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Production Strategies Adopted by Toyota

Paper Type: Free Essay Subject: Marketing
Wordcount: 4562 words Published: 12th Jan 2018

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Constantly since the company was founded in 1937, The TOYOTA MOTOR CORPORATION and their supplementary (“TOYOTA”), have incessantly strived to contribute to the sustainable expansion of society and the earth through the developed and provision of high-quality and innovative products and services. Through these continuous efforts, they have established a corporate philosophy that has been passed down from creation to generation throughout the company and which has come to be known as the “Guiding Principles at Toyota” (originally issued in 1992, revised in 1997; the “Guiding Principles”. they have also put TOYOTA’s standards and methods in written form, in the “Toyota Way” (issued in 2001). Such values and methods must be shared globally among us to realize the “Guiding Principles” and they are seeking to pass these on to future generations. Through these efforts and by Passing down business viewpoint and values and methods, they are steadfastly striving to understand the “creation of a prosperous society by making things”.

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TOYOTA has long-demonstrated its dedication to contributing to sustainable development. As their business operations have become increasingly global, they need to reconfirm their corporate philosophy and have issued an explanatory paper in January 2005 unconstrained “Contribution towards Sustainable Development”. This paper interprets the Guiding Principles from the stand point of how TOYOTA can work toward sustainable development in its interactions with its stakeholders. They believe that by implementing the Guiding Principles in maneuver, TOYOTA will successfully fulfill its expected contribution towards sustainable development. Therefore, as stated in the Guiding Principles and descriptive paper, we must meet the terms with local, national and worldwide laws and system, counting the strength thereof, and act with humbleness, honesty and truthfulness. compare to when the “Code of Conduct for Toyota Employees” was first issued in 1998, TOYOTA’s existence in civilization has to a great extent augmented and also new laws and policy have been recognized, such as for the defense of individual data. With this surroundings in intellect, we have revised the existing code of conduct and shaped the “Toyota Code of Conduct” in order to communicate the elementary approach necessary to motivate sustained confidence in TOYOTA, to respect and comply with the laws, and to maintain our honesty and integrity. I would mainly like to ask each one of you, as a person working for TOYOTA, to be aware that you are a necessary donor to the success of TOYOTA. In this period of global opposition, borderless trade, and diversification, TOYOTA wishes to conduct business in an open and flaxen means. TOYOTA aims to become the most appreciated, esteemed and trusted company in the world by its customers and society. Accomplishing this goal requires that each one of us is aware of TOYOTA’s respected reputation and standing in the community, the gratefulness their owe to customers and society, and the necessary respect of laws and regulations. Therefore, they must each act in a “unwavering, sure-footed, and thorough” way, and in agreement with common sense and good judgment. I imagine and ask you to carefully read this “Toyota Code of Conduct” and to implement the spirit within March..

After the Second World battle, the allocation of World economic authority was wholly rearranged. Prior to the battle, Europe and the USA lined the world marketplace. The administration of Western companies was based on the “Scientific Management” by Frederick Winslow. This intellectual basis characterizes the begin of industrialization, lead to mass production and to fabulous output increases. Yet subsequent to the war, new company appeared on the playground, whose work was based on a viewpoint, on methods and rules unknown before. At the same time as Western managers bowed to short-term thoughts to satisfy shareholders and to everlasting reform, the new actors intense on frequent development in the quality of products, consistency of processes and qualification of employees. Toyota is one of these new companies, which regardless of the ferocious opposition due to overload production capacity in the automobile industry of around 25 % outperforms Western opposition in every aspect, in technological innovation, in customer satisfaction, in continuous growth and in profit. In 2004 Toyota passed Ford to become the second major automobile manufacturer. prior to long, Toyota will overtake General Motors flattering the largest car company in the world most likely having no less than 15% of the world marketplace. Toyota will achieve continuous success in the automobile industry in the light of their innovations.


