Running head: THE TRANSFORMATION OF MANAGEMENT PRACTICES IN TOYOTA

“The Transformation of Management Practices in Toyota”

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THE TRANSFORMATION OF MANAGEMENT PRACTICES IN TOYOTA

Executive Summary

This report examines the evolution of Toyota's management techniques in response to the

COVID-19 supply chain issue. This report explores the history and evolution of Toyota's

management methods, focusing on the less well-known elements that increased their resilience

and agility to handle crises. The report also examines the causes of the COVID-19 supply chain

issue and assesses how Toyota's management practises have changed in relation to the

performance of its organisation. Additionally, it examines how freedom, authority, and power

contributed to the transition and offers advice for other businesses on how to make similar

changes. The report highlights how flexible and robust Toyota's management techniques are,

offering other firms a model to follow and adapt in emergency situations.

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Table of Contents
Introduction......................................................................................................................................3

Analysis Of the Origin and Development.......................................................................................3

Factors that led COVID-19 Supply Chain Crisis............................................................................4

The Impacts.....................................................................................................................................5

The Analysis of The Role of Power, Authority, And Freedom........................................................7

The lessons.......................................................................................................................................7

Conclusion.......................................................................................................................................8

References........................................................................................................................................9
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Introduction

There were considerable hurdles for manufacturers because of the COVID-19 pandemic's

extensive disruptions of the worldwide supply chain. One of the worst-affected industries was

the automotive sector, where shortages of essential parts like semiconductor chips led many to

question the efficacy of more established just-in-time and lean production techniques. Toyota

invented the lean production system, outperformed many of its rivals at this time, displaying the

adaptability and resiliency of its management techniques.

This report examines the beginnings and evolution of Toyota's management practises, the

contributing factors to the COVID-19 supply chain crisis, the effects of Toyota's management

practises transformation on its organisational performance, the role of power, authority, and

freedom during the transformation, as well as the lessons that other organisations can apply from

this transformation.

Analysis Of the Origin and Development

Kiichiro Toyoda started Toyota in the 1930s, which is when Toyota's management

principles first emerged. Toyota has developed its management practises over time, with the

company's emphasis on effectiveness and ongoing improvement. To produce only when it is

required, what is required, and in the appropriate quantity, "just-in-time" (JIT) manufacturing

was first developed in the 1970s. Toyota was able to reduce waste and boost efficiency because

to this strategy, which ultimately gave them a competitive edge. By implementing the Toyota

Production System (TPS), which placed a strong emphasis on continuous improvement,

problem-solving, and collaboration, the corporation greatly improved its management techniques

in the 1990s (Pal, 2019; Yamamoto, Milstead & LIoyd, 2019).

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Toyota’s management practices have continued to evolve over time. Toyota took

proactive measures to lessen the pandemic's negative effects on its supply chain. To find possible

bottlenecks and put solutions in place, the organisation collaborated closely with its suppliers. To

be less dependent on certain areas or suppliers, it also diversified its supply chain.

To maintain production continuity, Toyota had to modify its management techniques. The

business adopted a more adaptable strategy, enabling it to modify its production levels to meet

demand. Contrary to the established principles of the lean production system, this required

raising inventory levels for essential components. The focus on continual improvement that

characterises Toyota's management methods is another crucial factor. The business utilised the

pandemic as a chance to pinpoint problem areas and adjust to strengthen the resilience of its

system. Toyota enhanced its use of digital technologies, for instance, to better monitor its supply

chain and increase visibility.

Factors that led COVID-19 Supply Chain Crisis

Toyota was not an exception to the tremendous effects the COVID-19 outbreak had on the world

supply chain. A supply chain problem resulted from several numbers of issues the company

encountered, including:

1. Disruption in supply of critical components: Critical components like semiconductor

chips, which are used in a variety of electronic components in contemporary cars,

experienced supply chain interruptions (Frieske & Stieler, 2022). Toyota had to cut its

output because of the scarcity, which also caused production delays.

2. Logistic Challenges: Because of travel restrictions, Transportation delays and expenses

rose and other logistical difficulties that made it difficult to carry goods across borders.
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3. Factory Shutdowns: Due to lockdowns and other restrictions put in place to stop the

spread of COVID-19, numerous factories throughout the world were forced to close. This

resulted in a part and component shortage, which prolonged manufacturing delays.

4. Shortage of Workforce: Due to employee illness or quarantine requirements, the

pandemic also caused a scarcity of workers. Due to the disruption of production

schedules, fewer workers were available to staff factories. Additionally, it resulted in a

decline in the demand for cars, which decreased industrial output.

5. Uncertainty and unpredictability: Toyota found it challenging to adequately plan and

manage its supply chain due to the pandemic's high level of uncertainty and

unpredictability. The company had to modify its production plans, improve

communication and coordination with suppliers, and use technology to track shipments

and monitor inventory levels in real-time. To have a sufficient supply in case of future

disruptions, the corporation also started storing essential components.

The Impacts

In all over the world all the businesses have been significantly impacted by the COVID-

19 pandemic, and Toyota has not been immune from these repercussions. However, because of

the Toyota Production System (TPS), which was implemented to alter Toyota's management

procedures, has helped the business to get through this trying period and keep up its

organisational performance. Toyota's ability to be more adaptable in responding to changes in

customer demand and market situations was crucial. For instance, Toyota was able to swiftly

change production levels and concentrate on creating vehicles that were in high demand, such as

trucks and SUVs, as the COVID started to have an impact on the automobile industry.
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Toyota was able to control its supply chain with the aid of the TPS. Toyota has been able

to reduce disruptions and maintain its production levels by collaborating closely with suppliers

and utilising just-in-time inventory management (Choi et al., 2023). To guarantee a consistent

supply of components and materials, Toyota has also placed a great emphasis on developing

strong connections with its suppliers. Toyota has been able to sustain employee morale and

productivity throughout the pandemic because to the TPS, which places a high focus on

employee involvement and empowerment. Toyota has put safety measures in place to guard

against the virus, and it has also given staff members more assistance and resources to help them

deal with the pandemic's problems.

