Shine Narang - Soft

CONTACT AT: akshatamitkapoor@gmail.
com
A PROJECT REPORT
ON
PRODUCTION AND OPERATIONS
MANAGEMENT IN AUTOMOBILE INDUSTRY
Submitted By:
SHINE NARANG
201514776
PGDBA-.2015-17
SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
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CONTACT AT: akshatamitkapoor@gmail.com
ACKNOWLEDGEMENT
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ACKNOWLEDGEMENT
I would like to express my heartfelt thanks to many people. This dissertation is an effort to
contribute towards achieving the desired objectives. In doing so, I have optimized all available
resources and made use of some external resources, the interplay of which, over a period of
time, led to the attainment of the set goals.
I take here a great opportunity to express my sincere and deep sense of gratitude to my
esteemed faculty for giving me an opportunity to work on this project. The support &
guidance from sir, was of great help & it was extremely valuable.
I also express my sincere thanks to all the people who, directly or indirectly, contributed in
time, energy and knowledge to this effort.
Shine Narang
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Chapters
Contents Page No.
INTRODUCTION 05 –20
OBJECTIVE 21 - 29
RESEARCH METHODOLOGY 30 - 31
SWOT ANALYSIS 32 - 36
DATA ANALYSIS AND INTERPRETATION 37 – 42
FINDINGS 43 - 48
CONCLUSION 49 –52
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INTRODUCTION
INTRODUCTION
The Indian automotive industry consists of five segments: commercial vehicles; multi-utility
vehicles & passenger cars; two-wheelers; three-wheelers; and tractors.
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Toyota Motor Corporation (TMC) or Toyota is the Japanese multinational organization and the
world largest automobile manufacturers, selling 7.5 million models annually on all five
continents. At present, it employs 70,000 people. Like many enterprises that have made their
mark in history, Toyota has been shaped by a unique set of values and principles that have
their roots in the company's formative years in Japan.
The supply chain processes and strategies of Toyota are the fundamentals in its daily
operations. By adhering Just-In-Time (JIT) manufacturing and Toyota Production System
(TPS), Toyota emerges to be one of the world's largest automaker.
The case details the globalization strategies adopted by one of the world's leading automobile
majors, the Japan-based Toyota Motor Corporation (Toyota). It examines the rationale behind
Toyota's decision to concentrate on global expansion and studies the company's various
globalization programs, focusing on the localization efforts. The case also analyzes the
problems faced by the company within Japan and discusses the steps taken to overcome them.
Finally, it examines the results of Toyota's globalization strategies and discusses its future
prospects in the light of intensifying competition and demand saturation in its core markets,
Japan and the US.
FLASHBACK OF TOYOTA
Japan’s Sakichi Toyota (Sakichi) diversified from traditional family business of carpentry into
handloom machinery in 1897. Toyota Automatic Loom Works (TALW) founded in 1926 for
manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any
of the threads snapped. This concept (designing equipment to stop so that defects could be
fixed immediately) formed the basis of the Toyota production system (TPS) and later became
a major factor in the company’s success.
In 1933, Sakichi established an automobile department within TALW and the first passenger
car prototype was developed in 1935.
Toyota established in 1937.
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Kiichiro Toyoda studied the US automotive industry during visit to Ford. In Japan, he
customizes the Ford production system where each process in the assembly line produced only
the number of parts needed at the next step on the product line. This system was named Just-
in-Time (JIT)
Toyota flourished during the second world war by selling truck and buses to the army. The
company launched its first small car (SA model) in 1947. During this period, Toyota went into
downsizing and restructuring the company into separate manufacturing and sales division. In
1950 Toyota Motor sales company, Ltd was formed.
By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.
TOYOTA PHILOSOPHY
Toyota's management philosophy has evolved from the company's origins and has been
reflected in the terms "Lean Manufacturing" and Just In Time Production, which it was
instrumental in developing.
The Toyota Way has four components:
1. Long-term thinking as a basis for management decisions.

