Posted: May 25th, 2022
The automotive industry segment within the economy of the United States is a fundamental employer as well as a key donor of the American Gross National Product. The automotive industry segment is one that faces intense and comprehensive competition not only locally but also internationally. In recent times, the automotive industry has experienced deterioration in the revenues and profits generated and a decline in the market share as well as a lack of major employment opportunities. Within this similar timespan, the automotive industry has experienced major problems owing to the increases in the level of importation of vehicles and their corresponding parts from Europe and Asia as they have attained a greater market share as well as sales volumes. The purpose of this report to is to examine the different strategies and tactics employed by General Motors and Toyota Motor Corporation. These two companies are some of the biggest automotive companies within the United States. Specifically, the report will examine the corporations supply chain management, inventory management, quality control, project management, and lean operations.
Background of the Companies
General Motors is one of the biggest automotive companies not only in the United States but also across the world. The companys international center of operations is situated in the state of Detroit. General Motors conducts its manufacturing processes and has facilities situated in 33 nations across the globe. Notably, the locations of General Motors are strategically situated and play a pivotal part on where to position facilities for production as well as design. The company manufactures key vehicle brands such as Cadillac, GMC, Saturn, Buick, Saab, Pontiac, as well as Chevrolet. Statistics indicate that General Motors was able to manufacture and retail 8.4 million cars and trucks worldwide. The companys operations encompass designing, manufacturing as well as marketing of passenger vehicles, trucks, and locomotives. What is more, the company also undertakes the manufacturing of associated vehicle parts and accessories (General Motors, 2018).
From its establishment, Toyota has been in the quest for contributing to a more successful society by means of the manufacturing of automobiles, conducting its business with an emphasis on the production and sales of vehicles. The founding of Toyota begun in 1933 with the corporation being a department of Toyoda Automatic Loom Works committed to the manufacturing of vehicles under the guidance of Kiichiro Toyoda, the founder of the head company. A year later, the department manufactured its very first Type A Engine that was employed in the initial Model A1 passenger car and G1 truck. Three years later in 1937, Toyota Motor Corporation was instated as an autonomous and distinct company. Since then, the company has developed to be one of the biggest automotive companies in the world. The center of operations is situated in Aichi in Japan. In the contemporary, the company employs more than 360,000 personnel and reported sales of 2,129,383 in the 2017 financial year (Toyota Global, 2018).
Supply Chain Management
The supply chain of General Motors encompasses more than 21,000 businesses all over the globe and the company spends just about $90 billion, which is almost over 60 percent of the automotive expenses on approximately 200,000 product items. This signifies an assortment of raw materials, supplies, transportation and freight and is rendered to more than 30 nations (General Motors, 2018). Supply chains founded on strong, apparent and trustworthy affiliations are pivotal to making certain that consumers accomplish product quality, accessibility and affordability. Imperatively, these affiliations are pivotal to enhancing General Motors business competitiveness and diminishing the business risks being faced. In addition, this positions General Motors as a consumer of choice, facilitating the company in the transformation of transportation by working in tandem with suppliers to attain solutions for the problems faced within the automotive industry (General Motors, 2018).
What is more, the company makes certain that the supply chain is constructed on accountability and integrity values. General Motors endeavors to make certain that the suppliers within its supply chain acknowledge and share these philosophies (General Motors, 2018). Internationally, the company conducts several workspaces together with training to augment supplier operations, fundamentally in terms of efficacy, environmental management, workplace situations, and ethics and also the rights and freedoms of persons. In addition, General Motors assimilates localization in its supply chain management. The company builds plants where it sells them and also purchases them where the company builds in order to make the vehicles more competitive owing to price benefits and also can be constructed to satisfy distinctive local necessities that impel consumer interest and brand loyalty. Moreover, this diminishes risks by augmenting the flexibility of the supply chain to react to interruptions instigated by different causes (General Motors, 2018).
Supply chain management within Toyota Motor Corporation is a component of the corporations operations tactic, which is comprehensively centered on the Toyota Production System (TPS). Toyota Motors is renowned for not only being part of the establishment but also advancement of total quality management (TQM). For the company, TQM is centered on the notion of consumer first, also referred to as kaizen, which implies incessant improvement and overall participation the inference of which is the participation and input of the entire staff. The automotive company has incorporated statistical quality control in addition to the system of creative idea suggestion in order to provide backing and inspiration to personnel in making efficacious contributions to the organizations quality development. These notions are at the heart of Toyota production system and have resulted in greater levels of quality for end-products and work processes and enhancement in all elements of the company, ranging from individuals to services rendered. The Kaizen concept of quality management endeavors to eradicate waste and excessive production in addition to the creation of an administrative system in which any personnel can recommend change at any given turn. What is more, the approach employed by Toyota lays emphasis on longstanding enhancements instead of temporary ones (Toyota Global, 2018).
