Capella University MBA 6022 Unit 6
linsay21
sample_work_of_u06a1.docRunning head: OPERATIONS IMPROVEMENT PLAN 2
Operations Improvement Plan
XXXXXXX
MBA6022
Strategic Operations Management
Address: XXXXXXXXXXXXx
E-mail: xxxxx
Instructor: Dr. Zhimin Huang
Abstract
This operation improvement plan is to help improve the internal communication process at Toyota between their employees and management. There has been a loss of ideas and knowledge, which is a complete violation of their founding principles defined in the Toyota Way. With the suggested recommendations, Toyota can once again reclaim its dominance in the world automobile market while at the same time improving their operational efficiency and quality.
Table of Contents
Title Page 1
Abstract 2
Table of Contents 3
Executive Summary 4
Toyota Overview 5
Toyota’s Key Challenges 5
Cost-Benefits Summary 7
Analysis of Data and Findings 8
Summary of Recommendations 11
Conclusion 11
References 13
Appendix A 14
Appendix B 15
Appendix C 16
Appendix D 17
Appendix E 18
Appendix F 19
Executive Summary
The Toyota Motor Corporation has experienced numerous setbacks the past decade including lawsuits, damaged corporate reputation and eroding consumer confidence. Although many different processes can be to blame for this, ultimately it is Toyota’s upper management that has to be held accountable for the decisions made. One of the contributing factors to these poor decisions is the breakdown in the concept of continuous improvement due ideas and knowledge shared by employees not being embraced by management. This is a violation of the Toyota Way and Toyota needs to return to their roots. Data around Toyota’s employees has been collected to support the fact that internally Toyota treats its employees’ average compared to other global companies. Employees cited poor leadership and lack of direction as major complaints. External to Toyota, there is data to show that Toyota’s consumers feel similar feelings in that Toyota doesn’t show the proper respect to them and this is reflective in Consumer Reports review of Toyota. This communication process can be improved with the implementation of a knowledge management system (KMS). The KMS will help Toyota return to its roots and help to improve employee empowerment, productivity and the concept of continuous improvement.
Toyota Overview
According to Greto, Schotter & Teagarden (2010), Toyota was established in 1933. The main form of business for the company leading into World War II was the manufacturing of trucks for the Imperial Japanese Army. Shortly after the war, Toyota was on the brink of bankruptcy until an order from the U.S. military during the Korean War helped to revive the company. Recognizing a growing market across seas, Toyota expanded into the United States markets during the early 60s and grew very rapidly over the next few decades. During this growth Toyota spread out into other industries such as aerospace, higher education, robotics, finance and so forth. They also revolutionized the manufacturing industries and other industries with their pioneering philosophy called the Toyota Way, which was essentially a lean process that focused on quality and efficiency. “The Toyota Way mandates planning for the long term; highlighting problems instead of hiding them; encouraging team work with colleagues and suppliers; and, perhaps most importantly, instilling a self-critical culture that fosters continuous and unrelenting improvement” (Greto, Schotter & Teagarden, 2010, pg. 3). Somewhere along the way, Toyota in an effort to become the top automobile manufacturer globally strayed away from their core values. The result has been a decade of disappointment during the 2000s that has resulted in overambitious initiatives by management that was driven by short-term gains, dysfunctional management, overstretched resources, recalls (oil sludge incident, accelerator crisis), lawsuits and damaged employee and consumer confidence.
Toyota’s Key Challenges
“Toyota’s information and decision making has been highly centralized. The result: Top management in Japan has been less sensitive to the expectations of regulators, culture and politics in overseas markets, and consequently, they have been slower to respond to local problems. The reality is that Toyota’s problems were not caused by a faulty production system but by poor management decisions” (Cole, 2011, pg. 34). In the past, Toyota was a company that trained employees to embrace the Toyota Way and pushed their employees to strive for continuous improvement and perfection. The upper management at Toyota has strayed away from their core; founding principles that empowered their employees and contributed to making them a successful automobile manufacturing juggernaut. A major source for of their ongoing improvement and innovation has been from employees.
An analysis has been done for Toyota’s management team, Appendix A, E and F, to show the root causes and how these root causes affect the internal communication process of ideas, concerns and knowledge between Toyota’s upper management and its foreign-based employees. To summarize the problem into a statement: “The Toyota Way and TPS places heavy emphasis teamwork, employee empowerment and striving for continual improvement and perfection. To ensure these principles are always understood and embraced, Toyota’s management needs to be committed to making sure all employees are equally treated so that there is improvement with regard to Toyota’s internal communication process used to capture all employees’ ideas and knowledge for continual improvement.”
