Posted at 10.27.2018
Keywords: asutomotive industry five pushes, lean developing failure
Toyota Motor's perspective is to be the most successful and reputable company that can created the pleasure for customers. Toyota also desires to be the best answer of the auto industry with the variety of its products, and the very best quality of its people and technology.
Mission of Toyota electric motor is to provide customer with secure journey. Due to Toyota nervous about the environmental-friendly is the first and most important issue for its working, so that it developed many new technology for energy preservation and diversify power source while Toyota also matter for creating a good and clean culture.
Meanwhile, Toyota Motor unit Thailand's vision is to be the first choice of Toyota Asia Pacific and Toyota engine network around the world that be the most respected and respected company in Thailand. For the quest, it desires to fortify its creation and support the collaboration in the Asia Pacific area that can achieves the high client satisfaction and market share. In addition, Toyota Thailand targets the safety with the first concern because of its working and also desires to create public quality through many useful modern culture activities.
Toyota uses a Cost Management as its universal strategy. Toyota has been trying to lessen their costs in every level of value string but still, they need to maintain the high-quality standard. So, each level of the examination will show how it web links the cost management strategy to the value chain.
In this stage, Toyota gets parts from both local and international suppliers. They send components from international suppliers by ships then deliver to development plant by vehicles and then for local suppliers in Thailand, pickup trucks with full-loaded are used. This way they can buy components at cheaper price. Toyota makes suppliers making a committed action that they will share any creativity in the suppliers group that produces similar products. This can make suppliers produce better quality parts, more efficiently. Also they use Just-in-time and Milk run. (see appendix)
Just-in-time is an integral part of slim management. It reduces lead time, inventory level, so keeping cost decreases. On this stage, through the use of JIT, we will receive parts from suppliers at the right time and right amount. Because we will order parts at the amount the production crops really need. Because of this method, you offset possessing cost with purchasing cost.
Milk run is the method you use logistics providers to get vehicle parts from all suppliers in the routes and deliver to production plants. This technique can reduce traffic at the creation plants. You will see fewer vehicles because sometimes many suppliers used to deliver their materials to the crops but now only logistics providers' vehicle with full-loaded of parts from different suppliers. Also, this can make inventory level diminishes, because you will have the parts often a day, instead of getting a large lot once in a while. So cost in traffic management and holding cost cut down.
After obtaining components from suppliers, now creation plant life put all the parts along at their own development plants in Total Rong, Gateway and Baan Poh. This is called as Trim manufacturing which involve of Just-in-time, Jidoka and Kaizen. (see appendix)
For Just-in-time, Kanban has been used to help getting. Kanban tells you what to produce, when to create and how much to create by handing credit cards along in the creation process. And that means you won't produce if the prior production process has not transferred you the cards, which also could not get started if there is no demand from customers. And yes it could reduce lead time, which satisfies customers, since it can react to customer demand immediately. Furthermore, no stocking occurs in the creation plants.
Jidoka can reduce defective goods by detecting the development process strongly, so if any issue occurs in the assembly line, the creation brand will be ended immediately, set and make sure that you won't happen again. When less faulty goods occurs, the production system becomes more reliable, higher quality, the opportunity that customers are certain to get faulty goods will decrease, satisfaction boosts.
Kaizen is utilized to improve all functions continuously. It starts off with idea decades, then testing the best with the standardized process, if it is good, they'll apply that idea to the old process. The key in this technique is to keep enhancing, never stop producing ideas and test to see whether it's a good idea. By Kaizen, it creates value to customers because they will get better and better product from the improvement in production process.
For Toyota, it has worked on increasing their lean developing system to be able to distributed their fixed costs moreover production. They may have surpassed Ford and GM in production and costs. They can produce 15 vehicles per worker which is far more than the 4. 7 vehicles per staff Ford can produce. By creating more vehicles to sell, Toyota has effectively pass on their set costs over more production.
After products are finished, production crops need to delivery its done goods with the full-loaded pickup truck of cars directly to its own showrooms following the demand order of every showroom. Toyota Motor unit Thailand manages its own showrooms around the country. It helps customers to find Toyota's product easily.
