Example OF Operation Management Critical Thinking
Operation management is one of the fundamental aspects of an organization. Numerous organizations adopt different strategic options in the operations, which may include product processing, marketing, monitoring of the supply channels, resource acquisition and development. In essence, operation management entails all the activities that should be undertaken to ensure smooth running of an organization. This paper examines processes of the Toyota company in relations to the strategic operations management in application. The paper will explore the manner in which the organization is positioned in terms of the market performance. In addition, the paper explains the correlations between the performance objectives and the operations strategy of the Toyota Company.
The paper offers an overall picture of the processes, which are used to provide products and services. This includes the acquiring resources and producing of the vehicles and attributed products. Further, the paper explores the capacity management strategies, which are used in the organization.
Toyota Company is a well-known vehicle manufacturer, which has taken over a great percentage of the global market. Presently the organization occupies 17.3% of the world market share and this is attributed to apt strategy in relation to the operations management of the company. Consider the following chart that indicates the rest of the players versus their market niche
This is an indication of how the Toyota Company is competing with other players in the market. It is notable that diverse operation management in the various vehicle companies brings the disparity in the market share as indicated above (ZU, FREDENDALL & DOUGLAS, 2008).
This essay seeks to examine the overall operations management practices of the Toyota Company in relation to the market and objective performance. In addition, the essay will explore the capacity management strategies used in the organization and relate them with the present organizational performance in terms of revenues and market share.
Operations Management of the Toyota Company
Numerous praise statements have been coined for the Toyota Company for the success it has made across the globe. For instance the company phrase is the “the vehicle in front of you is a Toyota” this is an indication of the far-reaching brand status Toyota has created. It is imperative to note that, the physical products displayed for sale, which results to the creation of a good brand name results from the internal organizational mechanism. In essence, any successful company begins with the internal milieu then continues to the external factors. In the case of the Toyota Company, the operations management is dictated by the organization’s culture of forward thinking integrated with the integrity, passion and invention beyond the vehicle production.
The managers of the Toyota Company are proud of their creativity, particularly in structuring the operations of the company. For instance, the implementation of the Just In Time method of production and distribution of the products. This implies that, the vehicles are released to the market as per the designed schedule to avoid space wastage. In essence, the organization has gone a step further in ensuring that its marketing department helps in increasing the market share in the emerging economies, which is now used as parking space. The vehicles are produced with ready markets waiting, and this saves the storage space. In addition, the distribution channels, which include the online advertising agents, have helped the organization to gain fame in both the developed and emerging markets. In essence, the organization has successfully used the online platform to enhance its market niche and increase its profit margin (HENK, AKKERMANS, BOGERD, YÜCESAN, AND VAN WASSENHOVE, 2003). For example, the organization has continuously enjoyed an increase profit margin from 1996 through 2005 with the highest point being 8.2. The increasing trend of the profit margin and market share are two key indicators of the Toyota’s operations management. In the case of the online marketing, the organization has created distribution lines, which connects its clients and extends to the new ones.
