International business research the toyota’s way of production

for Toyota's product quality, sales and service activities.. Operational, production and business situation From business results, Toyota is the leading car company in the entire market

TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN

-*** -INTERNATIONAL BUSINESS:

RESEARCH THE TOYOTA’S WAY OF PRODUCTION

LÊ MINH NGỌC HOÀNG THẢO NHI NGUYỄN NHƯ QUỲNH

HÀ QUỲNH TRANG

I OVERVIEW OF TOYOTA 3

1 History of formation and development 3

2 Vision and philosophy 3

3 Operational, production and business situation 4

II TOYOTA PRODUCTION SYSTEM (TPS) 6

1 Overview of TPS 6

1.1 Overview 6

1.2 TPS goals 7

2 Five main pillars of TPS and practical application 8

2.1 Standardization 8

2.2 Just in time 8

2.3 Jidoka: 10

2.4 Kaizen: 11

2.5 Heijunka Production Leveling 12

3 Compare Toyota Production System (TPS) and Lean Manufacturing 13

III LESSONS LEARNED FROM VIETNAM WHEN APPLYING THE TPS SYSTEM 16

1 Difficulties 16

2 Advantages 16

3 Lessons 17

3.1 For State management agencies 17

3.2 For business in Vietnam 17

I OVERVIEW OF TOYOTA

1 History of formation and development

Toyota Motor Corporation (Toyota) is the No 1 automobile manufacturing corporation in Japan, a symbol of quality and leading vision in the automobile industry In 1937, Kiichiro Toyoda, son of the founder of Toyota Industries, founded Toyota Motor Corporation The company initially specialized in manufacturing and maintaining machinery for the textile industry After Mr Kiichiro shifted the company's activities to the field of automobile manufacturing

In 1970, Toyota Corolla's success in the US market marked an important turning point when the company became one of the world's leading automobile manufacturers Toyota has always continued to innovate and invest in fuel-saving and environmentally friendly technologies over time

2 Vision and philosophy

● Toyota Vietnam vision:

With the desire to see "Customer Smiles" by exceeding customer expectations, we set quality goals at a new level, in which quality in work becomes the foundation for Toyota's product quality, sales and service activities Besides, we will always strive to contribute to the Vietnamese auto industry, respect the environment as well as the community and become the most trustworthy company in Vietnam We will power our ability to achieve these challenging goals through our talented and passionate team members, always thinking of a better way to do things

● Toyota's business philosophy in Vietnam is one of the outstanding points That is: + Production and business based on quality, achieving success

+ Environmental protection, sustainable development with society

+ Contribute to society, support and share with the community

Toyota's core values and management philosophy have created an outstanding working style, helping the company build a high-performance and reliable production system

3. Operational, production and business situation

From business results, Toyota is the leading car company in the entire market with sales reaching 92,625 units in 2022 (including Lexus cars), an increase of 34% compared to 2021 Cumulative sales reached 846,592 cars By the end of 2022, Toyota has shipped 36,602 vehicles, an increase of 20% compared to 2021, bringing cumulative production output to 660,702 vehicles Regarding service, Toyota has welcomed more than 1.6 million customers,

an increase of 45% over the same period last year, bringing the total number of vehicles using genuine Toyota services to more than 16.2 million In 2022, Toyota expanded its dealer network with the opening of 7 new dealers, bringing the total number of Toyota dealers to 85 located in 46 provinces and cities across the country Toyota's export of components and spare parts is guaranteed with a revenue of 68.6 million USD

Toyota is considered the "flagship" in automobile production and assembly in Vietnam with quality car models that are popular with customers such as Vios, Fortuner and Innova Besides manufacturing and assembling, Toyota Vietnam is also an enterprise that focuses on promoting the use of domestic spare parts and components

In the first half of 2022, Toyota launched new and improved products, starting with the Corolla Altis model, adding a Hybrid version, becoming the third Hybrid car line following the success of the Corolla Cross Hybrid and Camry Hybrid In December 2022, Toyota released the B-MPV Veloz Cross and Avanza Premio duo after less than a year of being sold

as CBU imports The assembly of these two car models contributes to improving supply,

better meeting market demand and contributing to increasing the localization rate This event marked the number of domestically assembled car models of Toyota Vietnam increasing from

