Using_Teams_in_Production_and_Operations_Management

Using Teams in Production and Operations Management Jason R. Lochlain Contemporary Business BUS 508 Hampton University Professor Etido Agio May 8, 2012 Describe a major global corporation: (1) a leading manufacturer or (2) a major retail or restaurant business. Describe the type of business, market share, financials, size, and global presence. Toyota Motor Company is one of the largest auto makers in the world, employing over 300 thousand workers around the globe with revenue totaling 19 trillion yen and profits of 284 billion yen as of first quarter 2012 (Toyota Motor Corporation, 2012). The company headquarters is located in Toyota City, Japan and was founded in 1937 by Kiichiro Toyoda. Toyota is led by CEO Akio Toyoda who is carrying on the tradition of innovation and leading the world in quality automobile manufacturing. Toyota Motor Company is part of a larger parent company, the Toyota Group, which includes many subsidiaries in the auto industry as well as those involved in financial services, insurance, technology development, robotics, and communications. Toyota maintains a 15 percent market share so far for the 2012 year, exceeding its 12 percent market share recorded from the previous year. Toyota is ranking higher in market share compared to other Asian car manufacturers and is quickly catching up to leading American car manufacturers such as GM, which has a current market share close to 18 percent (Toyota Motor Corporation, 2012). Toyota is a leading car and truck manufacturer that has operations that span the globe in Asia, North America, and Europe. Toyota predominantly produces small sub-compact cars, light trucks, SUV’s, hybrid economically friendly cars, crossover type vehicles, and light commercial vehicles. Through their Lexus brand Toyota is offering high-end cars that fit the luxury market. Toyota has always been a car manufacturer that has put value and quality first in producing their vehicles which are exported all over the world and sold in many foreign markets. Today the company is multinational and has factories operating in Europe, United States, Canada, as well as Japan, where the company originated. Many of these regional factories located throughout Europe, North America, and Asia have taken advantage of skilled work forces, lower costs, reduced taxes, and prime locations that allow for convenient distribution of their products to the markets where they are most sold (Toyota Motor Company, 2012). Describe the company’s production or operations management. Toyota has a unique system to ensure smooth operation of its production facilities and achieve the highest quality results and products. The Toyota Production System encompasses a philosophy of perpetual progression by continuously seeking to improve every facet of the business, to have respect for all people in the organization, and taking time to analyze problems carefully in order to find the right solution. This system also seeks to empower the employees of the company to take the initiative when issues arise, or when defects are found and to communicate needs to the other members of the production team. Workers and managers alike at Toyota’s plants are encouraged take an active approach when they find or suspect any problems concerning production or the products themselves. Another objective includes the reduction and elimination of waste and wasteful practices in order to save valuable resources. Toyota also seeks to foster an environment that focuses on continued development and learning by conducting training sessions based on their philosophies. The company even pushes their partners and suppliers to work to increase their own efficiencies which will contribute additional value to Toyota’s business (Kageyama, 2012). The assembly line is much different at a Toyota auto manufacturing plant compared to that of what is typically found in an American or European automobile factory. The cars are built by a flexible system that involves the components being supported and moved along the factory floor by means of moving stands that allowed for adjustments and changes to be made in the type or style of products being manufactured. The plant could conceivably build several different models on the same assembly line without any real difficulty. When a different model was needed to be produced the assembly line team could switch up just the required parts and continue production without any downtime, waiting periods related to retooling or refitting machines, or additional costs from adding equipment (Toyota Motor Corporation, 2012). Work teams were trained to be efficient by doing a series of tasks and doing them flawlessly to ensure efficiency and impeccable quality. The Toyota Production System is a tool to reduce stress in the workforce and counter inconsistent production and quality of products. Under this system Toyota established a standardized way of performing tasks that would allow for close tolerances, lower waste produced, efficient use of time, products only manufactured to fill necessary demands without unneeded excesses stockpiled, products delivered on time when they expected by customers, correction of defects immediately upon discovery, and striving to always improve methods and operations (Toyota Motor Corporation, 2012). These methods were originally devised by Toyota’s founder Kiichiro Toyoda and referred to as “just-in-time production.” This system evolved over time and became the Toyota Production System, and has since become better known as the “Toyota Way.” (Fackler, 2007). Many people in other industries around the globe have learned from these methods and have adopted them into their own businesses in an effort to increase efficiencies and production while reducing