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Management and Organisational Problems of Toyota



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    Ambitions and targets are something which everybody owns. But not everyone has the same ambition. To some, becoming a pilot is an ambition, while to some doing Doctorate is an ambition. Similarly owning and driving Toyota Lexus is an ambition of many people. But ambitions of these are not easy to achieve. There are thousands of people who fancy owning a Toyota Lexus, as we all know how costly it is and affording a Lexus is not easy.

    When we study this case we came to know that they were encountered by a data administration problem, when they started posting cheques equivalent to $400 to the customers who were not eligible or never owned Toyota Lexus. Those cheques were issued to compensate the tyre replacement for Toyota Lexus customers only. The seriousness of this problem can be assumed by this fact that those cheques were send to those customers as well who never owned Toyota Lexus since a while.

    And the worst part was that they came to knew about this problem when one of the cheques was received by the Auditor of Toyota Motor Sales USA who no longer owned the vehicle. Following is a case study which emphasises on the value of money for the customer services and also on the importance of accurate data administration by keeping it organised in an efficient way. Research and Analysis: Toyota Lexus believed in high customer’s services and satisfaction and in pursue to achieve that they contacted the owners of the vehicle, pick up their vehicle for servicing and provided a courtesy car.

    And after servicing their vehicle they would wash the vehicle, fill up the fuel and return it to the customers as a good will gesture. Customer service of such intense level was made achievable by the help of Toyota Motor Sale’s Corporate Information System. This system was accessed and processed by Toyota’s call centre in Iowa to provide customers with warranty, roadside assistance, prepaid maintenance etc. This was all done in order to assure high quality customer service, boost up sales and profits and achieve organisational targets.

    Problems Occurred: But in 1998, Toyota Motor Sales USA (TMS) came across a data administration problem when they started issuing cheques for more that $400 to customers who never owned a Lexus or either they owned it before. This problem is a worst nightmare for any company because nobody would want to throw money like this. Luckily one of the cheques made its way to the Toyota’s auditor who was the previous owner of a Lexus. It was only then when they realised they are facing a failure with Corporate Customer Information System.

    This was a technical problem which should have been fixed earlier and it occurred because of the overloaded system because information systems have a limited capacity to store the data. If data exceed the provided limit it is obvious that it will crash. Another cause of the problem was the sensitiveness of the software by placing the right data in the wrong place. But unfortunately this was not only the problem they were also dealing with the shortage of time because they wanted minimise the duration of time to solve a particular query.

    Because the Customer Information System which Toyota Motor Sales USA was working under the principle of logical organisation. ‘Logical Organisation Integrates data from several different locations and is how the user sees the data’. (McLeod, Raymond-Management Information Systems, 1998) The data inside the system was stored in 14/15 different locations across the company and it was used to solve the customer’s query and for that call centre staff members had to open 4 or 5 different application to access the customers details from the database.

    This process was very much time taking because customer had to wait on the telephone so that call centre staff can access their data before the query is being solved. This was a bad impression for the customers because Toyota Lexus claimed gold plated service. Another problem they had to face was to increase the number of staff because to access the customer’s data was a time taking process so they needed more personnel to assist the customers with their queries. Decisions Taken:

    Finally, after realising the seriousness of the issue the President of Toyota Motors insisted for a centralised database management, with all customers’ records being stored in a single database. Although it seems to be a very easy task to collect all the records from different locations and then compiling it in a single database, but it was not as simple and easy for Toyota because it involved a series of data management processes. Firstly, they had to collect all the data they wanted because all the data was not accurate which resulted in wrong posting of cheques.

    The verification of the data was very essential because in order to assure the correct output of the new system which filters out the current information system was needed. The concept of the ‘Garbage in and Garbage out’ can be highlighted in this stage because wrong input produces wrong output. So they needed to store the genuine and verified data in some storage device which could be used as an initial input for the new system, adding some new data’s if needed, enacting the data from any destruction and then finally arranging the data for an easy and friendly access to its users.

    Another problem which Toyota was facing was that the volume of calls to its call centres was increasing and they didn’t wanted to increase the staff so the started looking for a business intelligence system but it could be either expensive to implement or was not suitable to fit for the company. But then, John Gonzales, the data quality manager for Toyota Motor Sales USA, saw a presentation in a conference which showed Informatica’s data extracting, transforming and loading software. The purpose the software was to pull data from multiple sources and then compiling it into central data warehouse.

