Operations Improvement Plan

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U06a1 Operations Improvement Plan
Jessica Horlacher
Capella University
MBA 6022
February 16, 2012
Dr. Huang

Executive Summary

Toyota is one of the leading vehicle manufactures in the world and has faced some challenges throughout the years. This paper will discuss a key issue that Toyota has faced and how they can utilize communication software to improve the business relationship between supplier and Toyota.

Operations Improvement Plan
Introduction
Toyota Overview
Toyota is one of the leading manufacturers of vehicles in the United States and across the globe. Toyota is ranked #55 in Forbes, World’s Biggest Public Companies, and capturing sales of 202.8 billion and a market cap of 137.8 billion as of March 2011 (Forbes.com, 2011).” Founded in 1937 in Japan, Toyota now employs 320,590 with operations all over the world (Forbes.com, 2011). “Recognizing a growing market in the United States, in 1957 Toyota established its first sales, marketing and distribution subsidiary in the U.S. called Toyota Motor Sales Inc. (Gretto, M., Schotter, A., & Teagarden, M. 2009, p.2).” Over the years Toyota has manufactured and sold vehicles all over the world and is a leader in innovation and technology. However, in recent years Toyota has faced many setbacks that have consumers concerned about their safety and have Toyota looking for a way to get back their credibility. The current situation Toyota faces is the recall of millions of vehicles due to sudden acceleration causing the death of a few consumers. The delayed reaction from Toyota has them scrambling to make things right in the eyes of the customers and law makers. Robert Cole (2011) states “there appears to be two root causes for Toyota’s quality problems: the first is an outgrowth of management’s ambitions for rapid growth; and second is the result of the increasing complexity of the company’s products.” Challenges

Toyota implemented an ”aggressive globalization strategy by building factories in the U.S., Europe, and other markets, effectively doubling the number of overseas manufacturing facilities to more than 100 (Gretto, M., Schotter, A., & Teagarden, M. 2009, p.4).” Many industry insiders, including Takaki Nakanishi, an auto analyst at JPMorgan Securities in Tokyo, expressed reservations about Toyota’s rapid growth. “Toyota is growing more quickly than the company’s ability to transplant its culture to foreign markets,” Nakanishi said (Gretto, M., Schotter, A., & Teagarden, M. 2009, p.5).” Due to the rapid expansion into foreign markets Toyota faced even more controversy because of the use of suppliers with no relationships established. Toyota struggled to effectively leverage its TPS standards due to the complexity of its far-reaching and complex global supplier and partner network compounded by its headquarter-centric decision-making processes (Gretto, M., Schotter, A., & Teagarden, M. 2009, p.9).” If Toyota continues to rely on these partnerships the quality and safety of their products will continue to decline and their reputation will be that much harder to restore. Furthermore, Toyota must develop a strategy to understand the foreign markets they have entered and invest in known suppliers and foster working relationships with all parties involved including engineers, managers, distribution centers, and finance. Fishbone Diagram

The fishbone diagram identifies causes that may be contributing factors in the way Toyota communicates with it suppliers that could affect their production and performance.

Fishbone Diagram

Product
Management
Methods

Non-Family Management

Quality

Not enough suppliers

Ambitious goals
Innovation

Low cost
Safety

Growth too fast

Accountability
Poor Planning

Communication

Improved communication with suppliers to provide quality products with a customer focus

Competition substantial

Technology
Lack customer focus

Misaligned goals

Reputation
Planning...
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