Toyota Motors Manufacturing Usa Inc

Table of Contents

1        Introduction        2

2        Operations strategy        2

2.1        Quality – as component of TPS        3

2.2        Cost – as a component of TPS        3

3        Introduction of Camry Wagon        4

4        Management problem        4

5        Addressing the problem        5

6        Available options        6

7        Current routine for handling defects – violation of principles of TPS        8

8        Real problem faced by Doug Friesen        8

Figure 1: Operations Strategy of TMC (orange circle)        2

Figure 2: Style and color transitions        4

Figure 3: Short-term and Long-term options        7

1. Introduction

Toyota Motor Corporation (TMC) decided to establish its manufacturing facility in North Americas as a way of entering foreign markets. This decision was taken under the circumstances when Japan was facing tremendous trade imbalance and it was becoming more of a political decision than a corporate decision. Considering the macro-economic situation, TMC announced to establish a manufacturing facility in Kentucky in 1985 with USD 800 million under the name of Toyota Motor Manufacturing, USA (TMM). It started production in 1988 which had annual capacity of 200,000 sedans by the name of Toyota Camry.

Toyota had an ambitious philosophy of “better cars for more people”. This would mean that Toyota would have to offer cars to a wide customer base with varying preferences and at an affordable price. This compelled Toyota to come up with strategies to minimize costs not only adding profitability to the company but also to meet its philosophy of offering cars to general people and “Toyota Production System (TPS)” was evolved. 

1. Operations strategy

TPS was a two-pronged system which focused on ensuring quality and cost.

[pic 1] [pic 2]

Figure 1: Operations Strategy of TMC (orange circle)

The operations strategy is aligned with the corporate strategy as TMC’s philosophy ‘better cars for more people’ means that the quality cars for the people at an affordable price. Therefore, it needs to focus on quality and cost to meet the corporate objectives.

1. Quality – as component of TPS

One of the distinguished practices at TMC is Jidoka. Under Jidoka, quality is focused at every stage of the production line, and production is stopped whenever any quality issue arises. In order to identify the issue immediately, the process needed to be standardized and documented. Usually Jidoka is machine focused, but under TPS it also adds the human element to it. Equipment contains fail-safe features like lights and buzzers that indicate defect; and people stop production when they detect any abnormalities. This practice helps in reducing waste and instills quality within the production system.  

To further instill the character of quality amongst workers, Toyota had a corporate slogan ‘Good Thinking, Good Products’. The need of this approach was to encourage the managers and staff to come up with the solution of the problems whenever it arises and reach to the root cause of the problem. This would resolve the problems such as shut downs and delays for a particular problem in time and also that it does not arise in future.

1. Cost – as a component of TPS

One of the ways that TPS identified to reduce its manufacturing cost without affecting the scale economies was practicing Just-in-time (JIT). JIT refers to the term where inventory is arrived only when it is required on the production line and requires little or no warehouse facility. This strategy would help in reducing cost by eliminating the necessity of a warehouse and reduced tied up capital in the inventory. Furthermore, all the ancillary costs linked with inventory storage are also reduced, such as; movement of trucks to bring the inventory from warehouse to production line, warehouse keepers, maintenance costs. JIT also helped in eliminating the bottlenecks as inventory compilation from process to process was eliminated. Even if there were any bottlenecks then they were easy to identify and resolved.

1. Introduction of Camry Wagon

TMC has introduced variation in Camry models which has more to do with accessories. There has been transition in the styles and colors in the seats in the Camrys with the introduction of the variations. Initially, there were three styles and four colors which was altered to three seat colors and five styles. The situation was drastically changed with the introduction of Camry Wagons. There was immense pressure on TMMC as it did not just produce for North America, but it was the sole manufacturing plant for Camry Wagons around the world. To cater other regional markets, slight modifications were made in the model which also included seats. The north American version had included eight additional seat variation. Further 28 seating variations were added for Middle east and Europe, combined.