    The representatives of Informatica’s were invited by Toyota Motor Sales USA, to present a proof of test and assure that software fits the company requirements. The representatives presented an abstract model of the software in which they showed the aspects that how can this software cover all the needs of categorising data and relationship between elements of data. Hence they presented a detailed and effective model of the future. And at last, software was executed and Toyota discovered solution to the dilemma. The important factor which influenced Toyota to purchase that software was the friendly usage.

    It’s very important for any organisation to make sure the user friendliness of any software before purchasing it because if the staffs are having difficulties to use it then it’s not worth while. Another factor which should be taken care of is that employees find difficulties in indulging themselves into any changes which directly affects their way of doing things. And these difficulties can be assisted if the change implemented is fair to everyone and that was suitably considered by Toyota as they introduced software which can handle the complexity of the data with easy access for his employees.

    So by the end of April 1999, Toyota had their new Informatica’s Power Mart Installed and ready to go. But this was not the end of dilemma; in fact it was the beginning of a new challenge as further six months were assumed to be needed in order to exchange the data as it was necessary to assure the correct output. Further going on, Toyota experienced many discrepancies in the databases relating to the vehicles, motors and addresses. All these discrepancies had to be removed before executing the software. Hence there were millions of records to be checked before entering it into to new system.

    So in order to rectify that Toyota used outside resources, in some cases the Department of Motor Vehicles was asked for the details and in some cases they called there customers on the phone to remove any possible errors. Hence, upon the successful completion of the project, Toyota enjoyed a data warehouse which can hold data up to 250 gigabytes and this whole project cost them approximately $250 million. But Toyota believes that it was a wise decision and that considerable amount of money was suitably invested.

    Because of that they avoided extensive call centre operations and their sales rocketed from 750,000 to 1. 7 million vehicles a year. If they wouldn’t have upgraded themselves they would have desperately required more man power to handle customer queries. So concluding, it is understood that new software really helped Toyota to reduce their cost of business and now they pride themselves for being loyal to their customers and that investment was well done. Conclusion: It can be concluded from the above case study, that; Accurate Database Administration is important for an organisation specially when handling multiple and huge data’s •Toyota should have monitored the Corporate Customer Information Systems on regular basis. •Holding data at 15 different locations was not a good action. •Their Corporate Customer Information System was not efficient because it was taking too much time to access the records. •There were no checks on the incorrect data which resulted in wrong posting of the cheques •Before making any changes analysis should be done either these changes are going to fit the organisational needs. Although a considerable amount of $250 million was invested for this project but it was worth while. Results: •The decision to introduce a centralised database management system was a wise as it reduced the length of duration to process data. •Extra care was taken before the purchase of Informatica’s Power Mart as they ran proof test for it and it was made sure it was easy to use. •Less time was taken to answer customer queries when Informatica’s Power Mart was used. •Increased customer satisfaction which increased the sales volume. •Life made easy for the employees as they no longer needed to open 4 or 5 windows to access data’s. Reduced business cost as they avoided spending money on extension of call centre extensions. •$250 Million investment was well don’t by Toyota. Recommendations: •Garbage data should be allowed to filter out from the system on daily basis. •Only useful data should be allowed to enter the Information system. •Random checks should be done to avoid any discrepancies •Centralised database is a good idea to speed up the data processing. •Regular backing up should be assured for the important data’s •Back should be saved in a separate location if in case system crashes. Proper staff training should be given to handle complex data’s and usage of system. •Data should be prohibited from unwanted access and any other misuse. •Detailed analysis should be done before purchasing any new information system. References: Gallagher, Sean – Baseline, June 2002 McLeod, Raymond – Management Information Systems, 1998 Bibliography: http://www. personneltoday. com/Articles/2007/04/10/40089/the-elegant-solution-toyotas-formula-for-mastering-innovation-book. html Gallagher, Sean – Baseline, June 2002 McLeod, Raymond – Management Information Systems, 1998

    Management and Organisational Problems of Toyota. (2018, Feb 10). Retrieved from

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