In the circulation process, Toyota will await the customers' demand. A lot of the car will be parked at the auto parking lots where they are looking forward to the purchasing requests from the traders. For the autos that already have been positioned purchasing orders from customers, they'll be parked at the point of exchange and you will be sent to the clients as quickly as possible. And around 15 % of the vehicles that have been parking in the playground tons will be delivered to the near auto parking lots for further mailing to the dealers
In Thailand, there are 119 sellers with 319 showrooms that Toyota production plant life in Thailand have to provide. Because of this outbound logistics in Thailand, Toyota is rolling out a system called Vehicle Logistics which is a cluster deliver. Before, one truck can hold 3 large-sized automobiles and 6 small-sized cars. In nowadays, it is advanced so that one truck can hold 4 large-sized automobiles and 8 small-sized automobiles. This also helps save the travelling cost for the company as well as reduces skin tightening and emission to protect the environment which is one of the Toyota's purposes.
At this level, Toyota communicates their autos by focus more on local area and specific lifestyle to satisfy the various need in each area by using below the lines marketing. For the reason that Toyota found out that auto market expanded more than 50% from the prior year and only mass media cannot build up attention of its concentrate on. So, Toyota made a decision to offer more of its occurrences through segmenting standards of living of its customers such as for individuals who love sporting, Toyota supplies the "Toyota One Make Competition" that your event is perfect for racing Toyota autos and also to show quality of Vios and Yaris, around the united states. For sport market, Toyota offer itself to be a sponsor in many athletics that popular in Thailand, boxing and basketball, including the Toyota Thai boxing marathon Vigo smart and the Toyota premier cup 2010. Toyota also provided 100 automobiles for the prize of brief film competition in the Film Expo Asia 2010. However, Toyota attempts to grow its events in every part of Thailand which Toyota won't control all of those events but local dealer to be the one who control each event. This technique can make Toyota get more attention from people in different lifestyle and help increase the impulse purchasing from customer.
Environmental friendly is the one which Toyota considers as its first concern for working. Therefore, Toyota pushes many CSR activities for save environment and enhance the society like the White Road Advertising campaign to teach children about traffic restrictions and safeness through fun and useful lessons
Toyota also communicates and posts its reports through electronic media such as its website, www. toyota. co. th. Furthermore, direct email is an instrument for people who want to receive reports through e-mail from Toyota by register on its website. Brand ambassador also another tools that Toyota use for gain more attention from people by using superstars who popular in at that time for promote its automobiles such as it used "Joe-Wan AF" to be brand ambassador for New Toyota Vios in concept of Make it work.
Even though Toyota focus more on below the lines advertising but it addittionally communicate its automobiles through Media such as Toyota kick off its advertisements of New Toyota Vios, which includes Joe-Wan AF to be a presenter, through television, radio, newspapers, journal, and billboard. As a result, people aware that Toyota has new Vios on the market because mass media can connect in wide area.
Besides Toyota communicated its autos by advertisement and promotion for its current targeted, it will try to capture new goal customer which is a teenager with in-trends lifestyle by building a location for hanging out, learning, and arrive their creative of scholar at the center of teenager, Siam Square. This place was called "The Style by Toyota" which includes the concept of Edutainment that folks can come to the place to enjoy many entertainments and can also learn new technology or reports of Toyota in once. In addition, Toyota also kick off a new model of its automobiles, Yaris beGroovy, to gratify its new targeted that happen to be teenager from 18-25 years of age with fashionable lifestyle. Toyota change its Yaris to be superior and stylish with its new technology, such as engine unit start, from its Vios and Honda Jazz which really is a main of its competitor. Therefore, the price tag on Yaris beGroovy also greater than the main rival which is Honda Jazz for make customers value its Yaris to be high quality than Honda Jazz.
After customers make a purchase of cars, the most crucial thing they want is customer support, that are check service.
Toyota provides its customers a guarantee after purchased by thirty six months or 100, 000 kilometres. will depend on an offer. Because of this guarantee, if there is any defect components or any activity that affects from the irresponsible of any assembly lines. Toyota will replace and fix those for free. This guarantee may possibly also transfer through different ownerships but within thirty six months or 100, 000km.