Resolving this issue will allow for employees to re-embrace a culture that once encouraged the free flow and sharing of knowledge and ideas instead of each branch of Toyota acting as its own entity. In the past, Toyota either saved money through suggestions that resulted in continual improvement of some process or received internal ideas for innovation that generated profits. Especially with Toyota being a global organization, it’s more important than ever for Toyota’s managers and employees to have access to all types of information in real-time and have some means to filter this data into meaningful information. This can be accomplished with a knowledge management system (KMS) that “stores and retrieves knowledge, improves collaboration, locates knowledge sources, mines repositories for hidden knowledge, captures and uses knowledge, or in some other way enhances the KM process” (KMT, 2010, pg.1).
Cost-Benefit Summary
Although the scope of the problem being address in this operation improvement plan (OIP) is around the communication and sharing of ideas and information between Toyota’s foreign employees and management, a KMS is really meant to be an organization-wide tool. Depending on the vendor, the overall costs associated with a KMS can be a few million dollars. Although a large initial investment, the benefits outweigh the costs and the payback on the investment can be as quick as 6 months – 12 months. The main reasons for the implementation of a KMS are to improve the communication of ideas between employees and Toyota’s upper management. Then these ideas have the potential to either increase profits for Toyota or to help reduce costs. The main benefits for a KMS are “increased efficiency and problem solving, better decision making, quality service delivery, speed and service delivery reduced costs, reduced training time, retention of intellectual properties, increased revenue and development of new business ventures and sharing business resources over long distances” (PHPKB, 2010, pg. 1). A KMS has data collection methods and analysis built into it. So it is important for Toyota’s management to define key performance indicators (KPIs) for assessing the effect of idea sharing or the effect the KMS is having on a particular project or activity.
According to Greto, Schotter & Teagarden (2010), Toyota faced a potential $2 Billion loss just related to recalls during the accelerator crisis. This doesn’t even count the $16.4 million dollar fine imposed on Toyota from the United States government. Also, it is hard to account for potential loss of business due to low consumer confidence and a damaged reputation. This small sample of loss business, plus a decline in profits according to the 2010 annual report, shows that Toyota’s management needs to address this problem immediately and find a means of improving their decision-making or else Toyota risks losing their reputation as a reliable and high-quality automobile manufacturer and their high-ranking status in the industry and the recommendations below will help to address these.
Analysis of Data and Findings
It is important that based on the recommended investment of a KMS that there is a measurement and data collection strategy defined to support this investment. There are two quantitative measures that will be used to measure the improvement of the selected process: the number of ideas and information being submitted to the KMS and the number of ideas or use of information being used to improve operational efficiency and quality. Qualitative measures help to provide context and meaning for quantitative measures. Qualitative measures will be done is to survey upper management at Toyota and see how much the KMS has helped them and to see if any ideas submitted were put into practice. Also, it will be shown that by having the information centralized and easily accessible, it will result in improved operational efficiency of Toyota and its respective departments. The numbers for the quantitative measures are easily generated by the KMS. A qualitative method such as a virtual survey can be used to query Toyota’s upper management as to how the KMS is improving their day-to-day jobs and if it has made knowledge sharing easier. Also, it should be measured to see if Toyota’s plans for growth have changed based on the streamlining of information through the KMS. A KMS is designed to help promote the idea of knowledge sharing and can help reduce a manager’s biasness by keeping the source of the idea kept secret from Toyota’s management. An independent group within Toyota can take care of distributing any appropriate rewards for approved ideas to the source of the idea. The few key components of the measurement strategy proposed will be to track the number of submitted ideas and to measure the increase or decrease in operational efficiency and quality of the approved idea.
As far as the data itself, there is only anticipated data for the process improvement associated with the implementation of a KMS. The collected data was done with digital surveys and a blog (GlassDoor, 2010) that random foreign and Japanese Toyota employees were asked to rate Toyota based on criteria such as job satisfaction. According to the results compiled in 2010, Toyota rated middle of the road on a scale of 1 to 5, with 5 being rated completely a great place of work for employees. Based on the 2010 results, it appears that each branch of Toyota acts independently with inefficient communication. Toyota rated as ok on this scale, but the main complaints revolved around leadership, high turnover, and lack of respect by management for employees’ ideas. This data would be important to help justify the large internal investment of a KMS along with the costs mentioned earlier associated with loss business, recalls, government fines and lawsuits. External to Toyota, from a consumer’s perspective, Toyota’s management is perceived to be as uncaring and showing little respect to their customers. This is strongly backed up Consumer Report’s rating of certain Toyota car models. Consumer Reports pulled their recommended rating for the following models: Avalon, Camry, Corolla, Highlander, Matrix, RAV4, Sequoia and Tundra (Korzeniewski, 2010, pg.1).
