Toyota Motor Corporation
Kiichiro Toyoda established Toyota Motor Corporation (TMC) in 1933. The company has its headquarters in Japan. It began its manufacturing with passenger cars. It then began producing trucks for Japanese army during the World War 11. After the war was over, it resumed production of passenger cars. The company was about to collapse when the United States approached the company demanding for 5000 vehicles to be used by the United States army during the war with Korea. The large market attracted the company leading to the formation of its first subsidiary in United States. In 1957, TMC carried its first sales, marketing, and distribution in the country. The company distributed its products to all the states in the country. The large number of buyers demanding for the company’s cars led its fast growth. The company had 17 production sites and produced more than 10 million cars annually (Greto, 2012).
Problems Facing TMC
The company was about to become the market leader of automotive in the United States when success slowed down with the arrival of new plants and models from China and India to the United States and Brazil. TMC had overreliance on these potential markets to make sales. This led to straining of the company’s resources. The low profits made by the company led to its production of faulty products and building of underutilized plants. This situation became worse with the increase in the economic crisis across the globe (Greto, 2012). The company began facing crippling challenges that led to its operations under low costs and crisis mode. The company was owned by family and nonfamily that resulted to prolonged conflicts. These conflicts slowed down decision making leading to advance effects on the smooth operation of the business. TMC also faced stiff competition from other automotive manufacturers in the United States, such as Honda, General Motors, Nissan, and Chrysler. This led to reduced sales for the company in the United States and global target markets (Cole, 2011). The diagrams below show the flowchart of TMC operations.
(Source: TMC Operation Flowchart, Cole, 2011)
Greto (2012) identified that TMC had many subsidiaries across the United States, but its operations had to be reported to the headquarters in Japan. This slowed down decision making in the company. The company prolonged problems facing its production leading to high risks of making large losses. The company’s management gave powers to executives whose main objective was to target larger markets to make high profits. TMC could not overcome the challenge of economic crisis because it had made huge investments in expansion of production plants. The company did not have enough time to return its investments.
A complex Web
Greto (2012) identified that Toyota Motor Manufacturing USA, Inc. (TMC) had far reaching and complex global supplier and partner network. It also had a prolonged decision making process because its headquarters were at Japan. The company had to deal with product proliferation problems, especially those resulting from defective seats. The company had to deviate from its normal operation plan because of lack of a recovery system. The run ratio of the company declined from 95% to 85% which led to production of 45 less cars per shift. This problem was a threat to the progress and growth of TMC leading to the creation of overtime for workers. This meant that many cars would be needed for offline operations of different types before they could be shipped. The main problem was that, the cars had to go through the assembly without changing the defective seat. The car would then proceed to the code 1 clinic area with the defected seat“`s. This is where the workers would try to correct the defects.
In other cases, the workers would move the car to the overflow parking area to wait for the time a supplier delivers a new seat. This process led to the company’s inability to control quality processes in North America. This led to a drastic increase in the number of pulls made each month. The pulls in the year 1992 were 20 in the first shift, but the number increased to 120 in the next shift. The pulls were expected to increase with time because there were no major changes made in the quality control process. This problem caused a threat to the sales and profits of the company. It also led to a decline in the image, recognition and reputation of the company products and services in the American market. The losses created by seats alone were a threat to the growth of the company. Some of the seats had faulty problems that were impossible to repair. Seats are expensive to purchase hence leading to high additional costs for the TMC. The company also used seats that were prone to damage. Seats were the bulkiest parts in the production requirements of the Toyota cars. TMC had to satisfy customers through meeting rigorous standards of performance in case the car crashed (Greto, 2012). The diagrams below shows the TMC production system.
Source: TMC Production System, Cole, (2011)
The information from the fishbone diagram points to the step taken by TMC to improve on the quality of products offered to the customers. The company had been criticized for failing to deliver quality products. The low quality complaints had even caused the company lawsuits because a lot of accidents were experienced as a result. The fishbone diagram does not conflict with the initial flowchart because the two diagrams emphasize on quality aspect that the company had established to deliver products that satisfy the customers. The fishbone diagram incorporates the strategies that the company applies to ensure that the products manufactured are of high quality. There is need to conduct further research about the impact of the strategies that the company applied. There is need to understand whether the strategies had a positive or negative impact. The information does not change the problem statement because the main issue that has been added is the application of strategies to improve the problems that the company encountered about the quality of products delivered to the company. There is no additional key stakeholder who mighty has updated feedback on the process flowchart.