In a nutshell the company’s objective is to have:

“Action Commitment Teamwork for becoming #1 in the world”

Explanation of the Project

The core concept of the project is to understand the benefits of controlling the waste material, the strategy introduced by Toyota which is Toyota production system and the benefits of TPS. How much this crucial innovation helped in achieving customer satisfaction around the world? TPS explain how it became the leading automobile manufacturers by following its strategy. Thus this research project covers all the aspects of TPS and provides the best outcome.

CHAPTER Literature review

The Toyota Way

Author: Jeffery K. Liker

The Toyota concept: In the 1980s, Toyota started making its mark, on the world highway, as a sturdy car that lasted long and required less of maintenance than American cars. Today, the Company is the world’s most profitable car manufacturer, consistently producing high-quality cars using fewer man-hours and less on hand inventories. To this day, Toyota continues to raise the bar in manufacturing, production development and process excellence.

TPS and Lean Production: The Toyota Way explains the management principle and business philosophy behind Toyota’s success. It narrates Toyota’s approach to Lean Production (known as the Toyota Production System – TPS, which it invented in the 1940s and 50s) and the 14 principles that drive Toyota towards quality and excellence. The book also explains how one can adopt the same principles to improve one’s business processes, while cutting down on operations and production costs. Toyota invented Lean Production in the 1940s and 50s. The Company focused on eliminating wasted time and material from every step of the production process (from

raw materials to finished goods). The result was a fast and flexible process that gives the customers what they want, when they want it, of the highest quality and at most affordable cost. Toyota improved production by eliminating wasted time and resources, building quality into workplace systems, finding low-cost and yet reliable alternatives to expensive new technology, perfecting business processes and building a learning culture for continuous improvement.

How Toyota Became the World’s Best Manufacturer: After World War II. While Ford and GM used mass production and economies of scale, Toyota faced very different business conditions. Toyota’s market was very small but it had to produce a variety of vehicles on the same assembly line to satisfy customers. The solution: making the operations flexible. This resulted in the birth of TPS.

TPS borrowed some of its ideas from the United States. The core idea of the Just in Time (JIT) system came from the concept of the “pull-system”, which was inspired by the American supermarkets. In the pull system, individual items are replenished as each item begins to run low on the shelf. Applied to Toyota, it means that the first step in the process is not completed until the second step uses the materials or supplies from Step 1. At Toyota, every step of the manufacturing process uses Kanban to signal to the previous step when its part needs to be replenished. The Company was also inspired by W. Edwards Deming, who, aside from broadly defining customers to include internal and external clients, also encouraged Toyota to adopt a systematic approach to problem solving, which became a cornerstone for continuous improvement (known as Kaizen).

Eliminating Waste: The purpose of TPS is to minimize time spent on non-value adding activities by positioning the materials and tools as close as possible to the point of assembly. The major types of non-value adding waste in business or production process are overproduction, waiting or time on hand, unnecessary transport or conveyance, over processing or incorrect processing, excess inventory, unnecessary movement, defects and unused employee creativity.

One of the keys to success of Toyota is that it lives by the philosophy of self-reliance and a “let us do it ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not buy a company that already made luxury cars. Rather, it created its own luxury division – the Lexus – from scratch, in order to learn and understand the essence of a luxury car.

CHAPTER Aims Of The Study

1. Aim of the study: Toyota strategies in controlling the wastage of Material

Toyota Production System (TPS)

Primary, of course, it trained the recent car manufacturing how to make cars appropriately. Only some had heard of the Toyota Production System (TPS) until three academics in the car industry study planned run by (MIT). It described the philosophy and practices at the back the “just-in-time” mechanized system urbanized at Toyota by Taiichi Ohno. He in revolve had haggard motivation from W. Edwards Deming, an powerful statistician and quality-control specialist who had played a big part in mounting the rapid-manufacturing processes used internationally during the Second World battle. At the heart of TPS is removal of waste and absolute attentiveness on reliable high quality by a process of nonstop enhancement. The memorable just-in time aspect of bringing parts jointly just as they are required on the procession is only the clearest materialization of the persistent drive to remove sludge waste) from the industrialized process.


