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Toyota Case

In todays competitive environment, a companys performance does not depend upon its capabilities alone. In the past decades, what had increased was: outsourcing, supply base reduction and consolidation. This has increased the reliance of buyers on their suppliers and has become the popular manufacturing strategy for companies. It is because of the increased dependence, that how main suppliers perform once in terms of quality, delivery, costs and services, affects the buying companys performance. For instance, part shortages contributed to long production delays for Boeings 747 and 737 airplanes and a resulting loss of over $1 billion. Therefore, it is critical for a successful firm to understand a suppliers capabilities and performance potential.

As the fourth-largest automaker in the world, Toyota is committed to continuous improvement, looking forward to new tomorrows. Built-in car navigation system is getting more popular all around the world since it can provide a more convenient and safer environment for drivers. The aggregation of mapping data, for the navigation systems from Denso, is now available in almost every Toyota model in the UK. Densos vehicle navigation systems perform complex spatial data processing and were used by car manufacturers such as Toyota, Jaguar and Cadillac. While Toyota is not the only buyer of Denso; Denso is the only navigation supplier to Toyota.

At the supplier level, Denso has a Total Quality Control (TQM) System to ensure every finished product meets Toyotas quality levels. Satellite navigation systems must be tested over a thousand times on the product line in order to ensure high quality products. Also, Denso has its own suppliers. Denso must have a good relationship with them to ensure receiving reliable raw materials. Moreover, its employees should be well-trained and maintain the relationship with Toyota. At the buyers level, Toyota has invested time, money and effort into helping Denso reach the required quality levels. This is because Toyota wants to get reliable parts from its long-term reliable partner. There are three Denso manufacturers in the UK, which are located in Herts, Shropshire and Shipley. As a purchasing manager for Toyota, visiting these three Densos factories regularly would be the managers main job. Also, Toyota must get involved in what is happening in Densos factories. There are four points that Toyotas buying manager must notice when visiting Densos manufactories. First, the buying manager must check that Denso has an adequate total quality control system. After realizing the quality control systems do exist in Denso, the next mission of the manager is to ensure the system processes are suitable and essential. Third, the manager then can check that the processes are followed properly in the factory. Finally, the products future development is an important subject in the product quality control, thus the manager must get deeply involved into this issue. Toyota also must get feedbacks about its navigation systems from customers and take this into consideration when producing present products or developing new products. All productss function and quality are for satisfied customers. If customers cannot feel satisfaction after purchasing, that will not be a successful product no matter how good quality it is.

The satellite navigation systems are high technological products. In addition, the latest satellite navigation system on Toyotas vehicle costs 1250. With this high price, customers would expect a lot before and after purchasing. Now they can use the navigation system to locate everywhere they want to go in the most parts of UK; they can get latest news if they want. Customers expect the system they have bought is impeccable with no defects. If it was a defective product, customers would want to have a guarantee from Toyota. Also, customers will expect more service from the navigation system: wider and more detailed maps; ask the computer to find out a short cut; vocabulary and voice recognition function; three-dimensional displays and built-in Web browser. Toyota and its supplier Denso must understand customers basic needs and their expectation from a navigation system. system, and produce the product which customers really want. All these improvement need fully technologic support from Denso. On the other hand, Toyota must also have had a whole after-sales support from Denso.

The system Toyota has implemented efficiently in managing its suppliers delivery is the Just-In-Time (JIT) system. One of the major contributors to Toyotas success was the lower cost structure achieved through aggressive management of inventory levels. JIT focuses first and foremost on the elimination of waste and non-value added activities of all kinds in production, including unnecessary product movement. Also, Toyota often asks its suppliers to deliver its parts in a fixed time, usually less than 24 hours. For example, if a Toyota driver wants to build in a new navigation system, it should not take more than five working days. Thus, from receiving the customers car; delivery it to the Toyota factory; build into the system and testing on the produce line; end by sending vehicle back to the customer should be finished impeccably within five working days. Time is a really important issue here. However, the navigation model which customer wants could be very varied. If this particular model is not available in Toyotas warehouse, Toyota must order this from Denso, with the right time delivery. Not only Denso itself but Toyota must also struggle to achieve this target. Repair and service of vehicles, for instance, usually have to be carried out on the same day. This is because the garage carrying out the repair does not know which parts are required until the vehicle is up on the ramp. Toyota has also move one step further by making its supply chain more flexible by using the Web. The Web allows Toyota dealers to send requests for parts to its suppliers as the demand arises. For instance, if Toyota experiences a high demand for a certain model, it can notify its supplier and get the product delivered to its factory quickly and with a minimum amount of human intervention or paperwork. Through this new system, both Denso and Toyota can execute their supply chain more efficiently. Recently, Toyota officials described a next-generation just-in-time logistics system and computer software that allows planners to create a virtual production line as key factors in the companys compressed manufacturing cycle time. Parts are delivered to assembly lines 24 times each day, on average, in small lots, by trucks that run fixed routes to several suppliers on each trip. Although Toyota set its parts orders on the Web which can save time and administration fees, it is never enough. Since the internet field is very mature now, Toyota can connect or even control its suppliers through the internet. For instance, Toyotas managers can get the latest information from Denso and give some feedback immediately. The time lag will be minimized through this internet system. Moreover, Toyota drivers can use this system to check the working process of their vehicles. Observably, this can let Toyota manage its supply chain and customer services effectively and efficiently.

Questions

1. Why is it important for Toyota to have the right quality products?
2. Explain how JIT relates to quality
3. Explain the strategies practiced by Toyota in its drive for quality.
4. Describe how Toyota could improve its quality by implementing JIT.