3 to 5 cars, nearly 300 components on the Veloz Cross and Avanza Premio models were localized, contributing to the cause of automobile localization of the country

Business results of Toyota Vietnam in the first 6 months of 2023:

In terms of sales, Toyota Vietnam leads the passenger car market with sales reaching 27,420 vehicles in the first 6 months of 2023 (including Lexus), bringing total cumulative sales to 884,496 vehicles In terms of production, Toyota has shipped 11,309 vehicles, bringing cumulative production output to 672,011 vehicles In terms of service, Toyota has welcomed more than 865 thousand customers, an increase of 12.5% over the same period in 2022, bringing the total The cumulative number of vehicles using genuine Toyota services is more than 17 million Toyota's export of components and spare parts reached nearly 37 million USD in revenue, with accumulated revenue reaching nearly 827 million USD

In May 2023, Toyota Vietnam officially introduced Vios 2023 with a safety upgrade system with top features of the Toyota Safety Sense safety package Next, the all-new Toyota Wigo was launched in June with comprehensive changes Exterior and interior details have been completely transformed with segment-leading safety features At the same time, Toyota has updated Euro 5 emissions standards for vehicle models corresponding to the company's product change roadmap according to the Government's direction

Through each year, Toyota's products are constantly improved and receive the love and acceptance of customers In particular, the Corolla Cross, Vios and Veloz Cross models are regularly in the top 10 best-selling car models on the market with sales of 6,341 cars, 5,425 cars and 4,512 cars, respectively

II TOYOTA PRODUCTION SYSTEM (TPS)

1 Overview of TPS

1.1 Overview

Toyota's production system is a system that produces products in the right quantity at the necessary time or we can say "Just-In-Time", arising from the need to respond to surrounding circumstances company “Toyota Production System” (Toyota Production System) is the first production model proposed by two senior leaders of Toyota Group, Eiji Toyoda and Taiichi Ohno, after World War II

The most famous element of TPS is certainly the Just-in-Time pillar of the manufacturing system The company was quite poor and could not afford to waste money on excess equipment or materials during production Everything is expected to be purchased on time and not too early or too late

In 1957, two automobile tycoons, Ford and Chevy, were dominating the market But only 50 years after Toyota appeared, Toyota became the largest car manufacturer in the world Toyota first caught the world's attention in the 1980s when consumers began to learn that Toyota cars were more durable and required fewer repairs than cars from the United States Today, Toyota is the most profitable car manufacturer, consistently producing high-quality cars using few labor hours and little inventory Toyota continually raises the bar in manufacturing, and develops product and process excellence What makes this famous car company successful? It is a comprehensive, effective, practical and potential production system that the company has applied

1.2 TPS goals

The goal of the Toyota Production System is to provide products at world-class quality levels to meet customer expectations, serving as a model of corporate responsibility in the

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industry, surrounding communities and reducing the timeline from when an order is received until it is delivered to the actual customer

The Toyota Production System has historically had four fundamental goals consistent with these values and goals:

● Provide world-class quality and service to customers

● Develop the potential of each employee, based on mutual respect, trust and cooperation

● Reduce costs through eliminating waste and maximize profits

● Develop flexible production standards based on market needs

2 Five main pillars of TPS and practical application

2.1 Standardization

The first pillar is the standardization of production processes and instructions Standardization is production processes and instructions that are specified and communicated

in great detail This creates consistency in job performance and helps avoid inconsistencies and incorrect assumptions about how a job should be performed

The goal of standardization is to unify production activities, except when production processes are adjusted due to new needs arising A high level of process standardization also makes it easier for companies to expand production, avoiding disruptions that can result from

a lack of standardized processes Standardization will maximize efficiency and minimize waste by controlling the following three factors:

● Takt time: time needed for a job to be completed

● Work sequence: Order of each step of work

● Inventory handling standards: Establish work sequences for each process to achieve the ideal time and quantity of goods in the standard process