Toyota production system TPS is the combination is the combination of just in time inventory (JIT) and Jidoka In the above diagram exemplify the continuous flow work because the supplier are available to provide the inventory and without any shortage work is complete on time and all works starts same time and end up at same time. On the contrary the Jidoka systems of inventory stops and notify the abnormalities, work is done in separate settings manual work and automatic work finished separately without depending each other.

Justification of Aim: Just-In-Time (Jit)

Just in time production system eliminate the wastage of inventory because there is no warehouses cost would incur whenever the inventories are required the suppliers fulfill the demand and in the case of Toyota develop strong line with the supplier, if any supplier not able to provide the inventory on time the other supplier provides immediately

Through just in time inventory system the product not suffers due to the shortage of material and availability issue completely resolved. Just in time inventory (JIT) system is one of the tremendous innovations of Japanese automobile industry initially introduced by Toyota and now implemented in all automobile manufacturing concerns.

Toyota production system TPS is now working efficiently by adopting the just in time inventory system and it overcome the issue of overproduction and assist in making instant decisions.

2. Aim Of The Study: Efficiency & Effectiveness of Production Process.

A wide number of principles and practices can be employed to achieve the efficiency and effectiveness of production process. As management once noted, people instinctively know to eliminate waste once it is identified as such, so the task of reducing waste often centers first around identifying unnecessary uses of human, capital, or physical resources. After waste is targeted, new processes or practices can be devised to deal with it.

Justification of Aim

Process Enhancement

One of the crucial aspects of controlling the wastage and enhancing the production efficiency through this amazing system introduced by Toyota which is Toyota production system TPS, this process saves time and cost and increase the ratio of profit. Earlier the production is languish in the warehouses and operating cycle duration increasing and all the cost incur due to the longer operating cycle time. another problem that worker spent their time and efforts on arranging the material which is directly related to the production of the product and all the system depend to each other and push strategy being used. However Toyota eliminates the traditional process and come up with the latest innovation which is TPS.

Worth Added

Toyota production system TPS, one of the vital technique launching by Japanese manufacturing concern which differentiate the action and put the added worth in the product and these additional features that makes product prominent not incur any cost which is base on the idea which comes in mind . the main focus of any manufacturing concern is to minimize the cost and to maximize the level of profit but its just like a word but Toyota converts these words into reality by providing value added services in the form of Toyota production system, extra cost cuts, inspecting cost, warehouses cost, outsourcing cost, opportunity cost and time delays issue completely resolved and by incurring the lower cost achieve the best quality which fulfill the market demand.

Excellence By Design

Another aspect of capturing the market Japanese manufacturing concern is a striking concentration to the design of the product that will attract to the customer through its Toyota production system and develops incomparable products in the market that makes difference to all other automobile manufacturing concern and provide 100% satisfaction to the customer which is the true evidence of Toyota success in the form of large market share of Toyota in all over the world. Toyota production system improves the production process and brings the positive results that helps to resolve current problem which Toyota is facing and for planning the safest future strategies and for best outcome.

Order-Based Production

Order base production system is one of the crucial strategy adopted by Toyota the concept behind the order base production system is to eliminate the cost of overproduction and also the cost of warehouses in which the product are standstill for selling. The order base system makes the order on the behalf of market need and demand rather than production capacity this process saves the maintenance cost of machinery eliminate the extra expenses some of which are directly or indirectly related to the manufacturing of the product and also one imperative aspect is to save a lot of time and order base production process provide brand new product to the customer and this process also a best tool to monitor the inflation cost which depends upon the whole economy scenario. Order base production system assist in setting the prices and eliminating the wastage of materiel.


