ISCOM 383 Week 2 Team Assignment Toyota Value Chain Model Paper
ISCOM 383 Week 2 Team Assignment Toyota Value Chain Model Paper
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Week 2 Team Assignment ISCOM383 Global Value Chain Management Week 2 Team Assignment Toyota Value Chain Model Paper Identify a nonUS based global organization Prepare a 10501750 word paper describing the components of its value chain Select a nonNorth American country in which this organization operates Describe how this organization utilizes its value chain within that country Answer the following questions 0 Which value chain model is being used 0 Why is the value chain model being used 0 How does this model differ from other supply chain models Be sure to obtain faculty approval for these selections prior to Week Two The selected organization and selected country will be used for the rest of the Learning Team assignments A minimum of two citations from different references in a proper APA format required to receive credit for this assignment Toyota Value Chain Model ISCOM383 55 PointsToyota Value Chain Model Value Chain Management is the process by which a company creates and develops trade and strategy partners and increases the effectiveness of the company Sheridan 1999 Within a value chain a product is designed and ideas are formulated before start of production Once this is completed a supply chain is established and communication is outlined The entire process requires managers familiar with the industry requirements not the least of which is the actions by competitors Toyota was one of the rst companies to employ the value chain In doing so Toyota has set the standard for other companies worldwide The purpose of this paper is to examine the components of the value chain and outline how it applies to Toyota in Japan Generic Value Chain Models Many corporations implement value chain management programs based on concepts outlined in Michael Porter s popular Value Chain model or those found in Michael Treacy and Fred Wiersema39s Value Disciplines Porter39s Value Chain focuses on primary activities including logistics operations and service Processes that support primary activities are company infrastructure human resources management technology development and procurement Institute for Management nd Treacy and Wiersema suggest that companies bene t from focusing on any of their three value disciplines operational excellence product leadership or customer intimacy Keynote Resource 2004 Some corporate decisionmakers use these concepts along with organizational strategies to customize the organization39s value chain Other companies such as Toyota develop value chain disciplines based on organizational culture rather than concepts from the generic value chain models Toyota Production System Eliminating Waste quotWaste can manifest as excess inventory in some cases extraneous processing steps in other cases and defective products in yet other casesquot Toyota 2011 para 2 The Toyota Production System TPS espouses the philosophy of eliminating all waste This philosophy began in the late 18005 with Sakichi Toyoda s development of production efficiencies in his automatic loom business Today Toyota uses the JustinTime principle that was developed by the founder of Toyota Motor Company Kiichiro Toyoda Using the JustinTime principle Toyota maintains adequate inventory levels of parts for current production projects instead of warehousing excess parts that could become obsolete with newer innovations in the company39s automotive technology Managing inventory level means less capital is tied up with less inventory loss on obsolete parts In addition to managing inventory levels TPS follows stringent rules that govern production encourage improvements and guide relationships with employees customers and suppliers Spear amp Bowen 1999 Such efforts decrease waste and increases production ef ciency TPS and Toyota s Success quotWhat39s curious is that few manufacturers have managed to imitate Toyota successfully even though the company has been extraordinarily open about its practicesquot Spear amp Bowen 1999 p 97 Although other manufacturers including Ford and General Motors have tried to develop value chain models similar to Toyota39s production system none have been as successful as Toyota Research suggests that Toyota39s success comes from the shared vision of corporate leaders and employees of creating the ideal production system based on ideals passed down through decades of family and corporate culture Spear amp Bowen 1999 Successful Implementation As a vertically integrated company Toyota prides itself in management of its supply and value chain and successful implementation of best practices However one can argue that Toyota was clearly following in the footsteps of Ford Motor Company by using the production line technology and making it more ef cient Ahrens 2006 Aforementioned Toyota s Production System TPS focuses on waste elimination low costs high exibility optimization of all activities and consumer satisfaction Important to note about TPS is that it is supported by JIT justin time and Jidoka automation with human touch JIT provides for zeroinventory and justintime delivery of vehicle parts Jidoka enables multimanagement of machines and production of less defective parts Furthermore Toyota implements TPS in conjunction with the total quality control TQS These aspects of value chain management result in effective and productive workforce and thereby achieve one of Toyota39s crucial goals The effective workforce is further able to create value across the chain and establish the process that many other companies try to copy Ahrens 2006 In aim of creating further consumer value Toyota39s management places high priority on human capital management fair procurement practices technology and internal structure For example Toyota is assisting its employees in both personal and professional development by providing educational and career opportunities fostering relationship with families and nurtures a business culture focused on technical skills Additionally Toyota s procurement practices advocate fair competition mutual bene t and good corporate citizenship Toyota 2005 Based on the aforementioned examples it is proven that Toyota39s implementation of its value chain is not only an internal strategic activity but