Supply chain management is a feature for any corporation to be examined in a comprehensive manner so as to ascertain ways to enhance it. Enhancement in supply chain management can diminish outlays for a business and proliferate the efficacy and necessitates a strategic method to be carried out towards it. It is imperative to note that Toyota Motor Corporation is at present one of the prototypical businesses internationally in several features of shepherding a prosperous business practice, as well as supply chain management. Toyota Motors makes use of the philosophies of Just in time, Kanban, lean manufacturing, Kaizen in addition to others, which provide competitive advantage for the organization and provide effectiveness in numerous business functions in consort with supply chain management (Iyer, Seshadri, and Vasher, 2009).
Being one of the biggest automakers in the globe, General Motors has to incessantly come up with approaches of augment value and diminish waste all the way through its supply chain. Akin to several manufacturers within the automotive industry, the company faces pressure to be innovative and at part with the increasing test of meeting demands for ever enhanced, faster, and economical products. In recent times, owing to first-time problems regarding the recalling of vehicles, General Motors huddled up its most inventive personnel together with supplies to formulate strategies as an element of a multi-pronged initiative for quality enhancement. Consequently, at the onset of the 2016 financial year, the company started making a changeover for its suppliers from the prevailing supplier quality program referred to as Quality Systems Basics (QSB) and instigating them into the Built In Quality Supply Base (BIQS), which is a more potent program. Through this initiative, the automotive company is able to hold its supplies to several quality benchmarks that it undertakes for its internal quality endeavor (The Luminous Group, 2016).
Built In Quality Supply Base comprises of the most ideal practice quality management approaches that can be utilized in any setting to making longstanding enhancements in quality. An example of a quality element strategy takes into account making use of a layered audit process that comprises of the ascertainment of frequency, scheduling, outcomes, and corrective measures. Based on the benchmarks of General Motors, the layered audit process appraises the compliance of the supplier to the standardized practices, ascertains prospects for continuous improvement, and also encompasses consumer-distinct and quality-oriented checks appraised by all layers as well as management. In addition, through this process, the management are given the task of making certain that efficacious corrective measures and counter measures are instituted. Another approach is the execution of a quick reaction, problem solving process with everyday monitoring. Based on General Motors requirements, it is imperative for the supply to present proof that well-timed and comprehensive problem solving methods are practiced on aspects dealing with safety and quality. Instead of espousing the problem at face value, Fast Response necessitates confirmation and substantiation that suspicious parts are kept in check, a well-organized root cause search is piloted, temporary and long-standing resolutions are well-thought-out, and apprises are made to document procedure directions and controls (The Luminous Group, 2016).
The performances demonstrated at Toyota have accomplished business excellence and top quality levels. The fundamental source of this comprises in the companys Toyota Production System (TPS). TPS is centered on the constancy of the companys business ideology that lays emphasis on the unique significance given to quality, an aspect of the system that gave rise to the execution of total quality management at the company. Quality is existent in the perceptible and imperceptible parts of TPS. The former encompasses practices, tools and principles whereas the latter takes into account management outlook and patterns. Toyota partakes in the incessant enhancement if the quality of their goods, services and practices. The company accomplishes quality management through different practices including lifelong learning, continuous improvement, workforce focus, customer focus and strong leadership (Toma and Naruo, 2017).
One of the most significant challenges experienced by automotive manufacturing and supplying companies encompasses the ability of counterbalancing efficacy and productivity with product quality and safety. A huge number of automotive companies are in compliance with benchmarks and standards that aid them in laying emphasis on quality, which as a result facilitates the increase in the level of productivity. General Motors makes necessitates that the suppliers of its different materials as well as body parts to acquire QS-9000 registration (Master Control, 2012).
From the time of its establishment, Toyota Motors Corporation has persistently and with conviction instituted and carried out quality assurance activities, giving rise in topmost ratings from the consumers. The fundamental principles linked to Toyotas system of quality assurance comprising of Quality First, Consumer First, and Go and See and the Scene (Genchi Genbutsu) were instituted at the time when Toyota was being established. From that time, these three fundamental principles have been carried on and provide insight to each of Toyota Motors organizational levels in the contemporary ranging from the vehicle shop floor to the high-ranking management level (Toyota Global, 2018).
Toyota Motors makes an investment in people, training, education and approaches of functioning to make certain that each and every vehicle that is manufactured is of the utmost quality, satisfying the high standards that are set and working hard to go beyond. The company is devoted to manufacturing vehicles of the highest quality through the use of accurate production procedures and a skilled and committed labor force. In order to guarantee quality control, Toyota makes certain that every vehicle that they manufacture goes through thousands of checks and examinations to make certain that the level of safety, performance as well as quality of the build are exceptional and satisfy the demanding benchmarks. In addition, to ensure that the quality levels of the company are high and satisfactory at all times, Toyota partakes in ensuring that people are trained and therefore learn and understand quality. This takes into account traineeships for the young individuals that are in the beginning phases of their careers in addition to consistent development prospects for the companys established labor force. More importantly, experience as well as know-how is shared all through the labor forces generations, fortifying the dedication to quality (Toyota Global, 2018).
