Toyota Motor Corporation’s operations management (OM) covers the 10 decisions for effective and efficient operations. With the global scale of its automobile business and facilities around the world, Toyota uses a wide set of strategies for the 10 decisions of operations management, integrating local and regional automotive market conditions. Toyota is an example of successful operations management at a global scale. These 10 decisions indicate the different areas of the business that require strategic approaches. Toyota also succeeds in emphasizing productivity in all of the 10 decisions of operations management.
Toyota’s approaches for the 10 strategic decisions of operations management show the importance of coordinated efforts for ensuring streamlined operations and high productivity at a global scale.
Toyota’s Operations Management, 10 Strategic Decision Areas
1. Design of Goods and Services. Toyota addresses this strategic decision area of operations management through technological advancement and quality. The company uses its R&D investments to ensure advanced features in its products. Toyota also integrates dealership personnel needs in designing aftersales services.
2. Quality Management. To maximize quality, the company uses its Toyota Production System (TPS). Quality is one of the key factors in TPS. Also, the firm addresses this strategic decision area of operations management through continuous improvement, which is covered in The Toyota Way, a set of management principles.
3. Process and Capacity Design. For this strategic decision area of operations management, Toyota uses lean manufacturing, which is also embodied in TPS. The company emphasizes waste minimization to maximize process efficiency and capacity utilization. Thus, Toyota supports business efficiency and cost-effectiveness in its process and capacity design.
4. Location Strategy. Toyota uses global, regional and local location strategies. For example, the company has localized manufacturing plants in the United States, China and Thailand, as well as official dealerships in all markets except Mongolia and some countries in the Middle East and Africa. Thus, Toyota addresses this strategic decision area of operations management through a mixed set of strategies.
5. Layout Design and Strategy. Layout design in Toyota’s manufacturing plants highlights the application of lean manufacturing principles. In this strategic decision area of operations management, the company aims for maximum efficiency of workflow. On the other hand, Toyota dealership layout design satisfies the company’s standards but also includes decisions from the dealers.
6. Job Design and Human Resources. The company applies The Toyota Way and TPS for this strategic decision area of operations management. The firm emphasizes respect for all people in The Toyota Way, and this is integrated in HR programs and policies. Also, Toyota has training programs based on TPS to ensure lean manufacturing practice.
7. Supply Chain Management. Toyota uses lean manufacturing for supply chain management. In this strategic decision area of operations management, the company uses automation systems for real-time adjustments in supply chain activity. In this way, Toyota minimizes the bullwhip effect in its supply chain.
8. Inventory Management. In addressing this strategic decision area of operations management, Toyota minimizes inventory levels through just-in-time inventory management. The aim is to minimize inventory size and its corresponding cost. This inventory management approach is covered in the Toyota Production System.
9. Scheduling. Toyota follows lean manufacturing principles in its scheduling. The company’s goal for this strategic decision area of operations management is to minimize operating costs. Cost-minimization is maintained through HR and resource scheduling that changes according to market conditions.
10. Maintenance. For decades, Toyota developed a network of strategically located facilities to support its global business. The company also has a global HR network that supports flexibility and business resilience. Thus, in this strategic decision area of operations management, Toyota uses its global business reach to ensure optimal and stable productivity.
Productivity at Toyota
Toyota’s operations management uses productivity measures or criteria based on the area of business considered. For instance, some of these productivity measures are as follows:
- Number of product units per time (manufacturing plant productivity)
- Revenues per dealership (Toyota dealership productivity)
- Number of batch cycles per time (supply chain productivity)
- Kachwala, T. T., & Mukherjee, P. N. (2009). Operations management and productivity techniques. PHI Learning.
- Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH.
- Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making, 9(3), 310-327.
- Toyota Motor Corporation (2015). Guiding Principles at Toyota.
- Toyota Motor Corporation (2015). Toyota Way 2001.
- Verdaasdonk, P. (1999). Defining an information structure to analyse resource spending changes of operations management decisions. Production Planning & Control, 10(2), 162-174.
- Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management decisions. Production Planning & Control, 12(6), 605-620.