyota Company uses the just in time philosophy as the strategy for capacity planning. According to Kootanaee, Babu and Talari (2013), the just in time philosophy has mostly been employed in the Japanese companies, and it involves having the items of the right quality and quantity. Such items must be made available at the right time and in the right place. The philosophy has been associated with positive feedbacks like the improved quality, productivity, and efficiency which have been steered by the reduced cost. However, the workability of the philosophy is pegged on the establishment of a good relationship between the company and its supplier and customers (Bon & Garai, 2011). The Toyota Company has invested heavily in establishing a good working relationship with is customers and suppliers to help support this philosophy. It will not be possible for Toyota to provide quality products at the right time if its supplies of the parts are not responsive and reliable. The supplier development by Toyota makes it possible to have a good relationship with its suppliers who provide quality raw materials (Briody Trotter & Meerwarth, 2016). The use of JIT philosophy is favored by the lean production by Toyota. Since lean production recognizes the transportation as a waste within the organization, the adoption of JIT philosophy ensures the materials from the suppliers are deposited in the right areas. This will help to reduce the double handling of materials as discouraged by the lean production hence reducing the possible defects. The lean production and JIT have worked collaboratively in Toyota Company to eliminate all the waste. The application of JIT by Toyota has enabled it to minimize the products defects and the customer complaints. 

Toyota uses both the quantitative and qualitative forecasting technique to predict the demand for its products. The qualitative technique is where Toyota requests the management to meet and deliberate on the likely possible demand to be anticipated. However, the use of quantitative techniques is more visible in Toyota when predicting their demand and sales (El-Namrouty and AbuShaaban, 2013). This entails the carrying out the computations where the company uses the past figures as the guide (time series). Through the forecasting methods, Toyota has been able to develop the rough estimates of the likely demand to be anticipated. On the other hand, there is a concept of make or buy decision which many companies have struggled to maintain. Most of the manufacturing companies adopt to outsource some duties to make them concentrate on what they believe to the core.  Toyota approaches the make or buys and trade-off decisions from a different angle. According to Mandar (2011), Toyota adopts the sand cone model to evade the tradeoff circumstances. The model stipulates that during the manufacturing process, the high attention should at first be diverted to the attainment of quality, then shifted to the focus on the dependability of production processes. The focus on production flexibility and the cost efficiency will then follow in that model (El-Namrouty and AbuShaaban, 2013). This model has enabled the Toyota to maintain production of quality products. 

The Toyota company performance could not be possible if there were no collaboration among the different functions that make the company. According to Briody Trotter and Meerwarth (2016), the interactions within the organization between and among different workgroups and departments are essential in maintaining the lean production strategy adopted by Toyota. Such relationships ought to be structured to help the company realize its goals. The former president of Toyota (2005 to 2009), Katsuaki Watanabe, recognized that the Toyota had developed their codes of relationship depicted as “Toyota way.” This kind of code fostered the continuous improvement within the company alongside with the development of respect among the workforce (Briody Trotter & Meerwarth, 2016). Toyota has been founded by strong relationships with its partners to help it maintain lean manufacturing strategy. However, its relationships are not only aimed at the side of supplier and customers but also within the organization where the various departments collaborate to achieve the common goal. The interrelationships by the Toyota Company departments have enabled the company to maintain the production of the right product at the right time and in the right quality and quantity. 

The metric used to measure the manufacturing performance by Toyota includes the cost, speed, quality, dependability, dependability, and efficiency. However, it is notable that Toyota diverts a lot of its attention to the quality concerns. Toyota manufacturing is spearheaded by sand cone model. This model places importance on quality, dependability, flexibility and cost efficiency respectively. Such metrics helps to evaluate the manufacturing performance of Toyota. Through the application of just in time philosophy, Toyota believes that performance metrics will report a positive feedback. Precisely, the adoption of JIT ensures the production of quality products which are dependable. On the other hand, the use of lean manufacturing is essential in reducing the cost due to the reduced waste. 

Strategy improvement

There are some improvements in manufacturing strategy that could be recommended. Toyota should consider incorporating the environmental friendly procedures that will improve their manufacturing processes. The environmentally friendly procedures will help to support the production of energy saving products without neglecting the value within the supply chain (Briody Trotter & Meerwarth, 2016). Currently, the world is a shifting to green procurement. Therefore, Toyota needs to incorporate the green measures within its manufacturing cycle to cope with the world dynamics. Most of the investors across the world are more gravitated to invest in companies that have not only great reputation in the form of profits but also companies that are environmentally conscious. 

Toyota should aim at expanding its manufacturing activities into the emerging markets. Before adopting this strategy, Toyota should monitor the conditions of the market within such markets and adapt to the needs of such markets (El-Namrouty and AbuShaaban, 2013). The company should develop the production and supply structures which will facilitate optimum pricing of the product as well as the delivery. This will help to maintain the value chain for customers across such developing countries. Although the Toyota tried to expand globally, it still needs to divert more energy in establishing the strong organization in the developing country. The company, however, believes in uniformity of its manufacturing strategies across their firms. This uniformity sometimes will need to be evaluated critically to meet the demands of customers in different companies. There are some strategies that will in some countries but fail in others (Briody Trotter & Meerwarth, 2016). However, despite Toyota instituting uniformity in manufacturing strategies, it needs to put in place the contingencies that are present in certain countries to make it have smooth manufacturing practices.