The conception of lean manufacturing was pioneered and advanced in Toyota. Imperatively, the main objective of lean philosophy is to accomplish the eradication of all waste and better customer care. Notably, lean manufacturing is centered on a system where the eradication of waste is perceived as a key objective. In lean manufacturing, Toyota makes certain that seven wastes are eradicated.
i. One of the key wastes is overproduction. This is largely costly to the automotive manufacturing facilities for the reason that it hinders the smooth and easy flow of materials and in actual fact damages the levels of quality and productivity. Based on the Toyota Production System, the Just-In-Time approach is utilized, which makes certain that every product item is manufactured as and when needed. Imperatively, overproduction can result in unnecessary lead times giving rise to excessive storage outlays thereby making it hard to pinpoint faults. Toyota makes certain that the items manufactured are those that can be immediately retailed or dispatched.
ii. A second waste is waiting. In this regard, Toyota makes certain that its operational procedures are linked together in order to guarantee that one process suckles directly into the subsequent one and thereby diminishing waiting.
iii. There is also transportation in the sense that the company ensures that good are incessantly moving or being processed in order to evade the costs that fails to have any additional value to the product. What is more, unwarranted movement together with handling can give rise to the damaging od products in addition to the deterioration of quality.
iv. Another waste that the companys lean manufacturing attempt to diminish is unsuitable processing. Specifically, Toyota is renowned for its utilization of low-cost automation mixed with faultlessly maintained machines. The companys investment is smaller as well as more flexible apparatus where conceivable has facilitated the reduction of waste of unwarranted processing.
v. Through lean manufacturing, Toyota is able to avoid unwarranted inventory that gives rise to increases in lead time and also delays in ascertaining issues and limiting communication
vi. Toyotas lead operations facilitate the reduction of scrap as this can directly impact the profits generated by the company and give rise to significant cost to the entity (Harris, 2007).
General Motors implements the program management office. In preceding periods, the company largely laid emphasis on quality assurance of the project process making certain that all personnel are adhering to all of the steps. This gave rise to increased time consumption in addition to being costly. However, in the present day, the company has formed the quality assurance procedures into different phases. General Motors scrapped the process of having checkers that examined individuals work. Rather the company constructed the quality into the process in order that at the end of the day there is no necessity for undertaking an eventual quality assessment or review (General Motors, 2018).
Project management within Toyota Motor Corporation can be assimilated into four wide-ranging groupings including process, philosophy, problem solving and people. One of the key principles of Toyota is to center the management decisions on a longstanding philosophy even with forgoing transitory financial objectives. This principle is definitely the foundation stone of Toyotas approach. The main aim in itself of any entity delineates the value that can be accomplished. For a project management practice, delineating its main objective is more often than not disregarded by the top level manager. With respect to project management, Toyota makes use of Kanban. This is an approach that stands above the practices being utilized within the project management team and which augments these practices by instituting some limitations or making changes. In this regard, Toyota makes use of Agile management, in that it becomes capable of altering the manner in which teams operate. As a result, this instigates self-organization, efficacious utilization of resources and cognizance. The key advantage that Toyota enjoys is the enhancement of quality of the final product in addition to ascertaining that the project team continues being motivated by understanding precisely what to and not being overwhelmed with a massive flow of incoming tasks (Nazaruk, 2018).
In terms of inventory management, General Motors makes use of an integrated, web-oriented system that satisfies parts needs majority of the time. The company accomplishes this by tracking and tracing which parts are utilized on a daily basis out of the inventory of a dealer. The accessibility of parts in the companys dealerships, essential for finishing repairs within a day is pivotal for sustaining consumer satisfaction. The main objective is to ensure that dealers are incessantly stocked with the different vehicle parts they require to keep the cars of the consumers on the road and General Motors getting repetitive business from such consumers. Furthermore, owing to the fact that the company is experiencing significant competition from Toyota in the North American expanses, the companys newly implemented new parts inventory management system is imperative. Initially, the parts department of General Motors was able to satisfy the needs of the repair shop solely 67 percent of the time. However, subsequent to the instigation of the inventory management system, General Motors was able to meet the consumer needs for parts 96 percent of the time. This centralized system traces and ascertain the parts employed everyday out of the inventory of the deal, gathering data such as ebXML by means of a mechanized polling system. Imperatively, if any vehicle part goes below 5 units, the new parts inventory system alerts the parts manager and sends out an order to one of the different parts distribution centers owned by the company (Babcock, 2006).
