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385 Practicing International Management Case Toyota’s Strategy for Production Efficiency Toyota Motor Corporation (www.toyota-global.com) com monly appears in most rankings of the world’s most respected foto pull the pin The hose would remain loose and would mpanies. One reason for Toyota’s strong showing in such rank leak. So the m alled a device to the line that contains a ines is that the company always seems to maintain profitability in funnel and clestrisce train is not tossed into the funnel (passing the face of economic downturns and slack demand. Another tea the electric eve ry 60 seconds, the device senses that the opera is that leaders in a wide range of industries have high regard or have forgotten to pull the pin and stops the line. As a result for Toyota’s management and production practices. a warranty problem at the dealerships was eliminated, customer dis- Toyota first began producing cars in 1937. In the mid-1950 satisfaction was reduced, and productivity was increased a machinist named Taiichi Ohno began developing a new concept Nearly 50 years after the groundwork for the TPS was first laid, the results speak for themselves. Toyota’s superior approach of automobile production. Today, the approach known as the to manufacturing has been estimated to yield a cost advantage Toyota Production System (TPS) has been intensely studied and of $600 to $700 per car due to more efficient production, plus widely copied throughout the automobile industry. Ohno, who is another 5300 savings per car because fewer defects mean less war addressed by fellow employees as sensei (teacher and master. ranty repair work. Ohno’s belief in flexible production can also be followed the lead of the family that founded Toyota (spelled seen in the fact that Toyota’s Sienna minivan is produced on the Toyoda) by exhibiting high regard for company employees. Ohno same assembly line in Georgetown, Kentucky, as the company’s also believed that mass production of automobiles was obsolete Camry models. The Sienna and Camry share the same basic chas- and that a flexible production system that produced cars according sis and 50 percent of their parts. Out of 300 different stations on to specific customer requests would be superior the assembly line, Sienna models require different parts at only It was at Tovota that the well-known just-in-time approach to 26 stations. Toyota expects to build one Sienna for every three inventory management was developed and perfected. Implementing Camrys that come off the assembly line just-in-time required kankan, a simple system of colored paper Thinking Globally cards that accompanied the parts as they progressed down the as- 15-13, Chrysler engineers helped Toyota develop its Sienna sembly line. Kanban eliminates inventory buildup by quickly tell minivan. In return, Toyota provided input on automobile ing the production personnel which parts are being used and which production techniques to Chrysler. Why do you think are not. The third pillar of the TPS was quality circles, groups of Chrysler was willing to share its minivan know-how with workers who discussed ways to improve the work process and a key competitor? make better cars. Finally, the entire system was based on jidoka. which literally means “automation As used at Toyota, however, 15.14. Considering financial marketing, and human resume management issues, what other benefits do you think the word expresses management’s faith in the worker as a human Toyota obtains from its production system? being and a thinker. A simple example illustrates the benefits of Toyota’s system. Sous: Hika Takeuchi, El Oson, and Noriko Shimin “The Toyota dealerships found that customers kept returning their vehi- Contradictions That Drive Toyota’s Success,” Harvard Busine krvi, cles with leaking radiator hoses. When a team of workers at the U.S. June 2008, p. 96-104 David Welch “What Could Dull Toyota’s Edge. plant where the vehicle was made was asked to help find a solution, blem was the clamp on the radiator hose. In a Bloomberg Musi k , April 28, 2006, p. 18:”OLAPushing Carmakers r k they found the problem was the clamp on the radiator hose t o Rev Up Factories. Bloomberg Businesweek
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