The Concept of Distinctive Competence and Continuous Improvement
In the world today, use of internet has taken the events and Toyota has taken advantage in enhancing its new strategic front in the operations management. The strategy of “Beyond World-Class” is key in defining the overall picture of the company. The Toyota Company embraces a competitive strategy, which is well integrated in the superior manufacturing aspect that has been adopted by not only the vehicle manufacturers, but also other numerous producers in diverse fields (Hayes and Pisano, 1994). This is attributed to the rate in which the market milieu is changing. The Beyond World-Class strategy integrated with programs such as Just In Time and Total Quality Management play a fundamental role in the success enjoyed by Toyota. With the Total Quality Management (TQM), the organization has been able to incline its objective performance towards the quality of the vehicles manufactured. In the competitive market in which the organization thrives in, the aspect of quality is paramount and it helps to gauge the other players’ position. It is imperative to new that, the Toyota and Nissan are both Japanese companies, however, they are far different in terms of quality and market share. For instance, the Toyota vehicles take a half of the Kenyan market, 20.1% in South Africa and 40.7% in the Nigerian market. What do these figures indicate? Toyota as a brand name has spread across the globe and with the aspect of quality, creativity and apt customer service; it has continuously increased its market niche (Hayes and Pisano, 1994). According to the previous and present performance statistics in the annual revenue, market niche and profit margin, it is clear that, the organization will present good results in future. However, it should be noted that, despite the increase in the annual revenue, other players such as the Ford and General Motors are speedily increasing their market niche as this will lead to the increased revenues. This implies that, the various sectors of operations Management such as processing and production of the products. The most advantageous aspect of the operations management in the Toyota Company is the strategy flexibility (Hayes and Pisano, 1994). This is a foremost advantage over other players inn the industry since, the trending in the market is ever changing and this will help in aligning the organizational objective performance with the strategic performance with the aim of remaining at the competitive edge. This tells us that the organization practices the concept of distinctive competence. The strategy of continuous improvement is associated with the Kaizen strategy of the operations management. This strategy acts a motivational tool for the management, sine the urge for improvement of the product quality is on going, even when the management feels that, they are on the top. This has helped the organization to increase its preference among the clients and this led to the continuous increased market share. The strategy of continuous improvement has made the organization’s management not to sleep with an aim of sustaining the company’s state in the market arena (Hayes and Pisano, 1994).
The Concept of Toyotaism (Lean Manufacturing)
Toyotaism stands for the lean manufacturing system, which is the production system embraced by the organization. The lean concept of manufacturing is intended to reduce resource wastage and the overall cost reduction. The system is critical in the removal of the redundant resources, which do not add value in the overall product. In addition, the lean manufacturing concept is advantageous in the sense that, it only focuses on the allocation of the resources according to the clients’ specification. This offers the client the desired value or worthiness with minimal quantity of resources (HAYES& WHEELWRIGHT, 1979). The organization has endeavored in maximizing the benefits attributed to the lean manufacturing system by implementing the cycle-time deviation approach. This approach help in saving time since, it out puts the products in production line. It is imperative to note that, the organization is able to reduce resource wastage, this put it a head of other players, and this enhances the central strategy of the organization of the competitive concept. The overall outcome of proper operations management practices is the stiff competition in the revenues and market share, which should be attributed to the various aspects of management. It is notable that the managers of any organization are responsible fro the success or failure of the company since they make decisions and ensure that the organizational goals are achieved (HAYES& WHEELWRIGHT, 1979). The relationship between the organizational performance in term of the market share and the revenue increase appears to be the driving motivation of the company in achieving its set goals. However, it should be noted that, the laxity of the managers would result into the decline of the company in terms of the already established niche.
The Concept of Six Sigma
Like any other organizational operation management, the concept of the Six Sigma enables the organization to benefit. The Six Sigma strategy is a potential helper in the removal of the errors and aspect of variability in the process of production. The overall effect of the organization is the increased quality of the product and reduced effect of the defects of the output. It is imperative to note that, the aspect of the Six Sigma is attributed to the element of specialization of the various managers (HAYES& WHEELWRIGHT, 1979). This should be attributed to the hierarchical procedure, which the organization should base the organization implementation with particular objectives. This forms another indication of how the organizational goals are in tandem with performance goals. The element of the Lean Manufacturing is advantageous since the organization is able to reap profits including the increase of the market share and revenues (HAYES& WHEELWRIGHT, 1979). This is a clear indication that the operations management’s aspects form the foremost reason for the anticipated growth of the company. In addition, the Six Sigma strategy has helped in increasing the efficiency of the employees in term of resource utilization. In most organizations, the employees find it easy to waste resources due to lack of mechanism of making follow ups to the production end. One the wastage trend is curbed, then the organization can grow in all aspects. The Toyota Company has made a name through these simple strategies and today, it is among the top. It is notable that, the secret to the top in terms of sales revenues and market share acquisition is apt operations management. Like any other company, the Toyota Company has enhanced its internal structure with technological systems such as the employee check time. The employees are checked on the time they work and the equivalent output, and then the management applies the TQM to ascertain the quality of the products produced (HAYES& WHEELWRIGHT, 1979). With the employees aware of the procedures, which the company follows in checking their output, they slowly develop a culture of working smart with the result being a high quality product. It is notable that the management requires coordinating with various departments to ensure that, the needed protocols are followed and aimed at the required product. In essence, without proper coordination of the management this strategy stands to fail.
