Toyota's Management Principles

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Toyota is known for revolutionizing management, manufacturing, and production philosophies. Toyota launched “the Toyota Way 2001” which includes 14 management principles to effectively utilize its resources. These 14 principles are divided into 4 broad sections:
Section 1: Long-term philosophy.
Section 2: Right process will produce the right results.
Section 3: Add value to the organization by developing your people
Section 4: Continuously solving root problems drives organizational learning
Toyota Way pushes employees to strive for perfection. In the early years, Toyota was preparing to operate as a truly global company, guided by a common corporate culture—the Toyota Way. The Toyota Way is supported by two main pillars: "Continuous Improvement"
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These principles were compromised in becoming the world’s largest automaker. Aggressive plant and model rollouts in new markets had strained the company’s resources and proper management. This hyper expansion plan led to production of faulty products in achieving the goal of higher volumes.
In the initial years of expansion Toyota was determined to accelerate Toyota’s growth with an aggressive globalization strategy. “Toyota 2005 Vision” bought a series of innovations in the system to make it more cost efficient and faster by changing the way cars were engineered. The “Global Vision 2010” and CC21 with “VI” (Value Innovation) strategy further supported the cost leadership strategy.
Toyota has successfully enacted the principles espoused in the Toyota Way in the initial years of expansion. The decisions taken were based on long term philosophy of cost reduction in accordance with principle 1. The TPS helped Toyota to effectively implement the right process and “pull” systems for efficient production in the global markets. They followed a standardized process of production in different production units throughout the world to maintain their quality and safety standards, but in the ambition of achieving high volumes Toyota’s focus got sidelined from “Quality” and “Safety” to
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As part of TPS, Toyota broke away from the Western supply chain model, which saw car makers sourcing in-house or awarding short term contracts to the lowest-price bidders. Toyota refined supply-chain management by selecting certain suppliers as the exclusive suppliers of particular components. This led to intimate collaboration between Toyota and these long-term partners.
Toyota classified its suppliers according to a three-tier system. Tier one suppliers supplied large, integrated systems to the automakers, followed by tier two suppliers who provided individual and assembled components. The third tier suppliers provided single components for several tier-two suppliers.
Toyota followed Keiretsu business structure which is a networked, industry specific, diversified conglomerate that resulted in the vertical integration of its supply chain. But due its global strategy, the supply chain became dangerously stretched and increased dependency on suppliers outside Japan and the keiretsu structure. Toyota leaned heavily on its single source supply chain approach reaping incredible economies of scale in the

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