also company39s philosophy Value Chain Model Decision Toyota39s value chain focus on new information technology supports an ever evolving product line This new technology creates consumer excitement to remain loyal to the Toyota brand According to Toyota s annual report in 2001 quotToyota has long sought to build close enduring relationships with its customers This objective lies at the heart of expanding our value chain for by offering an extra suite of services that are intrinsically linked to the automobile we can support people39s lives in a whole host of ways Such wideranging assistance strengthens the bond between Toyota and its customers and encourages them to stay with us throughout their daysquot Toyota 2001 para 2 The Toyota Company ofJapan has estimated the company39s worth at quot 30 trillion but not many people know that sales of new cars account for only a quarter of this gurequot Toyota 2001 para 3 The value chain brings together not only the sale of new vehicles but also adds in used car sales automobile accessories rental vehicles maintenance of the vehicles insurance and nancing of the Toyota cars Toyota has experienced global success by focusing not on the manufacturing end of the business but the customer s wants needs and satisfaction To track the demand of the customer Toyota remains focused on the information technology and nancial aspects of the business Five initiatives that drive the IT and nancial side of the Toyota Company are creating automotive e commerce websites quotIntelligent Transport Systems ITS aimed at commercializing the next generation of highway travel information terminals designed to add value to automobiles through increasingly sophisticated car navigation systems the T53 card that paves the way for our entry into the business of processing and settling consumer purchases and nally networks that support the above four initiativesquot Toyota Annual Report 2001 para 5 Differences with Primary Competitor Toyota s chief competitor is without question the Ford Motor Company One cannot handily itemize the wildly varying value chain strategies of Toyota versus Ford The truth is Ford and other parallel peers seek to emulate Toyota39s value chain philosophy Ford has witnessed rsthand the loss of market share to the company39s headspinning progress Toyota is in essence the industry leader and sets the tone for its closest competitors Wee amp Wu 2009 Toyota has achieved lean supply chain perfection via robust value stream mapping VSM VSM is a logistics discipline that assists with the highlighting of valueadded activities along the value chain and the discarding of those deemed wasteful Preoccupation with this one tool has helped Toyota secure the lowest cost production on the smallest volumes the highest complexity and most abbreviated lead times in the industry In a lean logistics context VSM eliminates redundant wasteful or impeding practices Surplus inventory defects untapped employee ingenuity excess downtime overprocessing and overproduction are examples of items that VSM combats Toyota singles out overproduction as its chief nemesis Wee amp Wu 2009 In contrast to Toyota Ford although employing similar VSM techniques has not prioritized aggressively the avoidance of overproduction Ford has chosen to xate on builtin quality exclusive of other VSM ndings In addition Ford s focus on shorterterm strategy has resulted in piecemeal value chain improvements with bright spots here and there but not rmwide or worldwide Relative to Toyota Ford s traditional shortsighted value chain management approach translates into overproduction and extra costs in the form of related warehousing and storage Wee amp Wu 2009 Conclusion Toyota is a worldclass leader of crossfunctional value chain management with synergistic policy deployment throughout their organization Cultural in uences have also led to the success of Toyota s Production System with JIT justintime and Jidoka automation with human touch processes This strategy raises Toyota s performance ahead of their competition With a primary goal on reducing overproduction and waste Toyota took industry best practices adapted them with improvements to the Japanese corporate business model and successful decreased waste An effective production workforce environment with a high priority on human capital management fair procurement practices technology and internal structure remains strong today Competitors try to use the same model but have not achieved the same success Ford s quotjustintimequot approach is spotty in its focus on overproduction and trends more toward quality control process improvements Cultural differences are also viewed as a primary contributor to Toyota39s success Japanese business culture emphasizes relationships with loyalty group harmony and team spirit as key components of a person39s character Grove amp Hallowell 1994 Using the 14 principles of the Toyota Way as a workplace modality Toyota has developed a successful cross functional value chain management system that remains an industry standard to emulate today Kotelnikov nd References Grove C amp Hallowell W 1994 Deciding Whom to Hire Promote and Trust Grovewell LLC Retrieved on March 13 2011 from httpwwwgrovewecompubculturalin uencehtm Institute for Management nd Porter39s Value Chain Retrieved from httpwwwifmendcamacukdstoosparadidmvaluchhtml Kotelnikov V nd Cross Functional Management CFM Retrieved on March 13 2011 from httpwww1000venturescombusinessguidemgmtcrossfunctionahtml Keynote Resource 2004 The Discipline of Market Leaders Choose Your Customers Narrow Your Focus Retrieved from httpwwwkeynoteresourcecomartice2Mtreacyhtm Spear S amp Bowen H K 1999 SeptemberOctober Decoding the DNA of the Toyota Production System Harvard Business Review 99509 Reprint 95 106 Toyota 2011 The origin of the Toyota Production System Retrieved from httpwwwtoyota olobal comcompa nvvisionphiIosoohvtovotaproductionsvstemorioino fthetovotaproductionsvstemhtml Toyota 2005 Environmental and Social Report 2005 Retrieved March 12 2011 from httpwwwtovota olobalcomsustainabilitvsustainabiitvreportpdf ledownload05pdfre port2005pdf Wee HM amp Wu S 2009 January Lean supply chain and its effect on product cost and quality A case study on Ford Motor Company Supply Chain Management An International journal 145 335 341
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