Operations Improvement Plan Implementation

Process Improvement

James Smith

MBA6022 Unit 2 Assignment 1

1/20/16

 

 

 

Problem statement

Although Toyota is at the peak of its operations, it has not been able to address some of its segment market concerns. Internal communications issues stands out among a wide array of other challenges like customer service, public relations and manufacturing (Liker, 2011). Internal communication is definitely the core challenge for addressing it will have a trickling effect on sales, production, profitability and relations all which will improve.

Background of the study

Toyota started its operations in the United States in the 1980 and hasn’t changed its foreign strategy when dealing with employees. The overall sales of Toyota have been declining in the US in the recent years, which can be attributed to a rigid central administration that which just hears improvement suggestions and doesn’t act upon them. Employees in its foreign markets have been reduced to simply sales and marketing professionals. Advice to top management has been heard but not taken into serious consideration for the most part. Such advice contains contagious issues about how to competitively operate in the US among rival companies and also to meet high customer expectations.

For the past thirty years, Toyota has been operational in the US they have operated using the Toyota way. The Toyota way is a philosophy that all important decisions are made centrally in Japan. The operations are centrally controlled, and strategic decision emanated from Japan and passed over to all foreign operational regions it either has production or assembling plant. Such decisions seem to work in some area while in some they do not.

Toyota operations have been a big success in Africa but not so much in America. Though its sales worldwide are increasing, it made a decrease in revenue collected in the year 2009. A 19% decrease was recorded in the year in comparison to figures posted from 2008. Toyota revenue was 211 billion dollars in 2009 (Greto, 2010). It had an effect on the vast profits Toyota had previously been making since it first ventured into this market. Such devastating impact can ultimately be attributed to its leadership programs and the strategic decision made.

To put it simple, the “Toyota way” is not working right in the US given its rigidity in the decision-making. The dynamics of a market will differ due to location and customer expectations. This dynamic is rampant in the US, given that there are many players, and those who will meet their expectation wins it big in the automobile industry. The employees are aware of the fact and have tried their best to offer a solution for continuous improvement, ideas, and ways to eliminate existing challenges. Almost all of these solutions that have been offered haven’t been taken seriously. Employees have not been empowered, and this has far-reaching effects. Foreign employees’ contribution has been minimal, and the management seems to limit it to being reactive. According to the management view their work is only to implement policies that have been deemed best in Japan.

There is a perceptive challenge by the top management that foreign managers, who are nonfamily members, are not committed to safety and quality in their suggestions. This perception has created laxity among foreign employees for they know that their proposal will be suggested to a lot of scrutiny based on the given suspicion. Generated solutions and ideas, whether from Japan or other countries, are first reviewed and then pushed up to the top management. Programs like engineering, financing and manufacturing that need proactive measures have been subject to delay eroding off the benefits they would have brought if the action were swift (Ciravegna, 2012).

Implications

Toyota is essentially sitting on a time bomb if these existing communication gaps are not solved to ultimately empower employees to share out solutions and suggestions. Ignored solutions and recommendations will only create more problems and missed profitable opportunities respectively. Employees will also feel alienated in their place of work if they do not feel free to present their views and talk about their concerns. Alienation also comes in where there existed a proposed solution and was not acted upon immediately with devastating results emanating from area pointed. Cumulatively, management will be making ineffective decisions to situations and operations and hurt profits and the company’s image furthermore.

Toyota stands to lose globally when it doesn’t consider segmenting and empowering heads of market segments like the US. Ignoring this possible solution to their problems will continue eroding values of quality and safety it once had firmly established. Toyota has been a victim of its action that saw the firm make compensation to aggrieved customers who filled court case due to its defective vehicle oil system (Ciravegna, 2012). Not only did this eat into their millions of dollars profit but also affected its quality vehicles’ tag image.

After that, it had to recall thousands of vehicle units to mend a defective accelerator system. It was penalized by the US government 16.4 million dollars for selling defective products under the banner all was quality (Greto, 2010). The recall cost over 2 billion dollars in logistics and repair process. All these recalls and losses might not have happened had they just had a good working employee-management relationship. Those defects would have most likely been noted early in advance and acted upon before it became catastrophic to the firm’s revenues and profits.

Desired outcomes

Toyota has to realize it might have been easy to reach the top but staying there is the ultimate challenge. There is a need for proactive measures to be formulated that will make communication and the overall internal process to be more responsive and accommodative. Employees should absolutely be empowered by the management and motivate them through encouragement to provide solutions and suggestions. A sharing culture will be born, and employee expertise and experience will contribute significantly to help formulate best strategic decisions for the management. These strategic decisions will position the firm competitively in this multi-billion industry and benefit all stakeholders including the management and their employees.

Such cooperation between management and employees will be achieved by investing in a knowledge management system (KMS) (Martin, 2002). KMS has far-reaching benefits that are spread from the minimization of e-filling to reduced file management costs. The systems is such efficient in that profitability will be improved based on the knowledge that will be transferred and results realized in leveraging quality work, the supply chain, and improved relationships (Russell, 2014). Resources will be adequately allocated to each delegated work leading to better job performance. The benefits of implementing the program outweigh the high initial cost of a using KMS.

There is the need to revert to the founding values of the Toyota way before a lot of damages has been done. Top management should embrace dynamism presented by operating in different regions with different customer expectations. Their employees being their representative know what is best in a certain market. All these can be captured by having a flexible internal mechanism that empowers employees.

References

Ciravegna, D. L. (2012). Sustaining Industrial Competitiveness after the Crisis: Lessons from the Automotive Industry. Basingstoke: Palgrave Macmillan

Greto, M., Schotter, A., & Teagarden, M. (2010). Toyota: The accelerator crisis. Thunderbird School of Global Management

Liker, J. K., & Convis, G. L. (2011). The Toyota way to lean leadership: Achieving and sustaining excellence through leadership development. New York: McGraw-Hill

Martin, K. (2002). Features – “Show Me the Money” – Measuring the Return on Knowledge Management. LLRX.  Retrieved from http://www.llrx.com/features/kmroi.htm

Russell, R.S., & Taylor, B.W. (2014). Operations and supply chain management (8th ed.). Hoboken, NJ: Wiley