Chapter 15 begins with a detailed description of the examples of several different companies and their approaches to the selection of leaders. Namely, Toyota’s strategy is juxtaposed to those of Ford, Nissan, Chrysler, and GM in terms of the process of acquisition of a new leader. The point of the overview in this chapter is to demonstrate the difference between a leader who was attracted from the outside as a valuable and experienced professional with some outstanding business achievements in the past, and a leader who has been working at the company for many years gradually moving up the career ladder.
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The rationale behind Toyota’s approach is the need for the company’s leader to be familiar with the organizational philosophy and deeply understand the organizational culture through living in it for a long time, and supporting it to ensure the learning environment for the future executives. According to Toyota’s perspective, the frequent change of leaders who come from the outside of the company and bring in different approaches and cultures causes frustration and inefficiency within an organization.
Under the influence of globalization and international expansion, Toyota was to establish its American branch, and surprisingly, an American leader (Gary Convis) was chosen to take charge. Convis had to learn the organization’s philosophy of establishing a culture that would support the people (The Toyota Way 2004, n. d.). A very caring and attentive attitude toward the existing and potential customers are the other aspects of Toyota’s approach and door-to-door sales strategy when the consumers are targeted individually and in a good time. The organizational structure of Toyota is the matrix where leadership and authority are dissolved within the operations and working process without establishing a top-down hierarchy.
All in all, the in-depth understanding of the organizational and working process dynamics is the key element that makes a good executive of any level in Toyota. Another important aspect of a company with an exceptionally strong organizational culture such as Toyota is its relation with the suppliers. The choice of suppliers and work with them is a critical aspect of the cost-effective manufacturing approach used by the company. Due to the strict focus of the organization, its suppliers are to be trained and educated about cooperating with Toyota and matching its needs.
This approach is very complex and cannot be easily modeled. As shown by the example of Ford – logistics of JIT is very expensive, and if done inappropriately, the cost will outweigh the benefits. Toyota has dedicated many years to building up its system starting with the people and culture, engaging processes, and planning. The Japanese determination and slow but steady movement towards the long-term goals is the main point of difference between this company and its Western competitors.
Just in time manufacturing (or JIT) is one of the key elements of the TPS – Toyota Production System; JIT is focused on the provision of the highest quality results at the lowest cost and in the shortest time by means of orienting the employees towards the appropriate tasks; in other words, JIT is focused on the achievement of the highest level of cost-effectiveness and the resource waste reduction.
Just in time practices are multiple. The case study describes several emphasizing how precise they have to be and how much they are regulated by the specific rules employed by Toyota. In other words, the manufacturers who begin to practice just in time approach (regardless of their location and heritage) are asked to follow the exact set of rules guiding this process at Toyota. For example, the relations with the suppliers play a critical role in just in time manufacturing as the materials are to be provided based on the precisely established time, sequence, and quantities.
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Besides, just in time manufacturing involves all the operations and spheres, not only the supply chain and materials. One of the additional JIT practices is known as hoshin kanri. This initiative involves the development and implementation of policies directed at the improvement of the efficiency of communication between the managers of different levels. This approach is highly practical because it ensures that the leaders’ goals and objectives are translated into actual positive outcomes.
The primary function of hoshin kanri is to create effective channels of communication between the leaders and the executives, top-level managers, and middle-level managers, as well as supervisors and leaders of the employee teams. That way, a cascade of interactions is maintained that serves to maximize the speed of communication and its quality. The cascade is required to carry the objectives from the top down in a smooth manner without distorting them. Hoshin kanri helps direct the employees at every level and make sure that everyone in the company is aware of the path they need to follow and the results that are to achieve.
This technique provides a sense of purpose, measurable objectives, and clear guidance to the workers and eliminates unnecessary practices and distraction bringing the staff together and shaping it into a monolithic team.
Another practice employed by Toyota is the value engineering – team approach of cross-functional nature. It is put into practice by means of a systematic examination of the design process and its contributing factors in order to learn what could be redesigned for better cost-efficiency of the manufacturing operations. In other words, this approach is focused on the evaluation of the existing operations and working out new strategies for the purpose of cost reduction. The new process design may potentially complicate the process or make it riskier because when every operation is based on precision and errorless flow, one small delay or malfunction can create a massive disruption at every stage of the manufacturing and eventually result in the loss of capitals.
The Reason for a Smaller Supplier Base
As mentioned previously, just in time manufacturing is based on precision and strict rules creating a flawless sequence of operations that ensure cost-effective production. However, regardless of the fact that this approach helps the manufacturer save a great portion of costs, it is not as convenient and beneficial for the suppliers who are forced to reorganize their operations in order to fit into the tight timeframes and requirements of the JIT companies such as Toyota.
For example, ordering materials from a supplier, just in time manufacturers would prefer not to buy anything beforehand and store it; instead, the JIT approach requires that the supplier delivers the materials right at the moment when they are about to be consumed by the manufacturer. For the suppliers who work with multiple clients, it may be impossible to arrange their deliveries in a way to satisfy the special needs of JIT companies. That is why, choosing to employ just in time approach, an organization is to be prepared to deal with a significantly smaller base of available suppliers willing to cooperate.
The Toyota Way 2004. (n. d.). Case Study.