Why Toyota Are Now Reported to Have Become Their Liability

In recent decades, Toyota Industries Corporation (TICO) was the number one of car companies in Japan and became 4th in North American car market. In 2007, Toyota over took General Motors to became the world's largest car company with Toyota reported a nine per cent increase in the first quarter of the year to recorded sales of 2.35m compared to General Motors 2.26m which mean that Toyota sales at least 9.4m cars while General Motors sale only 9.1m this year (FXDO,2007)

Toyota production process and management techniques were caught attention from the world of manufacturing; consumers perceived Toyota as a high quality product. However, since lately 2009, Toyota faced the management crisis resulted to a large amount of product liabilities. Toyota's Perceive Quality Score (PQS) ranking has dropped dawn from 1st to 6th and demand in the new market has declined rapidly which indicated that consumers no longer rely on Toyota's quality. (Traylen, 2010). This report will discuss on how Toyota became the world successful automaker and why Toyota are now reported to have become their liability.

Toyota developed management technique as "the Toyota way", also known as lean production that helped the company speedy entered to world market. The Toyota Way explains a set of principles and behaviours that underlie company's production system and managerial approach. The company put into practice several management techniques, so as to contribute to its success. Beside, the production system is based upon such principles as just-in-time (JIT), shojinka (flexible workforce), jidoka (autonomation), kanban (sign board), and kaizen (continuous improvement) philosophy (Russell and Patel, 1999).

Just-in-time production principle is one of Toyota's production systems which distribute all the necessary inputs as the appropriate production. JIT production is naturally flexible system of manufacturing which approach to stockless and eliminate of waste. The obvious benefit is that JIT production allows Toyota to have less capital in the inventory as a result of lower costs, better quality and faster delivery to customer (Slack, 2007). Slack also supports that JIT provides production with the right quality at the right time as a minimum quantity of parts. However, Toyota does not focus only the employee in factory, but every employee across service firms and suppliers need to be trained which make the system has higher efficiency.

The Kanban system is a communication tool which is the part of JIT system. It link information between upstream and downstream activities in the manufacture. If a downstream does not ready or does not need to be produced, the production will not be process. In the other word, Kanban is called a "pull" type of production system. It is the subsequent process of quantity. The operation pulls the component into the process dawn to the lower level rather than pushing from an upstream.(EPA, 2011) It is very simple and effective production control systems that help Toyota to reduce inventory and product obsolescence, provides flexibility in production, Increases output and reduces total cost.(Hudgik,n.d.).

Kaizen stands for Kai-change, Zen-good which is the philosophy of continual improvement. In Kaizen, the maintenance and improvement are the management functions that require a long-term process to make it keep more effective. Its technique focuses on employee participation to approach the strong encourage involvement in order to continuous learning curve to create an advance flow of new knowledge (Charles, 2009)

Jidoka means "automation with human intelligence" and it refers to a principle of stopping work. The assembly line is halted automatically and immediately whenever the defective unit is detected rather than waiting until the end of production when it may be invisible and flowing into good production (Lee, 2011). In production process, Jidoka principle helps Toyota in reduced cost, increased reliability and prevents the same problem in the future.

Shojinka or flexible workforce is the principle of usage human resource in the efficient way. Shojinka principle is based on developed HR through continuous training and development in order to handle multi-process rather than operate multi-machines handle. Moreover, it operates the amount of employees in the production department to achieve the variation in production demand as a minimum number of employees (Ross , 2008).

All management techniques that mention above was the implements which help Toyota to speedy enter to global market and overtook General Motor and to become the number one automobile manufacturer in 2007.

However, Toyota is now reported to have become their liability. Since November 2009, Toyota recalled more than 11 m vehicles worldwide, including popular model such as the Prius hybrid, and Camry and Corolla