More importantly, parts managers for the different shops for General Motors have established that mechanized systems take a more impartial perspective of the parts necessitated. This has been beneficial for General Motors for the reason that devoid of such a system, parts managers are not significantly effective at managing inventory. Their decisions may be impacted by deceptive sequence of repairs or disinclination to stock more costly parts. Through the new parts inventory management system, General Motors has been able to accomplish and improvement in inventory turnover by 11 percent. In general, inventory costs have relatively declined by eradicating overstocking and diminishing the necessity for shipping parts overnight (Babcock, 2006).
The inventory management process undertaken by Toyota is the Just-in-Time inventory management. Imperatively, Toyota began utilizing the JIT inventory controls during the 1970s and spent more than one and a half decades perfecting this practice. The company dispatches and transmits the orders obtained to procure production parts solely when it obtains new orders from consumers. One of the key advantages of this process of inventory management is that Toyota manufacturing plants are able to maintain production runs as minimal as possible and shift on to new products in a fast-paced manner and easily if necessitated (Peavler, 2018). What is more, owing to the Just-in-Time inventory management system, Toyota does not have to sustain a major span of warehouse space for the storage of inventory. In this regard, Toyota does not have to spend a huge amount of funds on procuring raw materials for production, owing to the reason that the company solely orders precisely what is required, which opens up the corporations cash flow for undertaking other purposes (Peavler, 2018). However, it is imperative to note that Toyota and Just-in-Time manufacturing will thrive and prosper on condition that the company sustains a stable rate of production, with high quality workmanship and devoid of machine interruptions at the manufacturing facility that could delay or halt production. What is more, the company necessitates dependable suppliers that can at all times deliver parts hastily and the capability to efficaciously assemble machines that piece together and build its vehicles (Peavler, 2018).
Toyota Motor Corporation also utilizes cash to cash (C2C) measures to ensure that its inventory procedures and practices are more efficacious and economical. In general, C2C is delineated as the number of days taken by a business in the conversion of the costs of raw materials into remuneration for the finished product. Toyota utilizes the C2C system to lay emphasis on the reduction in inventory levels. The company uses heijunka which has a meaning of making flat and level. Specifically, this infers to the eradication of increases in demand, but at the same time generating operational efficacy and reduction of general supply chain expenses. In terms of inventory management, the lean operation employed by Toyota Motor Corporation lays emphasis on the notion of purchase one, sell one. The company has the capability of manufacturing vehicles in almost the similar order consumers procure them. This flexibility and malleability to demand has handed the company the benefit of carrying the smallest amount of inventory (Theodore Farris and Hutchison, 2002).
Toyota utilizes the C2C approach for inter internal operations and also demands of its suppliers to enhance the general cash to cash sequence. Through the utilization of minimal batch production, it becomes possible for Toyota to accomplish short lead times. Instead of carrying out huge batches and maintaining unwarranted and surplus inventory, the different plants and facilities for Toyota speedily run a minute batch and maintain low inventory levels. For the company, the inference of this is having the capability and being in a better position to satisfy consumer demand owing to the reason that the manufacturing facilities and plants do not have to wait on a certain part prior to starting production on a car (Theodore Farris and Hutchison, 2002).
General Motors and Toyota Motors Corporation are amongst the biggest and most renowned automotive companies not only in the United States but also globally. The different strategies and tactics employed by these two automotive companies have facilitates their levels of success within the marketplace. One of the key strategies employed by Toyota in attaining effective supply chain management is total quality management through Toyota Production System. In addition, Toyota is one of the pioneers of lean manufacturing and lays emphasis on making certain that there is not waste. With respect to quality, the important principles associated to Toyotas system of quality assurance comprising of Quality First, Consumer First, and Go and See and the Scene. In contrast, General Motors demands that suppliers of its different materials as well as body parts to acquire QS-9000 registration. General Motors integrates localization in its supply chain management. The company constructs plants where it sells them and also purchases them where the company builds so as to make the vehicles more competitive owing to price advantages. On the other hand, within its supply chain, Toyota employs the Kaizen concept of quality management, which purposes to eliminate waste and extreme production as well as the formation of an administrative system in which any employee can vouch for change at any point.
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Harris, L. (2007). Lean Manufacturing Made Toyota the Success Story it is Today: Investing in our Economy. Capacity Magazine. Retrieved from: http://www.rcbi.org/index.php/viewarticle/130-capacity-magazine/spring-2007/features/336-lean-manufacturing-made-toyota-the-success-story-it-is-todayinvesting-in-our-economy
Iyer, A. V., Seshadri, S., & Vasher, R. (2009).Toyota supply chain management: A strategic approach to Toyota’s renowned system. McGraw Hill Professional.
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Nazaruk, A. (2015). Project Management Methodology: Kanban. Retrieved from: https://explore.easyprojects.net/blog/project-management-methodology-kanban
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