2. A process for problem-solving.
3. Adding value to the organization by developing its people.
Recognizing that continuously solving root problems drives organizational learning.
TOYOTA EVOLUTION, REASON FOR BECOMING LEADER AND PROBLEMS

FACED BY TOYOTA
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In 1995 Hiroshi Okuda became the president of Toyota. To improve company’s sales in
domestic market Toyota adopted following strategy: -
 Okuda chose to focus on the dealer network. Under this strategy, Toyota took initiative
to improve communication with its dealer.
 It offered more incentives to increase sales and encouraged them to attract more
prospects for test drives.
 It identified the younger generation as the means to increase market share in Japan.
Under this strategy, it took aggressive measure to attract youngster to its product.
It also realized that the dealer outlets could play an important role in attracting younger
customers. It recognized some functional discrepancies among its dealer outlets—Dealer
outlets were located too close to each other in some places and even displayed the same
model. Toyota adopted following strategy.
 Toyota stopped supplying similar models to such dealer outlets to avoid unnecessary
price competition.
 It decided to take a strict stance with who failed to meet the targets and withdraw the
monetary incentive scheme for them.
 It also asked some of its dealer to restructure and rename their outlets in such a way as
to attract younger buyer.
 The company also invested around $200 million on advertising in fiscal 1995.
AS a result of Okuda’s strategy Toyota’s performance began picking up. As the financial base
strengthened. Okuda decided to focus on improving the global sales performance, and took
Toyota on the path of aggressive globalization.
The company’s overseas production increased from 1.22 million units per year in 1995 to 1.54
million unit per year in 1998.
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While Toyota was drastically increasing its market share in the US, it was finding difficult to
perform well in Europe and Japan.
Its market share was still below 40% in Japan despite aggressive marketing efforts.
The above scenario was due to a host of reasons like
 Excessive capacity
 Choosy customers
 Surplus workforce
 Intensified competition within Japan.
In 1998, Japan sales accounted for mere 38% of the company’s total sales compared to 52% in
1990. Also, Toyota’s Japan sales contributed to a very small share of its profits.
 By the late 1990s young buyers accounted for 30% of the customer base as compared
to over 45% in the late 1980s. In 1998, models from rival companies such as Honda
and BMW were more popular than the ones offered by Toyota. According to reports,
Japanese youngsters felt that Toyota cars ‘lacked attitude’. Toyota realized that by
losing its young customers to other companies, it ran the risk of losing its future market
as well.
Alarmed by this scenario, Toyota embarked on an aggressive restructuring exercise and started
a new company, Virtual Venture Co. to design and sell cars that appealed to the young
generation. VVC experimented with many unconventional sales strategies to improve the
Toyota models to people, it built a $83 million amusement park in April 1998, where it
displayed Toyota’s visions for future models and also allowed people to design their own cars.
Beginning in 1999, the company rolled out many new cars specifically designed for the young
Japanese buyers. These cars such as Vitz compact, FunCargo compact, and MR-S sports car,
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had the distinctive looks and attitude sought by these buyers. More significantly, a majority of
these were entry-level. To keep the prices down, Toyota shared platforms with other models.
Apart from these new launches, the company also launched upgraded versions of its existing
models such as Windom (Lexus ES 300), Verossa and Brevis. To attract the young buyers,
Toyota took the risk of even de-emphasizing the Toyota brand. For instance the new car bB,
which became very popular with young buyers, had no visible signs of the ‘Toyota’ name,
except for a Toyota symbol on the steering wheel.
As part of making the company’s dealer outlets more appealing to young buyers, the company
renamed one of its five dealership chains Netz, and targeted it exclusively at entry-level
buyers. Toyota also undertook aggressive marketing efforts such as focused advertising of its
new models besides offering high cash rebates to buyers of its flagging models.
Toyota focused on streamlining and reducing its workforce and decided to hire contract
employees against its policy of lifetime employment. It planned to cut about $678 million in
costs, employment mainly by designing cars with fewer and simpler parts and by sharing
platforms and parts among its models.
 The factors that helped Toyota attain and sustain the leadership status in Japan
are: -
 Focus on dealer network.