Express Maintenance is after sales service for car checking. They are able to give customers an easy service, normally within 1 hour or the given exact time insurance firms 2 technicians check up on your car and a supervisor to make sure that your car meets their standards. Also, they provide a very comfortable ready room for customers or if you can ask the technicians about problems you have with your vehicle, you can. From the room, you can see the place where all the autos are being checked out. There are mags, TV, snacks, soft drinks for customers to enjoy.
Toyota Sure is a Certified Used Cars middle. It's the place where you can sell, buy or exchange your used Toyota car with a much better deal. They buy at a standard price. They make sure that the automobiles they are selling meet the same standard, with high quality. About 176 points have to be checked out before they sell those automobiles. Every car that is purchased, they give you a 1-year warrantee or within 20, 000. Plus they offer a wide service with an increase of than 50 Toyota Sure across Thailand.
If we look into a major players in this industry; Toyota, Ford or GM, that sell the products to many countries all over the world. We're able to see they are producing in the large amount. And undoubtedly, this is in the benefit of economies of level.
For automobile industry, it is very large and undoubtedly economies of size will need to have been successfully come to. In order to contend in this big industry, a make must have the ability to achieve economies of range. It is generally valued to be a low-cost manufacturer, sales of over four million vehicles a year are necessary. In this to occur, manufacturers have mass-production of the automotives so that the price of product will be affordable to the customers. This also implies that, the more the business produces the lower cost per device. This means in term of the fixed cost like the rent, the electricity, the over head cost, etc. The company can save the advertising cost and the transportation cost as well. As once they pay for the advertising cost or travelling cost, the cost per one product is less if there tend to be more units produce to market.
Therefore, because of this industry, it requires high economies of range for the businesses to contend.
For the automobile industry, for certain there will be high product differentiation. Once we can see in daily lives, many brands of automobiles are in the highways and even if in the same brand there will be many models designed for customers to choose. Nowadays cars demonstrate a variety of features in which they differ from their predecessors that an entrant has to spend big sums on safety, electric motor management, comfort, design, and numerous gadgets functions. However, the impressive technology can be one of the tools that established businesses use to make their differentiation in products as well as create brand identification and customer loyalties. For instance, Toyota has been unveiled the hybrid technology in many types of their automobiles. This also helps save the surroundings. However, Ford also comes up with a fresh model called "Ford Fiesta" that inventing the new technology that uses driver's sound to control the vehicles.
Therefore, in the present day technology and design can be use to create the differentiation between brands which helps to fulfill the needs of customers as well.
The investment in capital is another barrier to entry which it keeps the difficulty and trouble for the new entrants to enter in the industry, since it takes a wonderful amount of capital to produce the automobiles. It takes an extreme amount of capital not only to be able to manufacture the merchandise but also to keep up with the Research and Development (R&D) cost that is essential for the creativity requirements and product development. So, to be able to start the business enterprise, it requires quite a high investment. There should be an investment in term of the manufacturer, machines, warehouses as well as other assisting facilities like service facilities.
Let's look into the exemplory case of Toyota, in the year 2010 Toyota has spent its finance for the development of environment systems, maintenance and alternative of manufacturing facilities, and the release of new products. And the web cash found in spending with these activities was 2, 850. 1 billion for fiscal 2010.
Therefore, in starting or existing in the automobile industry, high investment in capital is considerable.
For the auto industry, the switching cost is low. Let's say if you want to improve from buying a Honda car to a Toyota one, this might take you a little bit higher or less of money so that you can pay. As there are many rivals for customers to choose and there are in competitive price, the purchase price for each and every brand is not mainly different. However, the moving over cost is not only imply in term of the amount of money or the amount you have paid, but this also includes your time and effort, energy, and other costs which may have been used to find or learn for the information bottom part on the new brand you want to get. Since people get familiar with the car plus they can also hear from what of mouth from other family or friends so, they could not need to pay a big timeframe or energy to find information. Therefore the switching cost in one brand to others is low and the space of price among brands is not generally different.
