Business operation management is the engine that drives the entrepreneurial idea of a corporation. Each day, every decision made emanates from a concept of management adopted. Numerous management theories have been published and used by thousands of thousands of business entities. It is important to note that different business entities operate within unique landscapes and they face varied challenges. Consequently, they prefer customized principles and concepts of doing business. These principles are always multifaceted, influencing every aspect of management. An example is Toyota Corporation, a Japanese multinational automotive manufacturer that uses 14 customized principles of business operation management. The principles have wide ramifications on managing aspects from human resources to marketing, operation management, among other important areas. The Toyota Way by Jeffrey K. Liker is writing that explicates these principles and the reasons for continued global automobile industry dominance by Toyota Corporation. The following paper explores the 14 set principles that define Toyota’s concept of managerial approach and production system in detail.
Liker (2004) gives deep insight and understanding of the basis of the glorious success of Toyota Corporation in the automobile industry. The book also describes a raft of practical steps and ideas inherent in the principles for general business development. Among the highlights of the success of the strategies are few man-hours, high-quality products (cars) with few defects, and less inventory. For all intents and purposes, Toyota products have earned their household names in every part of the world.
The author explains that the principles are divided/classified into four sections. The first segment, long-term philosophy, has the first principle requiring the setting of long-term goals. It states that long-term goals should be set even if it is done at the expense of short-term financial aims. The goals give a sense of direction even in the face of short-term setbacks in achieving temporary objectives. It helps a firm not to deviate from its foundational aims.
The second section, founded on the idea that the right processes produce the right results, has seven principles. The first theory exposes establishing a continuous process flow to unearth the operation problems. Liker (2004) explains that the continuously flowing process is attained by the timely evaluation of the production chain and redesigning. It helps to reduce the wastages that could result from the clogged and unchecked process. Some of the wastes the principle seeks to avoid in management include an unnecessary delay in the conveyor belt, time wastage, over-processing, inventory, and so on. Evidently, fundamental strides that an entity must make towards business success are the reduction of wastages. The loopholes for leakages must be well sealed through the enhanced process management. Consequently, a firm can enjoy a competitive edge on its market.
The third principle carries a similar theme to the preceding principle. It requires the use of a pull system to manage the production process. In essence, it seeks to reduce overproduction. The strategy entails the installation of a system approach, where a mechanism is built within the system to signal the predecessor if the material is needed. Only the required amount of output is achieved. It helps regulate the wastage of the raw materials. Further, the fourth principle encourages the harmonizing of the production process rate. It requires leveling the production speed so that that there are no wide gaps in the production chain. The machines should not supersede the people controlling it. The next principle demonstrates the weight the Toyota Corporation puts on the quality of their products. The law emphasizes that one should stop the process to get the quality right. Employees are empowered to stop the process when any quality issue occurs. It could explain why the Toyota vehicles are of high quality and with little defects. The sixth principle requires striking a balance between the process chain and employee engagement. The process must be standardized through continuous improvement. Moreover, it should empower the employees to take part in the company bureaucracies.
The seventh principle explains why maintaining an organized working environment is necessary. Liker (2004) incorporates a 5s program that contributes to time-conscious management. It also ensures the organized storage of needed tools and efficient sharing of the workspace by employees. Moreover, it emphasizes improved the working environment. The 5s program includes sorting, or putting the materials in the workspace, and shine, which involves making the area clean. The other S include straighten, involving creating space for everything, and standardizing, or making standard operation rules and procedures for every undertaking. Finally, sustaining entails maintaining the set program for the order.
The eighth principle depicts a careful choice of technology that serves the process and the people best. In other words, a firm should settle on machinery that brings benefits to the entire organization. The technology should not be pushed to manufacture, rather manufacturing should pull the technology. In other words, it is the process that should necessitate the choice of a particular technology. Liker (2004) also discusses proper employee management. He notes that empowering your people adds value to the company in the long run. It gives them confidence regarding their stay in the firm. Moreover, it also encourages innovative and inventive skills.
The ninth principle appreciates the role of capacity building among the employees. It helps them to remain worthwhile business individuals. It proposes that the team leaders be indoctrinated with principles of the organization so that they are trustable to teach others. Liker (2004) notes the principles can easily fade and therefore, they must be ingrained in the employees. They are encouraged to learn every day. Moreover, the tenth principle is leaned towards team building. This principle requires that a team of 4-5 exceptional people, who truly understand and follow the company’s philosophies, should be constituted. This concept involves management tiers upon which steering the company forward is vested. This principle underlines the fact that sound management and the ultimate success of the business are not based on an individual, rather a team. The fourth and the last section of the principles, as structured in the book, involves prompt solving the root problems to drive the organizational learning. Four principles are mentioned in this section. The eleventh principle requires strengthening the partners and suppliers so that they properly discharge their mandate. Toyota Corporation treats the suppliers much like it treats its employees. The company has assembled a cross-functional team that advises the suppliers on how to fix their problems. It helps them seal the loophole of their potential pitfall to improve their services and do good business.
The twelfth principle requires the Toyota managers to be in direct touch with the ground to see the operations. It enables them to acquire first-hand information on the ongoings, appraise the processes and hence, inform decisions. Liker (2004) emphasizes that without obtaining a firsthand experience of the situation, the managers will not be able to know how to improve the processes. The managers are guided by further 10 managerial principles. The thirteenth principle is about the exercise of due diligence in decision formulation. The principle prescribes that ordinarily, the decision-making process should be fairly slow and as consultative as practically possible. A quick decision-crafting environment is always prone to mistakes and risks, and quite often, it is non-consultative. The decisions, in this case, are made by an individual as opposed to a team approach in management. Toyota does not put much emphasis on the quick decision-making process, rather due diligence and reasonably expeditious process.
The fourteenth principle according to Dr. Liker is creating a knowledge-based system and a continuous learning process. It appreciates the role of constant quality improvement by up-to-date process modification. It flourishes in an environment of relentless reflection. The company has a culture of positive criticism of the work of employees, challenging them to aim as high as possible. Not only does the culture challenge the employees to focus on perfection, but it also incubates creativity and innovation. The principle promotes a creative solution to the teething problems. A seven-step process is described as part of this principle in effective solving of the problems. The establishment of the problem is critical. Secondly, clarification of the problem to understand it is also vital. The third step is finding the exact area of the cause of the problem. It is followed by determining its root cause before devising a countermeasure for the problem. The sixth step involves drawing a monitoring and evaluation plan to oversee the effectiveness of the solution. The final step here is standardizing operations, based on the lessons learned from the problem-solving exercise. The standardized operation ensures that processes are continuously improved based on the practical solutions that worked in handling the previous problem. The company undertakes a continuous audit of its processes to determine what works and what does not. Based on the report generated, Toyota has been able to improve its operation by learning from its past mistakes. A close examination of th