University of The Immaculate Conception

University of the Immaculate Conception
GRADUATE SCHOOL, A. Bonifacio St., 8000 Davao City, Philippines
BA 211 : Production Management Exam: Comprehensive AY: 2020

Professor: Dr. Presentacion C. Acosta Semester: Summer Date: July 11,2020
Instruction: Read and analyze carefully the given situation below and comply with the
requirements.
THE TOYOTA COMPANY
TOYOTA has an operating model to run their business and everyone from the lowest
level in the company and the CEO know the rules ad the game plan. In the desire for
growth, internal sources and supply chain were stretched by the opening of so many new
plants and locations around the world. Quality and Genchi Genbutsu (Go to the source to
get the facts) are hallmarks of the Toyota Production System. These are fundamentals
drove Toyota to become a large respected company.
In 2002, Toyota set a target to be the number one Global Automobile manufacturing
company in the world, an aggressive goal that required 50% growth. This is the equivalent
of Toyota starting up a company the size of Honda Automotive in just seven years.
Because of this focus, Toyota decided to stop their goal of slow and steady growth, which
allowed them to continue to make quality cars and grow market share. This growth
stretched their resources and their supply base. It became harder for them to stay focused
on quality when they were growing so fast.
When Toyota invented the Toyota Production System and it was working so well
they felt that they didn’t need to worry about being vigilant with their manufacturing
processes anymore. They felt that they have all the answers and took their eye of the ball.
In fact, Katsuaki Watanabe, the former president of Toyota, admitted in 2006 that the
company had quality problems. At that time, Watanabe acknowledged that lengthening
development times might be necessary. Instead, the company continued in its drive for
rapid growth.
The combination of rapid growth and increased product complexity has had major
implications for Toyota’s supplier management system and its overall performance. Around 70%
of the value added in Toyota’s vehicles comes from parts and subassemblies produced by its
suppliers. So the consequences of the growth and complexity were felt across the company’s
supply chain. First, Toyota personnel were stretched increasingly thin as the company’s growth
accelerated. In response to the growth, Toyota had to delegate more design work to outside
contract engineers and take on new suppliers because the internal engineering resources and
existing supplier base couldn’t keep up with the demands.
Toyota’s philosophy “Genchi Genbutsu” (Go to the source to get the facts) became
harder when there were many levels of management between the decision makers and the
problems. As a result of their rapid growth, manufacturing was taking place all over the
world. However, corporate headquarters in Japan continued to make the decisions at a
distance instead of taking input from local ‘sources’ where the factories were located.
Management stopped crossing the Lean Bridge. Lean is the vehicle that builds a bridge
between management and the process/owner operator. Performance is made visual so the
two groups can come together and solve problems/issues. Process efficiency and
effectiveness are measured and made visible to all so management can go to the process
and work with the owner to solve problems. Toyota had too many layers of management
not getting to the process to help lead solutions.
Toyota just like all automobile manufacturers has pressures on how to reduce cost.
Toyota started a program of buying products manufactured locally to their plants instead
of shipping in all components from Japan. This created more suppliers and more
complexity into its system. This added additional strain on the engineering teams and the
business as they also were growing at a fast pace.
Requirement:
You are to prepare a comprehensive written analysis of the case. For your
alternatives, refer to the topics given for review. (100pts.)
Mae B. Cañal
Comprehensive Exam of Production Management
July 11,2020
Toyota Company have these key principles, the Genchi Genbutsu which means the “real
location, real thing” and also the quality. Toyota aimed to be the no. 1 Global Automobile
Manufacturing company in the world. With this goal, they face major problem, which was
admitted by the former president of Toyota last 2006, that they didn’t stay focused on quality
while growing fast. As the company was aggressively expanding globally, it lost its focus on
quality and failed to maintain quality standards at its overseas plants.
Because of that, many problems occurred. Most of their parts and subassemblies
were produced by their suppliers. Toyota’s personnel were doing many things at the same
time but do not focused or give attention to what they are working. Aside from that they
delegate more design work the outsiders because they could not keep their demand.
What should Toyota do to aim their target? How will they aim to be number one, not
compromising the quality of vehicles while reducing its cost?
Toyota’s SWOT analysis identifies key issues, such as the effects of competition and
the company’s weaknesses based on its organizational structure and culture. To address
the threats based on competition, Toyota needs to maximize its competitive advantage
based on its innovative capabilities. The company can also further adjust its structure to
optimize its flexibility in decision-making and problem solving.
Strengths Weaknesses
- Strong brand image - Focused on the rapid growth,
products have no quality
- Has its own system (TPS)
- Hierarchal Organizational Structure
Opportunities Threats
- Growing demand - Competition from other automobile

- They have supplier and others companies
resources to support their demands - Supplier may pull out their contract
- Since they do not focus on quality,
there will be continuous
maintenance and worst, recall of
their vehicle
To have better operational management, Toyota should have quality capacity

management, in which they used their TPS or Toyota Production System (TPS). They
should not overlook their quality. Toyota should continue their Lean Process or the Lean
Bridge so that they can minimize to maximize process efficiency and capacity utilization.
Toyota should support business efficiency and cost-effectiveness in its process and capacity
design. Toyota must have or improvised its supply chain management so that they can
forecast their demand while accomplishing their target. They should create supply plans to
safeguard the availability of their materials.
The best way to keep its quality is to have better operations strategy. This will help
TOYOTA in planning on how they will allocate their resources in order to support their
production. This will reduce their problem in reducing their costs. On the other hand,
having flexible strategy will help them or easier for them to adapt to unpredictable
situations.

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University of the Immaculate Conception

GRADUATE SCHOOL, A. Bonifacio St., 8000 Davao City, Philippines

BA 211 : Production Management Exam: Comprehensive AY: 2020

THE TOYOTA COMPANY

- Growing demand - Competition from other automobile

To have better operational management, Toyota should have quality capacity

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