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Toyota Case Study

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In this activity car market, today's Toyota had not been the novice to seize the market by low price, but an industry leader by setting up a global production and marketing system. The core of Toyota production System (TPS) is cost reduction, waste elimination, quality enhancement and continuous improvement. The most outstanding feature of Toyota management mode is standardized real-time production which named as Just-In-Time (JIT). From Toyota's culture, enterprise thought the core strength is the enterprise's employees, especially the frontline workers. In general, Toyota Production System is relatively successful. But in recent year the quality and reliability of each model have some problems, which cars were constantly recalled. So how to assurance balance among the cost, safety, and quality is the main problem Toyota needs to face. The recall events give us an important warning that enterprise should not only consider the scale expansion, but also consider the sustainable development.

Question 1

Inventory is the main harm in Toyota's problem. It likes the small iceberg on the surface. Actually most of iceberg is hidden under water. In the production process, it is important for them to have adequate inventory levels to accommodate the needs of customers. However, in some case, having too much inventory can become a weakness. The "push" system often created excess inventory and blocked the production line. The excess inventories would cause direct economic loss, like the warehouse cost, cost of capital and loss from falling price, and some hidden issue, like usefulness of the equipment, low artificial efficiency, and low flexibility. The idle inventory can be also costly and therefore it could be a potential threat to company's success. In order to overcome this problem, Ohno developed Kanban system. Hence, Toyota had been very successful using the important approach to cut cost and improve work efficiency.

Question 2

Not because of the recall events, we should deny Toyota's lean manufacturing which has been imitated by the world's companies. There is no doubt that Toyota is lean. Lean manufacturing is the summarization and ascension of Toyota Production System. It represented the abundant practical experience and deep management thoughts in many industry and fields. The essence of lean manufacturing is through eliminating all forms of waste to improve the efficiency of value. It is normal that lots of other brand vehicles have been recalled in history. So, saying something like 'Lean is falsified now, because of the recent recalls', basically is the same as saying that physics as a whole should be relegated to the wastepaper basket. Of course, that makes no sense. What is true is that Lean should be adjusted or supplemented on a regular basis, to



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