waste. For many professionals around the world who use this system it is often universally referred to as “lean manufacturing.” for the way it uses only the right amount of company resources for the maximum amount of products and results (Strategos, 2012). The Toyota Way is meant to be effective and efficient from the beginning by design with allowances made for constant improvements over time. The Toyota Way is a waste reduction philosophy that states that work processes should be conducted intelligently and that inventory should only be produced to fill the need or to replace what has immediately been used up and requires restocking (Toyota Motor Corporation, 2012). One of the main principles of the Toyota Way is the concept of Kaizen, which suggests that the enterprise be in a constant state of improvement and innovation. If improvements are needed or there are suspected problems then instead of relying on second-hand information it is necessary to go directly to the source of the problem and assess the situation before making decisions. This concept is known as Genchi Genbutsu in Japanese. Under this system all Toyota employees, company leaders, and their partners should work together as a team by sharing the work as a group or working individually, while maintaining the courage to meet any challenges that they encounter (Toyota Motor Corporation, 2012). Toyota also would like to foster an environment where there is mutual respect for all people regardless of their rank, status, or seniority in the company. The Toyota Way entails the use of a “pull system” to prevent any overproduction of products that could be wasted. The workload should be evenly distributed to avoid any stress from being overworked and overwhelmed in the workplace (Toyota Motor Corporation, 2012). This basically means that workers should be able to work methodically, producing the highest quality products instead of working at break neck speed and producing only mediocre products. Under this system if a worker detects a problem or product defect then they have the power to stop production in order to address the issue. Describe and evaluate the company’s use of teams in production and operations management. The production process at Toyota’s plants is typically conducted in teams of highly skilled workers who can perform a multitude of tasks in unison with their team mates, and doing self-imposed quality check during the whole process of production. These teams had to collaborate and cooperate with one another and be flexible in their duties. They must be able to meet the demands of production needs and be able to adjust to changes in the assembly processes without delay or unneeded downtime. The Toyota Way and the production methodology that it endorses is based largely on teamwork and working together efficiently. Employees at Toyota should maintain a standardized method and flow of work to be done (Toyota Motor Corporation, 2012). Problems will be easily identified if all workers are performing their work in a similar pattern; so when a problem arises everyone will recognize it and see that it is corrected. The workload at Toyota’s automobile manufacturing facilities is to be dispersed evenly across all work groups and craftsman so that they all share the load without any one worker feeling overburdened. It is firmly believed that those workers that become stressed from work are prone to making mistakes and causing waste to be created. When one employee on a Toyota assembly line sees a problem he or she will alert the rest of the team so that they can all fix it before it reaches a critical stage later in the production process that will cost more in repairs; thus preventing waste for the company (Toyota Motor Corporation, 2012). This system relies on exceptional leaders, impeccable workers, skilled craftsman, and good teamwork from everyone. The Toyota Way basically demands that everyone be a part of the solution; if not they risk being a part of the problem. The team that has respect for one another, comes to each other’s aid, challenges everyone to improve and learn, and strives to constantly improve the production process will inevitably become strong and most effective in their work efforts (Toyota Motor Corporation, 2012). The Toyota Way also largely depends on building teams that genuinely care about the cause and have the skills and talents to actively contribute to the completion of the company’s goals. The team must make this company mission their own which states: “Foster a corporate culture that enhances both individual creativity and the value of teamwork, while honoring mutual trust and respect between labor and management.” (Toyota Motor Corporation, 2012). The employees must be excellent team players and able to fully adopt the company’s philosophies of continued improvement and mission to eliminate waste. To reduce waste employees must be diligent in preventing overproduction, idle waiting moments that have no real benefit, unneeded shipping of products, keeping excess items in inventory, excessive processing, and unnecessary defects in products. Analyze and evaluate the company’s ability to adjust to a major economic, environmental, or natural crisis (such as the real estate crash, financial crisis, nuclear meltdown, hurricane, flood, oil spill, etc.) and communicate effectively with their employees and customers about issues caused by the crisis. Toyota experienced several setbacks and crises in the past decade, which only now are they beginning to fully recover from and gain renewed strength. Like many other companies across Japan and around the globe Toyota was experiencing its own financial hardships as a result of the global financial crisis. In 2008 Toyota had to report a loss, which coincidently was the first in 70 years for the