Assessing Toyota’s Current Regional Production Strategy (North America, Canada, Mexico, USA)
University of Maryland University College
May 17, 2015
The Toyota Motor Corporation employs a self-developed system known as the Toyota Product System (TPS) which is based on the concept of efficiency, necessity, quality, and cost reduction to guide business process improvements. This system has two pillars known as just-in-time (JIT) and auto-activation (Jidoka). Just-in-time is a production method that encompasses a series of production innovation and preparation of work. This method has resulted in reduced stocks which have made it possible for Toyota to respond to customer demands, and produce quality products more efficiently. Jidoka – auto activation is aimed at delegating the responsibility of the production to the factory workers to ensure the highest quality of service when manufacturing an automobile. It is Toyota’s believe that their TPS system allows them to flexibility respond to changing customer demands with product efficiency and low production cost.
Toyota’s global vision is to achieve quality assurance by leading the way into the future through innovation and corporate responsibility. Utilizing their self-developed system Toyota Production System, the overall objective is to eliminate waste while improving productivity and efficiency of their manufacturing plants. For over fifty years, Toyota vehicles have found their way to over 170 countries and regions throughout the world (Toyota-globalization.com, 2014).
After doing necessary research online or otherwise, document and evaluate the current distribution of Toyota production facilities in North America.
Toyota believes in order to maintain its highest level of quality; their vehicles should be produced where the demand exists with the same level of quality no matter where the manufacturing plant is located. Among the hurdles that must be overcome is quality assurance. To maximize the revenue of from sales of manufacturing plants in North America, the selection of the production site is important. The location must be in proximity of its supplier to allow Toyota to bring its products quickly into the market. Toyota has implemented a lean production environment which reduced manufacturing time, lower cost, increased revenue, increased customer satisfaction, increased work culture, and increase productivity. Using its TPS system, Toyota has presented itself as a formidable competitor as this system has advantages by reducing the manufactures time, lower costs, increased earnings, decreased space requirements, increased productivity, waste elimination, customer satisfaction, and strong organizational culture. Toyota intends on increasing its manufacturing plants in North America adding additional products to its core vehicle line that roll off of the assembly lines in the U.S., Canada, and Mexico (www.the detroitbureau.com, 2012). Why does the team believe Toyota has chosen to produce its cars for the North American market in the current manner?
Toyota announced that it would add 3,500 jobs in North America in addition to increasing its capital investments to 1.6 billion. This move is Toyota’s attempt to deal with exchange rates which have played a critical part in their strategy. The U.S. dollar value dropped slightly and has recovered somewhat however, this can make it costly to import vehicles from the home market as well as dealing with disasters like the tsunami that struck China in 2011. These setbacks had a direct impact on Toyota’s ability to meet the customer demand as these areas are responsible for many of the parts and components used by various automakers. Toyota’s profitability margins dropped during this time causing the automakers raking to fall. Toyota established 63 dealerships in Mexico in 2001; all supplied by one manufacturing plant which accounts for 800 employees...
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