Global Operations and Supply Chain Management
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The global automobile industry had reached 1,640 billion dollars in 2010, and the market value is forecasted to increase 49.3% since 2010 to 2,449.2 billion dollars in 2015 (Marketline, 2011). Toyota, which takes up 6.8% of global industry’s value, has just experienced its recall crisis from September 29th 2009 to January 27th 2010. More than 9 million cars and trucks around the world in the whole world were recalled by Toyota (Chris, P., Roger, W., G., 2010). Toyota was immersed in trough because of these faults and bad luck, and the public image is also seriously damaged.
At present, Toyota is been returning on track gradually, and according to the report from Toyota Motor Sales, USA, Inc., its sales increased 17.2% to 161,695 units in November 2012 because Toyota only sold 137,960 units in November of 2011 (Marketline 2012). These bad luck and breakdowns are very serious to any company which would encounter, so Toyota expressed its professional skills and abilities to handle these crises which are advanced in the automobile industry. New CEO of Toyota, Akio Toyoda, brought some improvements to company’s operations and supply chain strategy. This critique will focus on three aspects of these changes, namely quality management, new product development and cost reduction, respectively, and in addition, some academic theories will be applied to explain these strategies
The core competitive advantage of Toyota in the past was the high quality, and the main cause of the recall crisis was also quality problem. Nearly all firms pay much effort to quality improvement to achieve goals like cost reduction, higher customer satisfaction, more loyalty from customer, and better performance from financial and market aspects (Verma, R., Boyer, K.K., 2010). In general, costs of company are from internal failure costs, external failure costs, assurance costs and prevention costs. Quality control system reduces some costs such as internal costs but the accompanying results are higher assurance costs and prevention costs. In the wrong cost reduction program taken by Toyota, the less spend in assurance costs and prevention cost made Toyota move quality from the first principle replaced by outputs, said by Akio Toyoda. Total quality management (TQM), six sigma and many other quality improvement approaches are depended on customer feedback (Pande, p. s., Cavangh, R. R., & Neuman, R. P., 2000), and the...
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