Comparison Of Production Model Between Toyota And American Automakers - Essay.

1. Compare and contrast Toyota’s manufacturing system with a conventional mass-production system. What are the advantages of Toyota’s system?
2. Describe the essential difference between the way supplier relations are managed at Toyota and how they were managed historically at the typical U.S. auto manufacturer. What are the consequences of these differences?
3. How does Toyota’s approach to customer relations influence its design and production planning process? What are the implications?
5. What is the basis of Toyota’s competitive advantage? Is it imitable?
6. Will Toyota be able to sustain its competitive advantage? Why or why not?

Equipment and Work Division

Question: 1

As per the case study given, in the early twentieth century, the trend of producing automobiles was initiated by the American automakers. The model of mass production of the American automobiles such as Ford and General Motors is to produce limited or single variant of product in large numbers. This helped them in reducing the cost of the manufacturing by achieving the economies of scale. The approach of the American automakers is to setting up similar equipments in producing same components as much as much possible. It reduced the time being consumed in shifting from one production process to another. On the other hand, Toyota involves more efficient production process by reducing the time in the shifting of the production process. Small innovations are being made in order to modify the existing mass production process of the American automakers. This helped Toyota in reducing the time in involved in producing a single car.

Another key difference between the production model of American automakers and Toyota is the work division of the workers. American automakers was having the approach of assigning workers with single type of jobs and leveraging the expertise being gained by them over time. On the other hand, Toyota involved the concept of teamwork with assigning each teams with a set of jobs. This helped in enhancing the diverse expertise of the employees along with reducing the monotony of them by doing same jobs.

One of the key advantages of the production process of Toyota is the less consumption of time. With incurring less time in the accumulation of the different processes, the time consumed in producing a single car is less for Toyota compared to Ford and General Motors. Thus, the cost of the production process is lower for Toyota. Another advantage for Toyota is the flexibility in the production process. This is due to the reason that, initiation of the tem work helped them in enhancing the different expertise of the employees. This helped them to produce different variants from the production line compared to the single assembly line for single product in the Ford and General Motors.

Question: 2

Historically, the dependence of Ford and General Motors on their suppliers is less compared to that of the Toyota. This is due to the reason that, American automakers initiated the concept of vertical integration in order to produce majority of the components by own. It was being believed by them that, having the vertical integration will reduce the dependence on the external suppliers and the management of the assembly line will be more efficient. In addition, the remaining components that were not being made were being sourced from the suppliers through competitive bidding. It helped them to select the suppliers with least price quotation.

Supplier Management

On the other hand, Toyota initiated the process of supplier relationship management. According to their philosophy, efficiency in the production process can only be gained when their will be long term relationship with the suppliers. In addition, Toyota was more inclined for sourcing components from the external suppliers in order to reduce the capital investments. In the due course of supplier management, Toyota brought the suppliers in the design process in order to determine the feedback from them regarding the new design of the components. They have also entered in agreements with number of independent suppliers and trained them according to their need and requirements. Thus, the key difference between the supplier management of Toyota and the American automakers is the intensity of the supplier in the production process.

The difference in the supplier management of Toyota compared to the American automakers is having multiple advantages. One of the key advantages being gained by Toyota is the increase in the productivity compared to their American competitors. As per information given in the case, the vehicles produced per worker of Toyota are much more than other competitors. This is mainly due to the reason that, major part of the components is being sourced from outside in ready to use condition. Moreover, due to the sourcing of the materials from the expert suppliers, the number of defects per 100 cars less for Toyota compared to the American automakers.

Moreover, the cost of production will also be low due to the fact that, the rate of procurement from the suppliers will be fixed for the certain period of time. On the other hand, the cost of production of components for American automakers will get increased with time, which will eventually increase their total cost of production. Another consequence will be the relationship with the suppliers. Toyota will have the advantage of having flexible process of purchasing of components due to the reason that, suppliers are being included in designing new products. On the other hand, American automakers will have to change their existing production process of component parts in order to design new products.

Question: 3

Toyota was one of the first companies in initiating the customer relationship management in the manufacturer’s era. In the seventies, the trend was to sale the products being manufactured. However, Toyota initiated the concept of adding the feedback of the customers in designing and producing the vehicles. In accordance to that, they gathered the opinion of the customers through their outlets and design their new products. Gathering the market data helped them to offer the products, which will meet all the requirements and expectations of the customers effectively.