 Initiative to improve communication with its dealers.
 It took aggressive measures to attract youngsters to its products.
 It stopped supplying similar models to such dealers whose outlets were located too
close to each other to avoid unnecessary price competition.
 It decided to take strict stance with those dealers who failed to meet target.
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 The company invested heavily on advertising in fiscal in 1995. (around 200 million)
 It embarked on an aggressive restructuring exercise.
 It built a $83 million amusement park in April 1998, where it displayed Toyota’s
visions for future models and also allowed people to design their own cars.
 As part of making the company’s dealer outlets more appealing to young buyers, the
company renamed one of its five dealership chains Netz, and targeted it exclusively at
entry-level buyers.
 It focused on streamlining and reducing its workforce and decided to hire contract
employees against its policy of lifetime employment.
 It planned to cut about $678 million in costs.
 Problems the company faced in this market later on: -
The problem was drastically increasing its market share in the US, it was finding it difficult to
perform well in Japan. Its market share was still below 40% in Japan despite aggressive
marketing efforts. This happened because of number of reasons like: -
 Excessive capacity
 Choosy customers,
 Surplus workforce
 Intensified competition
It is already mentioned regarding problem faced by Toyota and the strategy it adopted to come
out of the problem.
Over all the strategy it adopted to became leader in automobile market in Japan became the
best practices in automobile sectors.
SPECIFIC DETAILS OF THE MAJOR AREAS ARE AS FOLLOWS: -
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I. Advancing Localization
Since the New Global Business Plan was announced in 1995, TMC's overseas production has
been expanding on schedule, increasing from 1.22 million units per year in 1994 to 1.54
million units per year in 1998.
Europe
European production capacity expanded to 220,000 units by the end of 1998. Toyota
Motor Manufacturing (UK) Ltd. (TMUK)'s second assembly plant started building
Corolla lift-back models in September 1998. Total European production capacity will
reach 350 - 400,000 units in 2001, when the French plant goes into production.
In 1998 vehicle production result at TMUK was about 170,000 units (1994 result was
about 90,000 units).
 In 1998 engine production at TMUK was about 110,000 units (1994 actual
production was about 80,000 units). TMUK's engine production capacity will
increase from the current level of 150,000 units/year to 200,000 units/year by the
end of 1999, and to between 350,000 and 400,000 units/year in 2001. A casting
process will also be added to the engine production process (with the start of
production planned for 2000).
 The new production company, Toyota Motor Manufacturing France S.A.S.,
established in Valenciennes, France, in October 1998 is proceeding with plant
construction with the goal of starting production by early 2001 (at the rate of
150,000 units per year).
 In order to support Toyota's European manufacturing operations, Toyota Motor

Europe Manufacturing (TMEM) was formed in Brussels, Belgium, in October
1998.
 In July 1998, TMC established a design center in the Cote d'Azur, France (with
the start of operations planned for early 2000).
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 Exports of TMUK-produced cars to countries outside the EU, which began in

