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With global sales now at 10 million vehicles per annum and climbing, Toyota finds itself as the worlds leading auto manufacturer. US giant General Motors, which had previously held this title for 74 years, was dethroned in 2006, and the Japanese automaker has not looked back since. In a financial climate in which most of the top automakers have experienced declines both in sales and profits, Toyota stands out for its burgeoning financial returns, which are not restricted to the established US market, following investment in Chinas developing market. Environmental and technological advancement, in the form of its part-electric, part-petrol hybrid models, also creates healthy demand. Toyotas Lexus subsidiary also taps into the US luxury market, propelled in 2016 through its RX crossover model, which exceeded sales forecasts. Despite the fact that it dates back to 1937, Toyota rose from relative obscurity in the 1950s through Taiichi Ohnos development of the Toyota Production System (TPS). Based on Japanese principles such as jidoka (referring to human automation), muda (elimination of waste) and kaizen (continuous improvement), TPS enables greater cohesion within the manufacturing process, particularly with regard to team- and management-based tasks. In an industry that is so dependent on intricate supplier collaboration, it has been claimed that TPS helps to achieve this end, insofar as it minimizes defects. The eradication of such design flaws also allows newly created products to reach the customer in a shorter time than can be achieved by other companies, and with a greater level of quality control. This approach to production has been researched and emulated by a number of international carmakers and is now considered the industry gold standard, while also finding traction within other sectors. Now articulated as lean production, numerous service environments have also incorporated this approach. One such surprising application of TPS methodology can be found within the field of healthcare, in which the traditional focus upon meeting objectives is replaced with the prioritization of processes. Each role within the organization is defined in terms of key competencies, and, as these are met, patient needs are satisfied with greater consistency. TPS has been regarded as the secret to Toyotas success, implementing increased flexibility and productivity while eradicating many of the production errors that plague other car manufacturers. As a result, the company does not need to resort to competitor-minded discounts in order to satisfy a customer base that is happy to pay for quality. As Toyota continues to outperform its rivals for a fourth consecutive year, it now contemplates consolidating its position through business partnerships with manufacturers such as Daihatsu and Suzuki. And yet, at the heart of this increasingly outward-looking company remain the streamlining qualities facilitated through the TPS, which acts as an integral foundation for such growth.

QUESTIONS

1. In the 1950s Taichi Ohno developed the Toyota production System (TPS). Brief outline the three (3) main principles this system is based on. How does TPS benefits Toyota in its operation?

(10 marks)

2. Name one (1) other industry which has incorporated TPS approach. Briefly explain how TPS method bring about the change in that industrys operation.

(10 marks)

3. TPS is considered as the secret to Toyotas success. How does TPS makes Toyota to be to solve problems other car manufacturers are facing. What advantage does Toyota have over its competitors?

(10 marks)

Read the passage below and answer the questions

For years Motorola and other U.S. firms such as RCA, Magnavox, Philco, and Zenith were among the worlds most successful consumer electronics firms. In the face of withering competition from the Japanese, however, these firms began to fall by the wayside. Motorola has remained the exception: Today it is one of the world leaders in mobile communication technology, including the manufacture of cellular telephones, paging devices, automotive semiconductors, and microchips used to operate devices other than computers. Motorola has taken on the Japanese head-to-head. Although it may have lost a few battles here and there, the firm has won many more.

Motorola heard the call to battle in the early 1980s. The firm then controlled the emerging U.S. market for cellular telephones and pagers but, like many other firms at the time, was a bit complacent and not aggressively focused on competing with the Japanese. Meanwhile, Japanese firms began to flood the U.S. market with low-priced, high-quality telephones and pagers. Motorola was shoved into the background.

At first, managers at Motorola were unsure how they should respond. They abandoned some business areas and even considered merging the firms semiconductor operations with those of Toshiba. Finally, however, after considerable soul searching, they decided to fight back and regain the firms lost market position. This fight involved a two-part strategy: First learn from the Japanese and then compete with them.

To carry out these strategies, executives set a number of broad-based goals that essentially committed the firm to lowering costs, improving quality, and regaining lost market share. Managers were sent on missions worldwide, but especially to Japan, to learn how to compete better. Some managers studied Motorolas own Japanese operation to learn more fully how it functioned; others focused on learning about other successful Japanese firms. At the same time, the firm dramatically boosted its budgets for R&D and employee training worldwide.