Customer Relationship Management

One of the positive implications being gained by Toyota from the initiation of the customer relationship management is the positive branding in the market. This is due to the reason that, offering products according to the exact need and expectation of the customers helped them to enhance the level of customer satisfaction. In addition, it also helped Toyota to enhance their business potentiality. For instance, as per the information given in the case, customer data being gathered by the sales team helped Toyota in staring the process of exporting their cars. Initiation of the export of the cars helped Toyota to have less impact from the decline in the sales in the Japanese market in seventies. The market potentiality of their new products got increased due to the reason that, new cars were being made after considering the feedback from the customers. Gathering customer data set the designers in Toyota to design inexpensive and reliable cars with low fuel consumptions.

Question: 4

The basis of the competitive advantages for Toyota is the productivity. As discussed earlier, the productivity and effectiveness of the assembly line of Toyota is more compared to their competitors. Thus, it is easier for Toyota to offer their cars in competitive prices in the market. Another competitive advantage of Toyota is the less number of defects per 100 cars over their competitors (Li, 2013). All these competitive advantages are being gained due to the effectiveness of their internal management of assembly line.

The effectiveness of the internal management of Toyota is imitable by other competitors. This is due to the reason that, automakers such as Ford and General Motors are also having years of experience in this sector and by determining the organizational process of Toyota, they can also implement in their management. In the case, it is discussed that, in the recent times, the difference between Toyota and other automakers in terms of productivity and defects is rapidly reducing. Thus, it is imitable.

Question: 5

Toyota will be able to sustain their competitive advantages provided that, they will enhance the organizational productivity in accordance to the current situation. For instance, the current era is of updated and latest technologies and automation. Thus, it is important for them to initiate the use of latest technologies, which will further help them in enhancing the productivity of the production process. With the initiation of the latest technologies, the rate of defects will further get reduced in the process. Thus, the competitive advantages can be sustained. However, some sort of challenges such as labor issue in regards to the automation will create barrier for Toyota in sustaining their competitive advantages.

Competitive Advantages and Sustainability

Moreover, with the effective process of supplier and customer relationship and feedback management of Toyota, it is more likely that they will sustain their competitive advantage over their competitors. As discussed in the previous sections that the cost of production of Toyota is far less than that of American automakers, it will help them in sustaining their competitive advantages in the future also. In addition, Toyota is having diverse product portfolio ranging from heavy vehicles for the American market to cost efficient and lighter vehicles for developing markets, which will also enhance their competitive advantages over others. This is due to the fact that, majority of the American automakers is having heavy vehicles in their portfolio, which may not be acceptable in all the regions around the world.

Question: 6

In the future, Toyota should concentrate more on the developing countries rather than the developed countries. This is due to the reason that, in the recent time, the market growth rate of the developing countries such as India is more than that of the developed countries. In addition, the automobile market of the developed countries is already saturated with less probability of market potentiality. On the other hand, the automobile market of developing countries is rapidly growing. Thus, focusing the developing countries will help Toyota to increase their market opportunities. Targeting the developing market will have its own advantages. Toyota is already having lighter and fuel efficient vehicles in their portfolio. Hence, these vehicles will be the proper and perfect choice for the developing markets, where the social inclination towards fuel efficiency is more. It will be an opportunity for Toyota to have the largely untapped market present in the developing regions. Entering the developing markets at this point of time will help them to be the early bird in the region.

However, there will be various challenges to be faced by them in targeting the developing countries. One of the key challenges is the market preferences of the developing countries. This is due to the reason that, the developing markets are more inclined towards fuel efficient and affordable and small city cars compared to the higher end and heavier vehicles preferred by the developed markets (Shende, 2014). Thus, it will be difficult for Toyota to offer diverse products in different regions. Another challenge to be faced by them is the recent issues in the global political and economical scenario. Risk of terrorism and political conflict between the countries will cause negative impact on the business operation of Toyota. In the case, it is already discussed that, the business of Toyota in China is affected from the anti-Japanese sentiments of the people.

Economical factors such as origination of the global crisis will further reduce the market potentiality for Toyota. In the current era of globalization, economic crisis is having holistic impact on every country like one happened in 2008 economic crisis in the United States. This will have negative impact on the business operation of Toyota. Political issues will also have to face by Toyota. There are various countries, which are having huge market opportunities but having trade barriers in place by their respective governments. In order to cater to these markets, Toyota will have direct invest and set up their manufacturing facilities. This may hold more risk in the long term for them.

Reference

Li, J. (2013). Continuous improvement at Toyota manufacturing plant: applications of production systems engineering methods. International Journal of Production Research, 51(23-24), 7235-7249.

Shende, V. (2014). Analysis of research in consumer behavior of automobile passenger car customer. International Journal of Scientific and Research Publications, 4(2), 1.