Toyota has also been able to save costs during the epidemic thanks to the TPS. For

instance, despite the obstacles created by the epidemic, Toyota has been able to keep its

operational expenses low by lowering inventory levels and minimising waste. Toyota was able to

keep its attention on quality improvement because to the TPS. When customers could be more

reluctant to make significant purchases like a car, this has proved crucial in sustaining customer

happiness and loyalty.

As a result, Toyota was able to maintain organisational performance throughout the

COVID-19 pandemic thanks to the transformation of its management practises brought about by

the deployment of the TPS. Toyota has been able to be more adaptable, maintain staff morale and

productivity, manage its supply chain, concentrate on improving quality, and lower costs thanks

to the TPS. These advantages have aided Toyota in overcoming the pandemic's obstacles and

positioning itself for long-term success.

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THE TRANSFORMATION OF MANAGEMENT PRACTICES IN TOYOTA

The Analysis of The Role of Power, Authority, And Freedom

During the COVID-19 epidemic, the transformation of Toyota's management practises

was significantly influenced by the roles of authority, power, and freedom. Toyota's leadership

made the TPS as a strategic choice, and it took a lot of influence to transform the organization's

management procedures. The leadership's use of power helped the business implement the TPS

successfully and keep up its organisational performance. It is crucial to remember that employees

were also given authority and given the freedom to make decisions that would affect the

company's success. Toyota, decision-making power resided with the company's leadership,

which was tasked with determining how the organisation should be led. Freedom of Employees

at Toyota exercised their independence by having the authority to make choices that affected the

company's success (Soliman, 2020). The TPS puts a lot of focus on empowering people to

participate in the improvement process and make decisions that have an impact on the company's

success.

The lessons

The value of a strong leadership commitment to change is one of the most important

lessons that can be drawn from Toyota's transformation. The leadership's dedication to altering

its management practises was the key to Toyota's TPS implementation's success. The senior

executives of Toyota understood the need to enhance their management procedures and were

prepared to make risky decisions to accomplish this objective. The TPS lays a heavy focus on

including employees in the improvement process and giving them the authority to make choices

that have an impact on the profitability of the business. Employers will be motivated and

engaged to take part in the transformation process thanks to this strategy. By using this strategy
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and involving staff members in the improvement process, other organisations wanting to reform

their management practises can ensure the transformation's success.

Another lesson that can be drawn from Toyota's transformation is strong customer focus

is emphasised in the TPS, and this strategy has assisted Toyota in maintaining its position as one

of the top automakers in the world (Samson & Swink, 2023). Continuous improvement is a key

component of the TPS, and using this strategy has allowed Toyota to stay one step ahead of the

competition. Organisations can find opportunities for improvement and alter their management

procedures to get better results by continuously seeking for improvement.

Conclusion

As a result of the introduction of the Toyota Production System (TPS), Toyota's

management procedures were transformed, and other businesses can learn a lot from this. A

management transformation will only be successful if there is a strong commitment from the top

to the change, employee involvement in the process, a customer-centric mindset, and continual

development. By putting these concepts into practise, businesses can enhance customer

happiness, enhance managerial practises, and remain competitive in their respective industries.

The lessons from Toyota's transformation serve as an effective reminder that organisational

success is not only feasible but also attainable via a dedication to continuous improvement and a

readiness to accept change.

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References

Choi, T. Y., Netland, T. H., Sanders, N., Sodhi, M. S., & Wagner, S. (2023). Just ‐in ‐time for

supply chains in turbulent times. Production and Operations Management.

https://onlinelibrary.wiley.com/doi/pdf/10.1111/poms.13979

Frieske, B., & Stieler, S. (2022). The “Semiconductor Crisis” as a Result of the COVID-19

Pandemic and Impacts on the Automotive Industry and Its Supply Chains. World Electric

Vehicle Journal, 13(10), 189. https://www.mdpi.com/2032-6653/13/10/189/pdf

Pal, S. (2019). Toyota Production System (TPS)–Applications and Benefits for Indian Pump and

Motor Manufacturing Industry: A Case Study. International Journal of Research in

Engineering, Science and Management, 2.

https://www.ijresm.com/Vol.2_2019/Vol2_Iss9_September19/IJRESM_V2_I9_56.pdf

Samson, D., & Swink, M. (2023). People, performance and transition: A case study of

psychological contract and stakeholder orientation in the Toyota Australia plant closure.

Journal of Operations Management, 69(1), 67-101.

https://onlinelibrary.wiley.com/doi/pdf/10.1002/joom.1218

Soliman, M. H. A. (2020). Gemba walks the Toyota way: the place to teach and learn

management. Mohammed Hamed Ahmed Soliman. https://books.google.com/books?

hl=en&lr=&id=3g6mEAAAQBAJ&oi=fnd&pg=PP3&dq=Freedom+of+Employees+at+

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affected+the+company

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Yamamoto, K., Milstead, M., & LIoyd, R. (2019). A review of the development of lean

manufacturing and related lean practices: The case of Toyota Production System and

managerial thinking. International Management Review, 15(2), 21-90.

https://www.researchgate.net/profile/Robert-Lloyd-13/publication/340449306_A_review

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_Toyota_production_system_and_managerial_thinking/links/

5f970170a6fdccfd7b7fe1c8/A-review-of-the-development-of-lean-manufacturing-and-

related-lean-practices-The-case-of-Toyota-production-system-and-managerial-

thinking.pdf