Qualitative & Quantitative sources of data.


Primary Source Of data

Data collection is the step which needs much more concentration of the researcher because if this step is good enough then the research will be effective and efficient. I have used the source Interview and general observations as my instruments for primary data collection. We shall also refer to books, magazines and internet to make our research more comprehensive. Additionally a quantitative analysis also done through generating hypothesis and implementing a Z-test method.

b) Interviews

I have conducted interviews from the other managers and HR manager to acquire the accurate information. I have conducted structured interviews for collecting information.


The already existing data has about the banking sector had been collected from the following secondary sources:

Web site of the company

I collected the information about the history, mission, and vision statements from the website of the company. I used internet to collect more information that comes in secondary source of data.

Following are the other sources that also helped me to better understand the procedures and methods being used in Toyota automobile manufacturing concern.


Case Studies


Research design is a step by step process. It provides the basis for testimony. The need of the research itself determines the methodology and the design of the research.


The purpose of this research report is to explore the “Production strategies adopted by Toyota to minimize wastage of material.” A lot of research work has been done on the production process of Toyota, but a little research work is done on Production strategies adopted by Toyota to minimize wastage of material, so this shows that this is an exploratory research work.


Our type of investigation is “correlation” because we find the important variables or factors that contribute their part in providing an edge to Toyota production system TPS


To conduct this research our interference in the environment was minimal.


The study setting in our research is non contrived (natural) because we have not created any artificial environment for our research. This reason for keeping non contrived study setting is because we took a number of interviews, and research is being conducted in the natural environment of the Toyota.


In our research unit of analysis is “group” because in this research, we conduct interview to the Hr. Managers and employees and from some loyal people of Toyota. We collect the data from this specific group who use Toyota.


Cross sectional studies are those in which the data are collected just once over a period of days, in order to answer a research questions. Same is the case with our research because we collected the data in one shot and not again.

Ethical Consideration

TOYOTA will fulfill with related laws and business procedures, interior business policies and rules. Toyota always focus to the social norms and values that makes history and heritage of Toyota and strictly govern all the business policies and take timely action to the any violence of the rule. Toyota not compromise to the quality and commitment which are its core principles.

Toyota adopt the strategy to make the customer forever not for once and for that Toyota never motivate to an illegal way but it offers the tremendous services that catches the heart of customers.

The Toyota Company strictly banned to making any unethical advertisement that will defame the market of the Toyota motors in the eye of the customer and also beyond to its code of conduct.

Toyota company also not compromise with the safety of its product which it offer in the number of ways and Toyota will also educate people to create awareness of new innovation and for betterment of the customer , employees and for the sake of company ultimate growth and prosperity.

CHAPTER 5 Results


Null Hypothesis

In generating hypothesis we assumed that our population is normally distributed. We use Z-Score method to test our hypothesis.

By studying the literature review which contains the different researches and studies conducted in different universities, on the basis of these studies we are assuming that 65% of employees said that Toyota Production system TPS is the ultimate solution to controlling waste material. We are also assuming the same percentage for the employee of Toyota Company who said that TPS is the ultimate solution to controlling waste material. So our null hypothesis is:

H0: P = 65% or 0.65

Alternate Hypothesis

Now our assumed percentage of the employee of Toyota Company who said that TPS is the ultimate solution to controlling waste material could be greater or lesser than 65% and we can show it by alternate hypothesis which is:

H1: P ≠ 65% or 0.65

Level of Significance

We assumed the level of significance

α = 0.05

Critical Region

Since it is a two tail test so α/2 = 0.025

On the basis of the level of significance the critical region is:

-1.96 < Z < + 1.96


Analysis of our interviews, which had a random sample size of 120, show that 50% of the employees said that Toyota Production system TPS is the ultimate solution to controlling waste material.