Access to syndication programs is another high barrier to entry. A firm must find a dealership to market their cars or consider having their own dealership. Also, considering with dealership, since space in the dealerships plenty is quite limited. This helps it be difficult to truly have a wider variety of inventory.
And of course, to discover a dealership is not that easy no matter brand recognition Limited capacity within syndication stations (e. g. , brand reputation), risk aversion by supplier ship, and the xed costs associated with taking yet another product can bring about retailers being unwilling to carry a fresh manufacturer's product
Local content need is one of legislation that government collection to protect the neighborhood car companies to get damage from the international automotive maker that access to invest in lower cost countries. It really is a legislation, that automotive producer, especially on Toyota which is the biggest company from Japan have to check out, that required company to work with some elements of car that come from local country. In Thailand, the federal government required that about 85% of local parts are for picks up car's production, almost 70% are for traveler automobiles, and around 100% are for motorbike.
Imported car taxes requirement is one major of restrictions that control the number of imported completed or unfinished vehicles to target countries. In Thailand, the imported cars taxes are billed around 200-300% of car principles while the autos that produce in Thailand are priced only 40-70% of cars values. Even with the same brand, same series would be more expensive if it is imported.
Therefore, the federal government insurance plan of automaker in Thailand is high because administration issued regulations for protect the neighborhood organization intentionally. Which mean it's very difficult for new entrants to import their vehicles or invest creation in Thailand because rules that authorities required, new motor vehicle manufacturer need to have good marriage of suppliers to send the parts for productions and if some elements of productions need to import from oversea, it'll effect a great deal for new manufacturers to face the high cost of tax.
In final result, the threat of new entrants for motor vehicle industry is high.
Transportation system such as buses, trains, motorbike, sky teach, subway, ferries, and airplane are consider as one major of substitute products of car. Because vehicles system can meet people need that for transfer folks from one place to another, comparable to automobiles. Additionally, nowadays the oil price is rising continuously due to the hedge of world price of olive oil; it will motivate more people to use travelling system which can save their money. Environmental impact is also one reason which makes people utilize transportation system as a result of driving more autos, the more Co2. So, people concern more of the earth and environment that make them try to change their lifestyle. As people take more interest on time than before especially on working amount of time in urban people so instead of get stuck on the highway from traffic jam and wasting time, people convert rely on sky teach and subway for keeping time and cost. In Bangkok, though it has the rate of using sky teach slightly increased from 132, 071, 000 visitors to 146, 964, 000 people in three years, however the rate of vehicles on the highway also high more than two times when it compare with the sky teach using rate in same time frame. In addition, for Thai people, car is more than a vehicle. It also shows the image and public position of the driver. That is why Thai people value cat as public materialism plus they do not need to put into practice public travel like bus to show lower social status. (see stand in appendix)
Walking, riding bi-cycle is other alternative product for using car because these activities can also bring visitors to other place without taxes paid like fees of brought in car, and it will help more for personal health and environmental advantages. But related to with Thai weather which is quite hot, therefore it is quite impossible for a person to put into practice bicycles in a far distance.
Therefore, threat of alternative products of automobile is low. Aswell as, the management of travel system in Thailand is leaner than the standard that needs to be. In addition, Thailand don't have good city plan system for travelling so people in Thailand prepared to pay more of cost and time for private cars more than using travel system. Moreover, the elements in Thailand is not ideal for walking or riding a bi-cycle for other place since it too hot and damp. So even though there are extensive ways to transport folks from one destination to another place but private car also offer people more personal and comfortable.
As there are about top 49 vehicle manufacturing groups (by quantity), range from big players like Toyota, Standard Motor, Volkswagen Group to local groups such as, Ashok Leyland from India, Navistar International Firm from USA which produces trucks, inner frameworks, Diesel machines, buses, and institution buses.
For suppliers, there are about thousands suppliers around the world. When discussing suppliers, this means to supply from very small components such as power boxes, electric battery switches, electrical power fuses, etc. to bigger components, such as rims and wheels because normally car makers outsource those components and out along those components in their own developing plants.
So, supplier's power in automobile industry is low because they are a lot of suppliers with very few top vehicle creation companies. This means automakers have a high bargaining power on the suppliers; the suppliers rely much on those vehicle makers. In the event the supplier does not meet auto creators' expectations or rules in conditions of standard, price, lead time, etc. , they can just change to a fresh supplier.