The other data and metrics to be collected will be after the implementation of a KMS. Then these ideas have the potential to either increase profits for Toyota or to help reduce costs. A KMS has data collection methods and analysis built into it. So it is important for Toyota’s management to define key performance indicators (KPIs) for assessing the effect of idea sharing or the effect the KMS is having on a particular project or activity. One of Deming’s (1987) seven deadly diseases is management by use only of visible figures. As mentioned before, it is important to have well-defined metrics. Since the problem is around the improvement of the communication of ideas and knowledge between employees and management, metrics from a KMS should indicate if the knowledge is being shared and used. Since a KMS involves a central repository and databases, data can be collected on the number of hits for a particular subject. Also, data can be collected on the number of ideas submitted and knowledge being added to the database. It will be important for Toyota to make sure that the knowledge is properly categorized so that this information can be easily collected. Since the KMS is our data collection, it would be important to also collect data around the number of ideas approved, rejected or in a still pending status. One last important data to collect will be to see if all departments and branches of Toyota are making use of the KMS. It is important for Toyota to collect these metrics for the purpose of continuous improvement within their organization. Knowledge itself is an intangible asset, so that it is hard to measure. However, the impact of a KMS is measurable. Based on the anticipated data to be collected, the collected employee data will support the identified causes in the fishbone diagram and the knowledge management system conceptually wasn’t meant to overhaul the communication process and knowledge sharing between employees and management, it was meant to act as a means of improving the current process as illustrated in Appendices E and F. The process will continue in the same manner, it just that the information and knowledge will be centralized and made more accessible to all employees. The measurement strategy and data collection will be done through the KMS and the measurement strategy accounts for this.
Summary of Recommendations
It has been shown that through the past decade, Toyota has experienced setbacks. To offset and avoid more setbacks going forward, the following recommendations are being made:
· Implement a Knowledge Management System corporate-wide.
· Train all employees and managers on use of the KMS and have periodic meetings to reinforce the principles of the Toyota Way.
· Third-party organization to review statistics provided by the KMS on usage of the KMS and submittal of ideas and on the acceptance of these ideas. This is to ensure that ideas aren’t being eliminated based on the source of the ideas and to help establish baseline metrics for key performance indicators.
Continuous improvement and teamwork are the core principles of the Toyota Way. Successful implementation of a KMS will help to reestablish this work culture and give employees a sense of empowerment in their jobs which in turns keeps them more engaged and productive.
Conclusion
Overall, Toyota’s upper management needs to remove or reduce any biasness when ideas for continual improvement are submitted by their foreign employees. “Core competency is what a firm does better than anyone else, its distinctive competence” (Russell & Taylor, 2011, pg. 18). As pioneers of the Toyota Way and lean production, Toyota did do it better than everybody else and many different industries emulated them. To return to these roots and sustain a competitive edge, Toyota now knows a cause of problem that can be fixed. A KMS is designed to help promote the idea of knowledge sharing and can help reduce a manager’s biasness by keeping the source of the idea kept secret from Toyota’s management. Key metrics collect the proper data around the number of submitted ideas and collect data on how these ideas have either increased or decreased the operational efficiency and quality of Toyota.
References
Cole, R. E. (2011). What really happened to Toyota? MIT Sloan Management Review, 52(4), 29-35.
Deming. (1987). Transformation of today’s management. Leadership Excellence, 4(12), 8.
GlassDoor. (2010). Toyota Reviews. GlassDoor. Retrieved May 15, 2012 from http://www.glassdoor.com/Reviews/Toyota-Reviews-E3544.htm
Greto, M., Schotter, A., & Teagarden, M. (2010). Toyota: The accelerator crisis. Thunderbird School of Global Management.