1996, reached about 7,000 units in 1998. (The cumulative total for 1996 through
1998 was about 18,000 units.) Exports of engines to Turkey reached about 8,000
units in 1998. (The cumulative total for 1996 through 1998 was 45,000 units.)
Asia and Oceania
Production capacity in Asia and Oceania expanded to 640,000 units in 1998. Against the
background of stagnating economies and a shrinking automobile market in Asia, 1998
production result in Asia and Oceania was about 280,000 units (1994 actual production
was about 410,000 units). To maintain local operations and employment levels, TMC has
been taking such measures as the expansion of exports from local operations, support of
training, and active support of management of parts makers and dealers.
 In 1998 vehicle production in Taiwan was about 73,000 units (1994 actual
production was about 65,000 units).
 In 1998 vehicle production in the Philippines was about 11,000 units (1994 actual
production was about 30,000 units). Production of constant-velocity joints was
about 57,000 units. In addition, transmission exports to Japan began in March
1998.
 In 1998 vehicle production in Thailand was about 35,000 units (1994 actual
production was about 110,000 units). Production of engine blocks was about
100,000 units (1994 actual production was about 53,000 units). In April 1998, the
export to South Africa began of Hilux production parts made in Thailand. In July
1998, the export of Corolla bumpers to Brazil began. In August 1998, the export
of Hilux made in Thailand to Australia began.
 In 1998 vehicle production result in Indonesia was about 17,000 units (1994
actual production was about 80,000 units). In February 1998, production began at
P.T. Toyota-Astra Motor's (TAM) second plant (Karawang Plant). 1998 engine
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production at TAM was about 36,000 units (1994 actual production was about
70,000 units).
 In China, Toyota continues to build our parts production network. In June 1998,
the line-off ceremony for a constant velocity joint production joint venture was
held. In July 1998, the line-off ceremony for a engine production joint venture
was held. In January 1999, the line-off ceremony for a forged parts manufacturer
was held. As for vehicle production, in November 1998, a manufacturer of
compact buses was set up. TMC is also undertaking negotiations with the
Chinese government on a small car project. In addition TMC has been providing
support for increasing production capacity to 150,000 units/year targeting sales of
100,000 units per year for the Tianjin Charade. Finally, in February 1998
ToyotaTechnicalCenter (China), Ltd. was established to provide production and
development support, with operations scheduled to begin in April 1999.
 In 1998 vehicle production result in Malaysia was about 6,000 units (1994 actual
production was about 17,000 units). 1998 production result of power steering
units at T & K AutopartsSdn. Bhd. was about 27,000 units. 1998 actual
production of lower ball joints was about 12,000 units.
 In 1998 vehicle production result in Vietnam was about 2,000 units.
 In 1998 vehicle production result in Australia was about 100,000 units (1994
actual production was about 78,000 units). 1998 exports of Australian-made
Camrys totaled about 30,000 units. (The cumulative total for 1996 through 1998
was about 70,000 units.)
In 1998 vehicle production result in New Zealand was about 4,000 units (1994 actual
production was about 15,000 units).
Parts related
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For major parts, such as engines and stamped parts, as well as facilities and materials, TMC is
making steady progress in localization, with local procurement being the rule.
II. INCREASING IMPORTS
1. Increase of TMC cars produced overseas, and foreign makers' cars
 Sales result of VW/Audi cars through DUO dealers were about 29,000 units.
(The cumulative total for 1995 through 1998 was about 119,000 units.) At the
end of 1998, the nationwide sales network consisted of 144 sales outlets.
 Sales results of the Toyota Cavalier were about 7,000 units. (The cumulative total
for 1996 through 1998 was about 28,000 units.)
 Sales results of the Avalon made at TMMK were 4,000 units. (The cumulative
total for 1995 through 1998, including the Scepter, was about 59,000 units.)
2. Purchasing and parts
 In April 1998, to further facilitate sales by suppliers, TMC opened a

SuppliersCenter (in ToyotaCity, AichiPrefecture) that can be used for exhibiting
new parts, etc.
 For the importation of originally equipped parts, TMC is promoting:
1) New Supplier & New Technology Discovery Program,
2) Current Supplier Improvement Support Program, and
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3) International Price Comparison System, etc., of the "Global Optimum Purchasing

System" which is based on fair and objective evaluation, utilizing the same approach
TMC is using to promote local purchasing.
 In April 1996, TMC established TACTI Corporation to procure and sell new
brands of aftermarket parts. In November 1996, TMC began the operation of its
directly owned "jms" car shops, and increased their number to 28 shops by the
end of March 1999. The locations include: Sapporo (3), Kushiro, Hakodate,
Hachinohe, Morioka, Sendai, Mito, Kooriyama, Utsunomiya (2), Chiba, Tokyo,
Kanagawa (2), Aichi (2), Gifu, Kobe (2), Okayama, Takamatsu, Hiroshima (2),
Fukuoka, Oita, and Kumamoto.
 Cooperation with TACTI has significantly bolstered the lineup of imported
products handled by TMC parts distributors. As part of a plan to increase the
sales of TACTI products, efforts to increase sales are continuing.
3. Activities to promote understanding
 TMC established an internal "contact point" in July 1995 to deal with inquiries
related to handling foreign cars, and informed interested parties through visits
and announcements. So far, there have been contacts from several foreign
makers.
Global vision 2005 (1996 –2005): Cho decided to focus more on localization - he believed
that by doing so, Toyota would be able to provide its customers with the products they needed,
where they needed them. This was expected to help build mutually benefiting, long-term
relationships with local suppliers and fulfill Toyota's commitments to local labor and
communities. Cho defined globalization as 'global localization.' Therefore, besides focusing on
increasing the number of manufacturing centers and expanding the sales networks worldwide,
Toyota also focused on localizing design, development and purchasing in every region and
country.
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It’s implemented Kaizen and many philosophies. A new concept of just in time (JIT) also
innovated. Also, they adopted few western management practices in addition to the traditional
Japanese ones. All practices gave ample of improvement as its Kentucky plant won four ‘Gold
plant quality award’ from JD power and Association.
COMPANY’S OWNERSHIP STRUCTURE
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MARKETING DEPARTMENT
FUNCTIONS OF MARKETING DEPARTMENT
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 Arrange the events of the government institutes