company. In response to these events the company temporarily closed all of its factories in Japan to limit production and allow it to find markets for the products that it had since stockpiled. Many of Toyota’s customers in the United States and Europe were cutting back on their expenditures as a result of the crisis, which directly affected Toyota’s profits. Toyota’s financial services division was forced to request an emergency loan from the Japan Bank (Willacy, 2009). Toyota was also experiencing the adverse affects of rising costs of raw materials, transportation, and labor. Since 2009 the company has suffered because of a multitude of setbacks such as record losses and product recalls. Even though only a small fraction of cases actually involved defective parts or workmanship the company was hit with severe fines from the U.S. government (Kageyama, 2012). In 2011 Japan was struck by several natural disasters which included earthquakes, tsunamis, the subsequent nuclear reactor malfunction, and near complete nuclear meltdown were exceptionally devastating to the company, causing a dramatic loss in production time and sales (Vlasic & Fackler, 2008). These disasters caused much damage to Japan’s infrastructure, so while Toyota’s facilities were largely unharmed there was a complete shutdown of production. There was no electricity to power the facilities for normal operation and there was no adequate method of shipping the finished products since the ports were severely damaged and inoperable. As a result of the earthquake and tsunami all of Japan’s nuclear reactors have been shut down indefinitely, which dramatically affects the power grid that the car manufacturer depends on for normal operation. These concerns coupled with ongoing power shortage fears have prompted the company to implement a plan to install additional systems to supplement the generators it already has in operation (Kageyama, 2012). Through all of these troubling times Toyota has communicated its plans directly to its stakeholders, customers, and general public through the media, investor relations correspondence, and company websites. Toyota’s CEO, Akio Toyoda has recently stated during a press conference in Japan that he plans to turn the company around, increase efficiencies, increase market share, and recover lost productivity and profits (Kim, 2012). Despite hardships and challenges facing Toyota, Akio Toyoda has pledged to realign the company with the principles that it pioneered to enhance efficiency, reduce waste, empower employees, ensure highest quality products, and develop work environments where constant improvements are being made (Kim, 2012). In order to be able to meet demand and to get products to customers more economically many factories are being set up near the markets that they are meant to serve. This greatly reduces the cost of transporting the products from manufacturing plants far away, such as Japan shipping its products to the United States. Plants set up in North America and Europe also benefit from avoiding additional costs imposed on the auto manufacturer in their native Japan. There they must pay exorbitant taxes, expensive labor regulations, difficult energy policies, and the adverse affects of a very strong yen (Kageyama, 2012). Despite all of these setbacks Toyota has been able to keep itself on a steady course and is now poised to regain the level of productivity and profit that it once had in earlier years before the financial crisis and natural disasters that have plagued the company. According to Kim, despite losing nine weeks’ worth of sales to the U.S. markets, operating profits are steadily increasing up to $3 billion, with predictions of achieving annual profits over $12 billion (2012). This is still a fraction of what the company made previously, before the crises hit, but it is definitely progress that shows the company is on the right track to recovery. The plan, as explained by CEO Akio Toyoda and the company’s management team, involves further improving profitability by aggressively cutting costs, keeping quality exceptionally high, reducing waste in the production process and making products that fit the demand of the intended markets (Kim, 2012). The vision that Toyoda has for the company and the goals he has set for securing future success is best described in the corporate vision statement: "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. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet challenging goals by engaging the talent and passion of people, who believe there is always a better way." (Toyota Motor Corporation, 2012). Toyoda has vowed that Toyota is committed to keeping jobs in Japan by planning to build 3 million vehicles a year, which is significantly more than their competitors are producing. Many critics have stated that Toyota has too much production taking place in Japan despite the numerous obstacles that are standing in its way, but Akio Toyoda wants to keep jobs in Japan for the benefit of the Japanese people who are striving to make a comeback after numerous crises (Kim, 2012). References Boone, L. E. & Kurtz, D. L. (2011). Contemporary business: 2011 custom edition (13th ed.). Hoboken, NJ: John Wiley & Sons. Buss, D. (2012). Only Ford, GM, Toyota to gain share through 2015, study says. Retrieved from http://www.forbes.com Fackler, M. (2007). The Toyota Way: Is translated for a new generation of foreign managers. Retrieved from http://www.nytimes.com Kageyama, Y. (2012). Toyota quarterly profit quadruples on recovery. Retrieved from http://news.yahoo.com Kageyama, Y. (2012). Toyota shows innovations in production methods. Retrieved from http://finance.yahoo.com Kim, C. (2012). Toyota to treble profit this year, trim costs. 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