strategy and competitive p7_emba

8/14/2019 Strategy and Competitive p7_emba

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STRATEGY AND COMPETITIVE STRATEGY AND COMPETITIVE

ADVANTAGE - ( Toyota ) ADVANTAGE - ( Toyota )

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Why Study Toyota? (1/3)

FASTER:half the time of US competitors Ipsum minivan: 15 months, styling approval to full

production.

Standard is now 18 months; may be aiming at one year.

One hour response to suggestion by tool builder.

BETTER: Consistentlyhighestquality ratings.

A car in top 3 of every category (four of them #1) in 2003

Consumer Reports reliability ratings.

Lexus again #1 in JD Powers quality survey.

Toyotas not just good. Its always the best.


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CHEAPER: at least 4X the engineeringproductivity of US competitors

~ 150 product engineers per car program at peak not dedicated; ideal is two projects per engineer vs. 600 total at Chrysler for almost twice as long

Sales per employee 2 to 4 times those of Chrysler

(with similar vertical integration).



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Toyota makes lots of money and is overtaking GM to lead theworlds car industry.

Target: 15% of global car market

Market capitalization: worth 3x the American big 3 combined

Productivity grown 7x in last 25 years, Detroit 3.5x

The Economist,January 29, 2005



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History of Toyota (1/3)

1897 ,

1924 ,

1937 ,


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1938 1949 1953 SF 1957 1958

1960


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1964 TQM 1965 1970 21 2 1989 Lexus 1995 Lexus


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Profile of Toyota(2/5)

Produce brands Toyota , Lexus and Scion

Markets vehicles in more than 140 countries

Sales income 17.29 trillion in the fiscal year to

March 2004

Toyota is one of the most efficient manufacturers

in the world

Building 2 million cars a year outside Japan


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Profile of Toyota (3/5)


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Five Competitive Forces

Industry

CompetitorsSuppliers

Substitutes

Buyers

Potential

Entrants


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Competitors

American companies upon which Toyota originally developed

many of its own production processes from

GM

Ford

Etc.

Korean companies with planned production

Other Japanese companies, especially Nissan and Honda


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Value chain

INBOUND

LOGISTICS OPERATIONSMARKETING

& SALES

OUTBOUND

LOGISTICS SERVICE

Procurement

Technology Development

Human Resource Management

Firm Infrastructure

MARGIN


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Value chain

VMI

JIT

TQM

TPS

NoStocks

ProductLife-cycle

Management

3S


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INBOUND

LOGISTICS

The Just-in-Time Supply Chain

VMI

OPERATIONSMARKETING

SALESSERVICE

OUTBOUND

LOGISTICS

Inbound Logistics


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Traditional Buffered Supply Chain

Assembler

2nd Tier

1st Tier

Flow of Production

Flow of InformationCustomer

Demand


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The Just-in-Time Supply Chain

Toyota

2nd Tier

1st Tier

Flow of Production

Flow of Information

Customer

Demand


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VMI

VMI VMI (Venddor Managed Inventory)

J.I.T


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Production Supply Chain (1/2)

Organized suppliers into functional tiers First-tier suppliers: worked together in a product-development team

Second-tier: made individual parts

Encouraged cooperation and communication among first-tier suppliers

In house supply operations turned into a network of quasi-independent

first-tier supplier companies

Substantial cross-holdings between Toyota and suppliers, as well as amongsuppliers themselves even though each supplier is an independent company

Cross- sharing of personnel through Toyota sending personnel to suppliers to compensate for greater workload Toyota transferring senior managers to suppliers for top positions

Developed the just-in-time (JIT) system, or kanban


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Production Supply Chain (2/2)

market price minus system, not supplier cost plus system Value analysis reduces costs Declining prices over life of model due to learning curve

Production smoothing enables suppliers to maintain a constantvolume of business

Focus is on long-term relationships that underscores cooperation,teamwork, and gradual mutual improvement, rather than pricethrough bidding as a way to choose a supplier


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INBOUND

LOGISTICS

JIT : Just-in-Time

TQM : Total Quality Management

TPS : Toyota Production System

OPERATIONSMARKETING

SALESSERVICE

OUTBOUND

LOGISTICS

Operations


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Major Revolutions in Manufacturing

1776, Adam Smith The Wealth of Nations

1910, Henry Ford and Mass Manufacturing.

1980, The Toyota Production System. Lean Manufacturing.

Supply Chain Management.


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Toyota Production System (1/5)

Highest Quality

Lowest Cost / Shortest Lead-Time

Just-in-time Jidoka

Continuous Flow

Takt Time

Pull System

Stop and notifyof problems

Separate mans

& machines

work

HeijunkaStandarized

Work Kaizen

Respect for HumanityCustomer First Continuous Improvement Gemba First

S t a b i l i t y

Highest Quality

Lowest Cost / Shortest Lead-Time

Just-in-time Jidoka

Continuous Flow

Takt Time

Pull System

Stop and notifyof problems

Separate mans

& machines

work

HeijunkaStandarized

Work Kaizen

Respect for HumanityCustomer First Continuous Improvement Gemba First

S t a b i l i t y


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The Gestation of TPS Eiji Toyoda visit to Henry Fords factory in 1950.