One manager who visited Japan learned an especially important lesson. While touring a Hitachi plant north of Tokyo, he noticed a flag flying in front of the factory emblazoned with the characters P200. When he asked what it meant, he was told by the plant manager that the factory had hoped to increase its productivity by 200% that year. The manager went on to note somewhat dejectedly that it looked as if only a 160% increase would be achieved. Because Motorola had just adopted a goal of increasing its own productivity by 20%, the firms managers soberly realized that they had to forget altogether their old ways of doing business and reinvent the firm from top to bottom.

Old plants were shuttered as new ones were built. Workers received new training in a wide range of quality-enhancement techniques. The firm placed its new commitment to quality at the forefront of everything it did. It even went so far as to announce publicly what seemed at the time to be an impossible goal to achieve, Six Sigma quality, a perfection rate of 99.9997%. When Motorola achieved this level of quality, it received the prestigious Malcolm Baldrige National Quality Award.

Even more amazing have been Motorolas successes abroad, especially in Japan. The firm has 20 offices and more than 3,000 employees there. It is currently number three in market share there in both pagers and cellular telephones. Worldwide, Motorola controls much of the total market for these products, has regained its number-two position in semiconductor sales, and is furiously launching so many new products that its rivals seem baffled.

Today, Motorola generates over 56% of its revenues abroad. Major new initiatives are underway in Asia, Latin America, and Eastern Europe. The firm has also made headway in Western Europe against entrenched rivals Philips and Thomson. But not content to rest on its laurels, Motorola has set newand staggeringgoals for itself. It wants to take quality to the point where defects will be counted in relation to billions rather than millions. It wants to cut its cycle times (the time required to produce a new product, the time to fill an order, and/or the time necessary to change a production system from one product to another) tenfold every five years. It also wants over 75% of its revenues to come from foreign markets by 2002.

QUESTIONS

4. When the Japanese manufacturers began to flood the US market with low-priced, high-quality telephones and pagers, Motorola was pushed into the background. What was Motorolas immediate reaction. Eventually when does Motorola decided to fight back to regain their lost grounds, what was Motorolas strategies?

(10 marks)

5. Name and briefly outline two (2) new strategic approaches adopted by Motorola in order to be able to compete effectively against the treats they were facing from the Japanese manufacturers.

(10 marks)

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Workers and management at Whirlpool Appliance's Benton Harbour plant in Michigan have set an example of how to achieve productivity gains, which has benefited not only the company and its stockholders, but Whirlpool customers, and the workers themselves.

Things weren't always rosy at the plant. Productivity and quality weren't good. Neither were labour-management relations. Workers hid defective parts so management wouldn't find them, and when machines broke down, workers would simply sit down until sooner or later someone came to fix it. All that changed in the late 1980s. Faced with the possibility that the plant would be shut down, management and labour worked together to find a way to keep the plant open. The way was to increase productivity-producing more without using more resources. Interestingly, the improvement in productivity didn't come by spending money on fancy machines. Rather, it was accomplished by placing more emphasis on quality. That was a shift from the old way, which emphasized volume, often at the expense of quality. To motivate workers, the company agreed to gain sharing, a plan that rewarded workers by increasing their pay for productivity increases.

The company overhauled the manufacturing process and taught its workers how to improve quality. As quality improved, productivity went up because more of the output are good and cost went down because of fewer defective parts that had to be scrapped or reworked. Cost of inventory also decreased, because fewer spare parts were needed to replace defective output, both at the factory and for warranty repairs. And workers have been able to see the connection between their efforts to improve quality and productivity and they pay.

Not only was Whirlpool able to use the productivity gains to increase workers pay, it was also able to hold the lid on price increases and to funnel some of the saving into research, which added to cost savings and quality improvement.

QUESTIONS

6. Briefly explain two (2) key factors that Whirlpool management did in order to achieve the productivity gains.

(10 marks)

7. The management of Whirlpool decided to change the manufacturing process and taught the workers on how to improve quality. Briefly outline the results of these initiatives and how does it affect the workers.