The buyers can buy almost all of the industries productivity since there a wide range of brands for them to choose. The manufacturers depend on them to stay in business. The clients also are a large part of the industries income. If they cannot keep their clients with satisfaction then they are in risk to lose them with their rivals. However, the customers may go for the other brands if they are not satisfied. All the buyer do is sell the car they own and buy a new one. For example, like I buy an automobile from Toyota and I am not gratify with it I can sell it and buy a new Honda. The reasons why the energy is not completely high would be that the buyers aren't large and few in number. The buyers don't have the ability to integrate backwards into the industry. If indeed they want an automobile they have to purchase it from a dealership.
In Thailand, Toyota keeps almost half the market share, along with 2 big holders which are Isuzu and Honda. So we could say that auto industry is a consolidated industry, which means it has few big players who carry major control within the industry.
For car industry, they remain competitive in the similar target market, price, and product innovation. When one company arises with one of those techniques, others have a tendency to follow.
For example, Toyota Yaris launched the first era in 1999; two years later Honda Jazz have been introduced to the market and in 2007 Mazda launched Mazda2 to the marketplace. These 3 cars, Jazz, Yaris and Mazda2 are segmented as a hatchback subcompact car. They focus on same group of people who are looking for affordable travelling with petrol efficiency, young and dynamic. They all come with just a bit different prices with slightly different options, performance and campaign. (see appendix )
For auto industry, the level of rivalry is high because there are few big players where 1 product innovation encourages others to unveiling the same type of product, either with the same or better function or even more valuable. They cannot let anyone have a step forward for such a long time, because they would lose a high market show to the merchandise leader.
Toyota had to recall an incredible number of Prius, Tundra and a great many other models during the past years, off their gas-paddles, floor mats, fuel-pressure sensor, etc. These results from Toyota attempted to trim their unneeded costs too much, to lessen any waste as it said in Low fat Developing strategy.
The reason why many models of Toyota had been recalled is basically because Toyota used the same model of those defective goods from suppliers in many models, to gain more Market of Scale, for company to lessen cost and get an increased margin. These recalls induced sales of Toyota to decline by 16% last year.
As we can easily see that the situation arises from defective goods from a supplier, so we're able to apply the Vertical Integration to provide components, rather than outsourcing. In this manner we can control and keep maintaining a standard of Toyota autos, safeguarding a company's image and creditability.
As Toyota has been employing the Take Strategy, which imply they usually wait for the demand to come then produce, as making use of the Kanban tools. But sometimes, this results an extended lead time for customers. Out of this situation, Toyota should combine Push and Move strategy collectively to balance customer satisfaction and cost.
For Take strategy, they already gained a benefit from producing less extra inventory, reduce cost, and flexibility of products rises. But for Press Strategy, they may use for high-stable-demand products. For example, applying push strategy with the popular car color, features and model. So if you curently have those high-demand cars for customers, customer satisfaction will definitely increase, anticipated to less lead time. Normally, people have a tendency to buy more cars during the Motor Show session because they get an improved deal. In this case, after getting a demand forecast, we're able to produce cars in advance.
This strategy is utilized to respond to Push Strategy because when done goods are looking forward to demand, they'll desire a space for autos to store. Employing this system, fixed cost, letting cost, overhead cost, electricity and normal water, etc. reduces; also inbound cost because rather than delivering goods to numerous distribution centers, you only deliver to fewer centers, risk decreases but outbound cost increases, comparing to cost that incurred from decentralized syndication system.
Toyota has been implementing the Developing Postponement, which immediately web links to Kanban, await demand to start producing, but if Toyota would apply the Thrust strategy and centralized distribution system, they have to apply Time Postponement Strategy too. Since it means that the completed automobiles would be placed in central location and await demand to provide the requests to customers.
As you want to implement the Push Strategy along with the Move Strategy, Toyota can use this plan to forecast demand for Press Strategy from historical data to develop an expected demand from customers. But also demand could change, scheduled to marketing, marketing campaign on your products, movements (about color for example), financial condition, etc. So as you forecast, these factors should be include under your concern, in order to get the most correct forecast. Along with the more appropriate your forecast is, the fewer inventories you have to carry, the greater cost lowering and the greater customer satisfaction.