The SMED (Single-digit in Minutes Exchange of

Dice) program at the stamping plant. Demings quality movement in Japan.

The Engineers: Taiichi Ohno and Shigeo Shingo

Japanese Manufacturing hits America in 1970


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Main Features of TPS Greater Product Variety

Fast Response (Flexibility)

Stable Production Schedules Supply Chain Integration

Demand Management



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Elements of TPS The SMED Program.

Highlight Problems (Jidoka).

Gradual Elimination of Waste. Continuous Improvement (Kaizen), Root-Cause Analysis

(5-whys?) and Fool-proofing (Poka-Yoke).

Cross-Trained Workers.

Just-In-Time Production.

Stable Production Schedules (Heijunka)


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Eight Service Industry Wastes

1. Errors in documents

2. Transport of documents

3. Doing unnecessary work not requested4. Waiting for the next process step

5. Process of getting approvals

6. Unnecessary motions

7. Backlog in work queues8. Underutilized employees


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Just In Time(2/3)

JIT

1/3

l 3 1/2 1 10 1/3

1/4 2


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Just In Time (3/3)

JIT

(pull) (JIT)

(Kanban) ( )

Push System)


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INBOUND

LOGISTICS

Supply Chain Integration

No Stocks

OPERATIONSMARKETING

SALESSERVICE

OUTBOUND

LOGISTICS

Outbound logistics


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Supply Chain Integration

LogisticsLogistics

Logistics

Procurement ProcurementProcurement

SuppliersDistributor

DealerNA Parts

Operations

Minimum stock tocoveractual demand

Small lot, frequent andplanned supply based onactual sales

1 pc/day1 pc/day 1 pc/day1 pc/day 1 pc/day1 pc/day


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No Stocks (1/2)


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No Stocks (2/2)


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INBOUND

LOGISTICS

Collaborative Design

Product-life-cycle management

Production Support

OPERATIONSMARKETING

SALESSERVICE

OUTBOUND

LOGISTICS

Marketing & Sales


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Marketing (1/3)

2002.3 (Dassault Systems)IBM 8-12

25 64 1000

: Catia

:


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Marketing (2/3)

(Product-life-cyclemanagement)

: Delmia

: 10

M k i (3/3)


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Marketing (3/3)

Door-to-door selling/very customized

Emphasis on pull marketing: giving consumers

what they want

Tight relationship with previous buyers to keep

clients

Sales personnel received intensive training before

starting their jobs Up-to-date and detailed database of consumers helps

keep track of trends, interests, and tastes


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INBOUND

LOGISTICS

3S

Sales Service Supply of spare parts

OPERATIONSMARKETING

SALESSERVICE

OUTBOUND

LOGISTICS

Service


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Consumers Service (1/2)

Marketing executive Shotaro Kamiya focused on building a sales networkmodeled after Toyotas supplier network. Distributors with a shared destiny: wholly owned companies or ones in

which Toyota held equity aggressive selling: promoted long-term relationship between assembler,

dealer, and buyers

Dealer => production system => build-to-order system Buyers => product development process Direct calls to households with large database of households and buying preferences Focus on repeat buyers Also focus on brand loyalty => Toyota family

5 distribution channels in Japan: Toyota, Toyopet, Auto, Vista, and Corolla Closer and more familiar relationship between buyer and salesperson Focus on customer-specified order


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Consumers Service (2/2)

Toyota(26.8%) Nissan(16.1%) Ford(15.5%)

Toyota 3S Sales Service Supply of spare parts


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Time

Cost

Actual costs

Standard

Costs

Target costing effects

Cost keeping effects

New

Standard

Costs

Kaizen Costing

Cost variances

Old product model New product model

Target of costreduction

Target Costing and Kaizen /Target Costing and Kaizen / Cost keepingCost keeping


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Toyota Target Cost management developed from single model management

to multi or program-project management.

The Evolution of Target Cost ManagementThe Evolution of Target Cost Management

Project

Manager

New project 1

New Project 2

New Project 3

Functional Organizations for product

development

Multi Project Management

No explicit coordination between each project

Program office

Program and Project

Platform integration

New project 1

New Project 2

New project 3


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Toyota Production System & Lexus (1/4)

~ ~


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Lexus

Lexus LS400 B

Lexus JIT

Lexus Benz


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Lexus

LS400 Benz420SE/560SE

BMW735i

250km/h 222km/h 220km/h

7km

5.4km

5.3km

100km/h 58200km/h 78

100km/h 61

200km/h 76

100km/h 63

200km/h 78

0.28-0.29 0.32 0.37 1710kg 1760kg 1760kg



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Lexus

47003900

7300

0

1000

2000

3000

4000

5000

6000

7000

8000

Benz BMW LEXUS



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strategy and competitive p7_emba

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