Capacity Management strategies
The well-organized management team is an adequate capacity strategy, which organizes the operation management strategies mentioned in this paper. The company has adequate leadership from the top executive, which offers direction on decision-making. In essence, we can say that the overall management structure, which fits well into the cultural set up of the organization, serves as the overall capacity strategy. There is existence of the online monitoring of the market trends and this helps the management to adjust their goals towards the prevailing market state. In addition, the organization has an elevated approach to sourcing of materials and procurements process (SLACK, CHAMBERS & JOHNSTON, 2013). The organization uses the online channels to source and procure for the materials. This has enabled it to reduce extra costing of performing the processes physically. Further, the organization practices an organized system of logistics, which has so far seen the organization embrace best operations management in the overall performance (MOSER, 2006).
The effectiveness of the strategies
The Toyota Company enjoys a relatively large market share of 17.3% with the current profit margin ranging between 8-10%. These are two key indicators of the effectiveness of the company’s operations management. The operation management strategy in most cases is an internal aspect, which makes follow up to the external milieu of the organization. If the reflection of the organization is positive like in the case of Toyota, then it can be said that the operations management strategies such as the TQM, Six Sigma, distinctive competence and lean manufacturing are properly functional in relation to the market and organizational goals (BLACK, 2007). In addition, the effectiveness of these strategies is paramount since the management seems to use them without much change. Further, the foremost indicator of an effective strategy is the aspect of flexibility, which allows the management to adjust whenever the market trends vary. This aspect is paramount in the operations management strategies practiced by the organization. This has made the organization arguer well in any business milieu both in the local and global market.
The Toyota management is thriving well in the market and in terms of the revenue collection per annum. The organization is trending well under the present operations management strategies, however, the Kaizen strategy should be incorporated into both the Six Sigma and the disticnitive competence and continued improvement strategies so that it can act as a motivational tool. This will increase the quality and market share of the organization’s products. In essence, the current operations management strategies of the Toyota Company are adequately managed and the trend should continue to ensure increases standards of products. This will put the organization at bar with the other players
List of References
BLACK, J. T. (2007) Design rules for implementing the Toyota Production System, International Journal of Production Research, 45(16), 3639-3664. [Online]. Available at: http://www.tandfonline.com (Accessed: 30 December 2014).
HAYES, R. H. AND PISANO, G. P. (1994) Beyond World-Class: The New Manufacturing Strategy, Harvard Business Review, January-February, 77-86. .[Online]. Available at https://hbr.org/1994/01/beyond-world-class-the-new-manufacturing-strategy (Accessed: 30 December 2014).https://hbr.org/1994/01/beyond-world-class-the-new-manufacturing-strategy
HAYES, R. H. AND WHEELWRIGHT, S. C. (1979) Link manufacturing process and product life cycles, Harvard Business Review, 57(1), 133-140. [Online]. Available at: https://hbr.org/1979/01/link-manufacturing-process-and-product-life-cycles(Accessed: 30 December 2014).
HENK A., AKKERMANS, H. A., BOGERD, P., YÜCESAN, E. AND VAN WASSENHOVE, L. N. (2003). The impact of ERP on supply chain management; Exploratory findings from a European Delphi study, European Journal of Operational Research, 146(2), 284-301. [Online]. Available at: http://www.tandfonline.com (Accessed: 30 December 2014).
MOSER, R. (2006). Strategic purchasing and supply management a strategy-based selection of suppliers. Wiesbaden, Dt. Univ.-Verl. http://dx.doi.org/10.1007/978-3-8350-5404-2.
SLACK, CHAMBERS AND JOHNSTON (2013), Operations Management. Sixth Edition, Prentice Hall.
ZU, X., FREDENDALL, L. D. AND DOUGLAS, T. J. (2008) The evolving theory of quality management: The role of six sigma, Journal of Operations Management, 26, 630-650. [Online]. Available at: http://www.tandfonline.com (Accessed: 30 December 2014).
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