Graph1: the comparison of using Sky Teach and automobiles from 2007 to 2009 in Thailand.
Table1: The stand shows the specs of Toyota Yaris, Honda Jazz, Mazda2, and Suzuki Swift.
Toyota established website - www. toyota. com
Toyota Thailand website - www. toyota. co. th/th/toyota2009_home
Figure 3: Milk Run delivery system
Figure 4: The distinctions between doing business as regular and practicing Lean Manufacturing
Figure 5&6: Toyota Creation System including Just-in-time, Jidoka and Kaizen
Below the line
Deliver directly from plant life to dealer
Figure 2: Strategy used in Toyota Motor Thailand Value chain
Figure 1: Toyota Motor unit Thailand Value Chain
A hybrid system combines different power sources to maximize each one's advantages, while compensating for the others' shortcomings. A gasoline-electric cross types system, for example, combines an interior combustion engine's high-speed vitality with the clean efficiency and low-speed torque of a power motor that never must be plugged in.
There are several ways in which electric motors and a gas/petrol engine can be combined.
Toyota perfected the series/parallel or "full" cross to deliver the energy-saving good thing about a series cross types alongside the acceleration benefit for a parallel cross. Two key technologies - the power split device and advanced energy management - make this possible. They constantly improve the moves of mechanical ability and electric power for safe and comfortable vehicle operation at optimum efficiency.
Toyota's unique cross system combines an electric motor and a gasoline engine unit in the most effective manner. It will save gasoline and reduces emissions while presenting ample vitality.
For more information: www. toyota. global. com/innovation/environmental_technology/hybrid/
Toyota's method of automobile production, using its inherent quality control buttons, revolutionized the industry. Its "just-in-time" supply-chain principle has turned into a model for manufacturers surrounding the world, and not simply for automakers.
The Toyota Production System (TPS) calls for the end product to be "pulled" through the machine. This means the right parts reach the assembly range at the right place, just because they are needed, and with no excess.
This approach symbolized a radical departure from classic creation systems, which require large inventories to be able to "push" just as much product as is possible through production lines, no matter actual demand. The idea of TPS, the contrary, is to create only the merchandise required in the complete volumes desired at a given point in time
By basing production on demand rather than on capacity, Toyota manages to keep inventories, both of parts and of completed goods, to a rigorous minimum. But this is merely one of the most obvious benefits of Toyota's unconventional strategy. By concentrating on smaller production a lot and producing only what customers require when they require it, Toyota has developed a flexibility and responsiveness that continues to set the standard for the industry.
With its focus on constant improvement (Kaizen), Toyota has achieved die-changeover and machine-set times that are a fraction of its competition'. Thus its capacity for responding quickly to new market styles makes TPS an ideal system in the current rapidly changing global business environment.
Just as important is making sure quality control, and the delivery of reliable and reliable products to customers. When a problem comes up at any level of creation, Toyota's automatic error recognition system, called "Jidoka", flags the defect and enables line employees to consider the necessary steps to resolve it at that moment - even if that means bringing development to a halt.
By calling attention to the gear when an error first occurs, the Toyota system makes it better to identify the foundation of the problem and prevents flaws from progressing to following stages of production. Only something as agile and quality-oriented as TPS could make such measures financially possible.
This way not only helps eliminate waste, which makes TPS more respectful of the environment, it also means that customers can be confident that Toyota products will conform to the highest requirements of quality, stability and longevity.
A. Kaimook Numgaroonaroonroj
521-0065 Ms. Lalita Sae-be
521-0326 Ms. Sinit Chandrakoolphong
521-0467 Ms. Wathu Rojanavomgse
Toyota's Objective and Eye-sight 1
Value Chain Analysis of Toyota Thailand 1 Porter's Five Makes Analysis on Automotive Industry 6
SWOT Evaluation of Toyota 12
Implementing Ways of Toyota Value Chain 14
Appendix A 16
Appendix B 23