Now by using the Approximation formula

Z = (x – n P0) / √ (n P0 q0)


X = 60 (50% of 120)

n = 120 (sample size)

P0 = 0.65

q0 = 0.35 [q0 =1- P0]

Z = (60 – 120 * 0.65) / √ (120 * 0.65 * 0.35)

= -3.44


Because Z-Scores value computed by normal approximation does not lie in critical region, we did not find sufficient evidences to accept our Null Hypothesis.

We further concluded that less than 65% of employee said Toyota Production system TPS is the ultimate solution to controlling waste material.

CHAPTER 6: Discussions



Toyota Company is one of the best automobile manufacturing companies of the globe. This has successfully conquered its market through attractive and reliable cars with continuous innovations.

In this case, Toyota has main advantage of its efficient production system which is its unique characteristic. Besides that it uses number of marketing tools to maintain its sustainable growth, which is as under

Research and development

Toyota focusing on innovation, for that innovation they conduct research and collect information about market, customers etc and they always come up with new ideas, brings new cars With more feature of comforts

Customer relationship management (CRM)

They consider customer as king, and realize their importance in their business operation So they develop long term relation with them to best identify their characteristic in order to give them extra value and satisfaction

Compliance with laws and regulation

Toyota is global leader and markets its product in numerous countries, so for that it must need to understand rules regulation of every country to perform its business operations. So it always complies with national and international laws and regulation being socially responsible.

Stakeholder relationship

Toyota respect its stakeholders, who have some stake or interest in your organization, like customer, investors, suppliers, dealers etc so Toyota focuses on how to make them satisfied for smooth operations of business

E-Business operations

Toyota also started its e- business in many countries, so its good marketing strategy to facilitate customers and dealers to transact on computer (internet)

Promotional activities

It is almost impossible for multinational company to run without focusing on promotional activities, so Toyota does it recognizes too and stresses promotional activities.

Extra customer value and satisfaction

Toyota has the image, that it provides high quality and standard of life. It always contribute its efforts to maintain that image among customers, so it created brand equity and has made their customer brand loyal

Participative management

Toyota welcome suggestion from every working unit, encourage creativity from every employee of organization. Who shows creativity and innovation brings competitive advantage For Toyota, than it reinforce them by rewarding


Operations are strictly run by a sustainable business strategy in order to control the wastage of material, which is passed on from one generation to the other and not by short-term decision making or by the attitudes of changing management teams and variable customer tastes.

Toyota success comes through continuous efforts and launching incomparable product.

Growth comes from the inside out and not through mergers and acquisitions, in other words, growth through continual improvement of products and services and not through continued reform.

Toyota always focus to their customer need rather their capacity to produce the product the key point is to control the wastage of material because Toyota adopted the strategy mass customization rather than mass production.

Skilled employees are one of the key point of Toyota in achieving their long lasting goals. Toyota employees always work for the sake of the company prosperity.

Latest technology is being used like the Toyota production system to eliminate the wastage of material and to compete to the rivals and in order to fulfill the customer’s desire.

Centralized system is being adopted by Toyota all the powers are not in one hand divided into several hands for the interest of employees and staff. Flexible environment the lower cadre easily reaches to the higher cadre and sharing of ideas is the key spot of the success history of Toyota.

Remarkable history of Toyota an ultra growth in the automobile industry without any imperfection.

Toyota offer flexible working environment, create a culture to stick the setback.

New ideas are core area of the success of Toyota.

Toyota implements blue ocean strategy in order to make incompetent to their rival.

First fuel injected car introduced by Toyota which is his blue ocean strategy and capture the market share of all the automobile manufacturing concerns.

Standardised tasks are the foundation for continuous improvement and employee


produce leaders who scrupulously comprehend the work, live the values, and educate it to others.

Develop exceptional people and teams who follow your company’s beliefs.

Respect your comprehensive network of associates and suppliers by challenging them and serving them progress.

Make decisions slowly by accord, in detail taking into account all options; employ

decisions speedily.


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