The measurement strategy should include the gain in profits and the reputation of the company after the adoption of new strategies to improve quality of the products of the company. The quantitative measurement would be the profits or the sales revenue obtained by the company for a given period. The qualitative measurement would be the improvement on the image and reputation of the company in the global market. The improvement results should be measured after every one year. The annual measurement would capture reasonable changes towards achieving quality processes and products for the company. The problem statement would be impacted because it should capture the changes in the profit levels and the reputation on the company after the introduction of the new measurement strategies.
According to Greto (2012), Doug Friesen is responsible for collecting information about this problem. The seat supply had a problem that resulted from constricts to supply the cars on time to the sales company. The manufacturing company was different from the supply company. This meant that cars had to be parked to wait for clearance and available customer. The cars had to be moved through the parking area during the checkup before sales. This increased the chances of damaging the car seats. The delay during sales led to losses of approximately $73, 593,000 per year. The supply of sales delayed despite the high demand for the vehicles in the target markets.
Doug Friesen should talk with Kentucky Framed Seat (KFS) on the way to solve this problem. TMC management can decide to improve its communication networks and decision making process to avoid these prolonged losses. Establishing a headquarters in the United States can help speed up decision making. The company can also reduce the complexity of its supply chain to reduce the high number of defected seats. This can be possible through producing their own seats at the production plants and acquiring reliable and competent suppliers for its products. KFC can also decide to improve the quality of their seats to reduce the cases of defects. Both companies should work together to solve this problem. This is a lean production because the losses can be controlled through improving the quality of seats TMC uses (Greto, 2012).
Material flaws contributed to majority cases of seat defects. The seats that were delivered to the company took a long way to arrive at the company because of the long distance delivery. This increased the chances of damaging the seats. The company purchased seats from another company known as Kentucky Framed Seat. This means that the seats had to be transported to the company. This is the reason why some of the seats arrived when they had defaults or serious damages. This led to additional cost of $7, 311,542 per year on changing the defected seats. Accumulating cars with seat defects in the parking areas led to potential losses in sales.
Southwest Airlines Strategy and Process
Herb Kelleher founded Southwest Airlines in 1971. The airline began operating in Texas cities with 25 employees and 3 aircrafts. The business grew fast because of its target segments. It targeted the business and leisure travelers because they travelled frequently and had a high need of cheap airline. The airline had to focus on this strategy to attract its target customers. In 2010, this airline carried the highest number of domestic airlines than any other airlines in the United States. The airline has been making high profits for a long period of time, and it has been able to overcome the economic crisis. Southwest Airlines has been operating for 40 years but it has been facing serious challenges that have threatened its survival and stability in the market. The company is facing stiff competition from other airline operators in the United States, such as Allegiant and JetBlue Airlines (Ink pen, 2012).
Other challenges include managing the acquisition of Air Tran. The acquisition will lead to high additional costs to the business as it requires hiring of 8000 qualified and competent employees, a fleet of aircraft, and establishment of new market destinations outside the United States to cater for the increased services in the company. The airline industry in the United States keeps on changing its regulations leading to additional costs for the company. For an instant, the Civil Aeronautics changed the rules on entry and exit of airline routes, mergers and acquisitions, passenger fares, and airline rates of return. This slows down growth and progress of the airline (Ink pen, 2012).
Southwest Airlines has remained sustainable in its profits because of its effective strategies created by its shareholders. Gary Keller, a shareholder and president of Southwest Airlines, supports the use of low cost and cost advantage strategies for the airline to survive in the competitive market. The low cost focus allows the company to attract and maintain a sustainable number of customers to maintain high profits. This strategy also helps the airline create competitive advantage. The customers use this airline services because they are affordable. The customers are satisfied with its services in addition to the low costs, of the services. The airline also uses the cost advantage strategy to survive. Southwest Airline avoids unnecessary services that can lead to additional costs, such as offering food and entertainment in its aircrafts. These services and products are not necessary and instead uses the resources that could be spend in those services to offer necessary services, such as improved safety and security of passengers and increasing the number of aircrafts (Ink pen, 2012).
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