This case concerns the systems used by Toyota to become the third largest automobile manufacturer in the world. The case illustrates how this organization tries to serve customers and achieve a profit. The case intentionally emphasizes features of Toyota’s manufacturing system, rather than its marketing strategies, to show how the whole organization is focused on serving customer wants and needs, not just the marketing department. Questions 1. In what ways is Toyota’s new-product development system designed to serve customers?
There are a number of features to this system that make it customer oriented. The Toyota system responds more quickly than competitors, allowing the company to correct any mistakes and react to market trends faster than competitors. The system has a chief engineer responsible for the product from design to marketing which puts him in direct interaction with production process and consumers. This may allow consumer research to function as a direct input into engineering specifications rather than become a secondary concern after the product is designed.
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Since the corporate philosophy is to serve customers, consumer’s inputs are more likely to be used to develop better new products. This policy of new product development is far more effective than other competitors and it allows company to improve the product by keeping in mind the needs of consumers and develop the product as per consumer’s requirement. 2. In what ways is Toyota’s manufacturing system designed to serve customers? There are a number of features in Toyota’s manufacturing systems that are designed to serve customers, including the following features.
Employees, even on the assembly line, are trained to consider their output as a product that should satisfy the next employee (the “customer”) who receives it. If everyone in the company is satisfied with the quality of the work received from others, it is more likely that the ultimate consumer will be satisfied with the final product. If the receiving employee feels the quality is not up to mark he will simply not receive the product and return for improvement or replacement. Toyota’s manufacturing system has close relationships with suppliers and demands high-quality products from them.
Toyota is a very efficient company that keeps costs down and continuously strives to push cost down further without sacrificing product quality. This enables Toyota for a competitive product price for consumers than other players in the market. Toyota’s manufacturing system constantly strives to improve the quality of its automobiles through employee input in quality circles. Toyota reduced part defects by 84 percent, compared to 47 percent. Toyota’s engineering system allows it to take a new car design from concept to showroom in less than four years versus more than five years for U.
S. companies and seven years for Mercedes. This cuts costs, allows quicker correction of mistakes and keeps Toyota better abreast of market trends. Gains from speed feed on themselves. Toyota can get its advanced engineering and design done sooner because, as one manager puts it, “We are closer to the customer and thus have shorter concept time. ” 3. How does Toyota personalize its cars and trucks to meet individual consumer needs? Toyota’s manufacturing system allows consumers to order a vehicle and have it built with the features they want.
What is remarkable about this system is the response time–a customer can receive the car in seven to ten days–even though cars are a very complicated product. Few companies can produce even much simpler custom-made products in such a short period. Although not stated in the case, Toyota produces a full line of basic sizes (including mini, subcompact, compact, midsize, and full-size cars) with several variations of each (two-door, four-door, and three- and five- door hatchbacks).
Thus, Toyota produces a broad product line while still offering individually tailored vehicles to meet the needs and wants of unique consumers. In Toyota’s manufacturing system, parts and cars don’t get build until orders come from dealers requesting them. In placing orders, dealers essentially reserve a portion of factory capacity. The system is so effective that rather than waiting several months for a new car, the customer can get a built-to-order car in a week to 10 days. This way Toyota aims to reach in consumers mind and study the requirement of consumers and give its best to satisfy the need.