Korzeniewski, J. (2010). Consumer Reports may restore Toyota “Recommended” rating next week. Auto Blog: Consumer Reports. Retrieved May 14, 2012 from http://www.autoblog.com/2010/03/01/consumer-reports-may-restore-toyota-recommended-ratin/
KMT. (2010). Knowledge Management Systems. KMT. Retrieved May 5, 2012 from http://www.knowledge-management-tools.net/knowledge-management-systems.html
NASA. (2008). What is Knowledge Management? NASA. Retrieved from http://www.km.nasa.gov/whatis/index.html
Osborn, P. (2009). Toyota Production System – the Foundation of Scrum. Retrieved April 28, 2012 from http://paulosborn.com/tikiwiki/tiki-index.php?page=Toyota+Production+System+-+the+Foundation+of+Scrum
QuestionPro.Com. (2012). Survey Template Library: Employee Surveys. Retrieved May 12, 2012 from http://www.questionpro.com/a/showLibrary.do?categoryID=2&mode=1
PHPKB. (2010). Knowledge Management Software. PHPKB. Retrieved May 10, 2012 from http://www.articlediary.com/article/knowledge-management-system-cost-and-benefits-648.html
Russell, R.S., & Taylor, B.W. (2011). Operations management: Creating value along the supply chain (7th ed.). Hoboken, NJ: John Wiley & Sons. ISBN: 9780470525906
Yong, R. (2010). Toyota’s Downfall: Rapid Growth at the Expense of Knowledge Transfer. Retrieved May 5, 2012 from http://roanyong.com/2010/03/08/toyota%E2%80%99s-downfall-rapid-growth-at-the-expense-of-knowledge-transfer/
Appendix A
Fishbone Diagram
Loss of id
eas/concerns for Continuou
s
Improvement from employe
es
Procedures
Policies
Places
Employees
Toyota
operations
based in the
United States
Toyota’s
headquarters
in Japan
Culture
Training
Management
Toyota Way
Centralized decision-
making
Toyota Production
System (TPS)
System for
Capturing Ideas
and Sharing
Knowledge
Rapid growth plans
Appendix B
Original Process Flow Chart for TPS and Continual Improvement
Toyota Production
System (with its
own defined
processes). For a
engineering,
manufacturing,
financial or general
problem, if a
problem was
found.
Yes
Is it an actual
problem?
N
o
Halt all work until a
resolution to the
problem is found.
Continue with
normal operations.
Yes
Is problem
resolved?
No
Ideas for
continual
improvement
Y
e
s
No
Continue with
normal operations.
Review idea for
approval
Y
e
s
No
Continue with
normal operations.
Implement idea
and reward
employee
Appendix C
High-level Graphical Representation of TPS (Osborn, 2009)
Appendix D
KMS (NASA, 2008)
Appendix E
“Before And After” KMS Flow Chart
Toyota Production
System (with its
own defined
processes). For a
engineering,
manufacturing,
financial or general
problem, if a
problem was
found.
Ideas for
continual
improvement
Y
e
s
No
Continue with
normal operations.
Review idea for
approval
Y
e
s
No
Continue with
normal operations.
Implement idea
and reward
employee
Ideas Submitted to
KMS
Y
e
s
No
Continue with
normal operations.
Review idea for
approval
Y
e
s
No
Continue with
normal operations.
Implement idea
and reward
employee
Before KMS
After KMS
Appendix F
Revised Process Flow Chart
Toyota Production
System (with its
own defined
processes). For a
engineering,
manufacturing,
financial or general
problem, if a
problem was
found.
Ideas for
continual
improvement
Y
e
s
No
Continue with
normal operations.
Review idea for
approval
Y
e
s
No
Continue with
normal operations.
Implement idea
and reward
employee
Is source of idea(s) from U.S-based
employees? Or does decision have to
be made quickly (rapid expansion
plans, tight deadlines, etc..)
Y
e
s
No
_1397804648.vsd
Loss of ideas/concerns for Continuous Improvement from employees
Procedures
Policies
Places
Employees
Toyota operations based in the United States
Toyota’s headquarters in Japan
Culture
Training
Management
Toyota Way
Centralized decision-making
Toyota Production System (TPS)
System for Capturing Ideas and Sharing Knowledge
Rapid growth plans
_1397809094.vsd
Toyota Production System (with its own defined processes). For a engineering, manufacturing, financial or general problem, if a problem was found.
Ideas for continual improvement
Yes
No
Continue with normal operations.
Review idea for approval
Yes
No
Continue with normal operations.
Implement idea and reward employee
Is source of idea(s) from U.S-based employees? Or does decision have to be made quickly (rapid expansion plans, tight deadlines, etc..)
Yes
No
_1397220357.vsd
Toyota Production System (with its own defined processes). For a engineering, manufacturing, financial or general problem, if a problem was found.
Ideas Submitted to KMS
Yes
No
Continue with normal operations.
Review idea for approval
Yes
No
Continue with normal operations.
Implement idea and reward employee
Before KMS
Ideas for continual improvement
After KMS
Yes
No
Continue with normal operations.
Review idea for approval
Yes
No
Continue with normal operations.
Implement idea and reward employee
_1397208322.vsd
Toyota Production System (with its own defined processes). For a engineering, manufacturing, financial or general problem, if a problem was found.
Yes
Is it an actual problem?
No
Yes
Continue with normal operations.
Halt all work until a resolution to the problem is found.
Is problem resolved?
No
Ideas for continual improvement
Yes
No
Continue with normal operations.
Review idea for approval
Yes
No
Continue with normal operations.
Implement idea and reward employee