2.2 Just in time

2.2.1 Definition:

● Just-In-Time (JIT) is a production system in which the flow of raw materials, goods, and products is meticulously planned during the production and distribution process, so that the next step in the process can be executed immediately after the current process is completed As a result, no items are left in a waiting state, and there is no need for labor or equipment to wait for inputs to operate Each stage of the production process produces exactly the quantity required by the next stage Processes that do not add value are eliminated

● This is an inventory management strategy with the main goal of aligning the flow of raw materials with the production schedule and customer orders JIT is implemented to ensure production with the criteria of "right product, right quantity, right place, right time," aiming for "zero inventory, zero waiting time, zero additional costs."

2.2.2 Advantages:

● First and foremost, implementing JIT can help businesses reduce production lead times by minimizing waiting time between stages in the process Additionally, when JIT is applied, businesses must maintain everything in the right quantity and just-in-time, thereby minimizing the number of returned goods This, in turn, keeps inventory levels to a minimum, reducing various costs such as storage costs, bookkeeping costs, etc

● Another advantage of implementing JIT is increased customer satisfaction By producing quickly and efficiently, JIT can help companies respond more rapidly to customer demands, increasing customer satisfaction and loyalty This, in turn, can retain existing customers and potentially attract new ones

2.2.3 Disadvantages:

● The first apparent disadvantage of JIT production is that businesses can become dependent on suppliers Since JIT's goal is to minimize inventory, there are no safety stock levels, so when orders come in, JIT-based businesses must purchase materials from external suppliers Therefore, if subcontractors

do not provide the necessary components in a timely manner, the entire production process can be disrupted, and the entire supply chain may experience disruptions with even minor changes from the manufacturer

● Furthermore, businesses applying JIT may face shortages if they do not have accurate and regularly updated sales forecasts In addition, transportation costs may increase due to reduced batch sizes and increased delivery frequency Instead of delivering large quantities once a month and requiring a lot of inventory, JIT operates with weekly orders of smaller quantities to keep inventory costs low

2.2.4 Practical Application of JIT at Toyota:

● With the implementation of Just-In-Time, the entire management process from production to vehicle distribution at Toyota does not involve inventory holding

or surplus raw materials Vehicles are produced based on customer orders and delivered on time to the right location To avoid overproduction, the automaker uses a "pull system," which means supplying goods based on customer demand rather than a predetermined system or schedule In other words, it's a demand-driven system

● In Toyota's production line, to fulfill an order, they must adhere to the following rules:

- Upon receiving a new order, production instructions must be issued to the production line as early as possible

- Necessary parts must be held in reserve to assemble any type of vehicle in the production line

- The parts used in the assembly process must be in the same quantities

as the previous process

- The production process must be synchronized with consumption, meaning the preceding process must reserve parts and produce only the quantity required for the subsequent process

● JIT has enabled Toyota to create a highly integrated, efficient, and scientific production process Toyota's satellite companies must adhere to the process and schedule controlled by the parent company's information system through clear instructions regarding schedules and quantities Toyota always strives to keep inventory levels to a minimum, enough to replace the quantity of goods shipped

2.3 Jidoka:

2.3.1 Definition:

● Jidoka (Automation with Human Intelligence) is a production principle that combines human intelligence and the role of automation in machinery to detect errors early in the manufacturing process, minimizing losses due to machine malfunctions or defective products Therefore, each process and production line can autonomously control issues, identify abnormalities in machinery and products, and continuously operate, only stopping in the case

of equipment failure, quality defects, or human intervention in the production line

● There are four fundamental elements of the Jidoka principle in lean manufacturing:

- Detecting Abnormalities: In the production process, everything operates continuously from one production unit to another without stopping This can lead to problems in creating a high-quality product when the process encounters errors and cannot correct them promptly Jidoka performs automated production processes with the ability to detect abnormalities during production

- Stopping Production: When an abnormality is detected in the production process, the entire production line stops to rectify the issue Identifying defects occurs at this point, enabling prompt problem resolution during production to improve product quality Halting production when errors occur is crucial and necessary in production line processes