 Prepare the potential customer list
 Make region performance report
 Provide selling skills to dealers employee’s
 Contact with the Govt. institutes
 Contacts with the banks for leasing
 Establish the new dealership network
 Monitor the sale at dealers
TOYOTA – SUPPLY CHAIN
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OBJECTIVE
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OBJECTVES OF THE STUDY
Objective of the study is to prove that the production planning and control practices has
impact on the efficient utilization of the resources, waste reduction, reduce waiting time and
processing, thus contributing to the profitability of the industry. On these premise the study
accentuated to address questions in order to achieve the following objectives:
(a) To know how the production planning contributes to the efficient use of facilities
and equipments.
(b) To know the effects of Production Planning and Control on Production function.
(c) To know whether production planning and control practices lead to waste reduction
and increased profit.
(d) To prove that short term production planning and scheduling techniques employed
by industries, is necessary in minimizing process and customer waiting time.
Production Function
After taking decisions about the type of business, its location, layout etc. the entrepreneur
steps into the shoe of production manager and attempts to apply managerial principles to the
production function in an enterprise. Production is a process whereby raw material is
converted into semi-finished products and thereby adds to the value of utility of products,
which can be measured as the difference between the value of inputs and value of outputs.
Production function encompasses the activities of procurement, allocation and utilization of

resources. The main objective of production function is to produce the goods and services
demanded by the customers in the most efficient and economical way. Therefore, efficient
management of the production function is of utmost importance in order to achieve this
objective. Production management involves the managerial decisions regarding design of the
A Typical Manufacturing Systems
product and design of the production system i.e. determination of production processes and
production planning and control.
Materials
SUPPLIERS 21 CUSTOMERS
Machines
People
Raw Materials Finished Products
Production Planning and Control
Once the entrepreneur has taken the decisions regarding the product design and production
processes and system, his next task is to take steps for production planning and control, as this
function is essentially required for efficient and economical production.
Planned Production is the ability to look ahead, organize and coordinate and having plenty of
driving force and capacity to lead and ability to supervise and coordinate work and simulates
his associates by means of a programme of human relation and organization of employees.
Production Planning and Control involve generally the organization and planning of
manufacturing process. Especially it consists of the planning of routing, scheduling,
dispatching inspection, and coordination, control of materials, methods machines, tools and
operating times. The ultimate objective is the organization of the supply and movement of
materials and labour, machines utilization and related activities, in order to bring about the
desired manufacturing results in terms of quality, quantity, time and place.
Production planning without production control is like a bank without a bank manager,
planning initiates action while control is an adjusting process, providing corrective measures
for planned development. Production control regulates and stimulates the orderly how of
materials in the manufacturing process from the beginning to the end.
Production Planning and Control (PPC) is a process that comprises the performance of some
critical; functions on either side, viz., planning as well as control.
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Production Planning and control
Production Planning Production Control
Planning Dispatching
Routing Following up
Scheduling Inspection
Loading Corrective
Production planning
Production planning may be defined as the technique of foreseeing every step in a long series
of separate operations, each step to be taken at the right time and in the right place and each
operation to be performed in maximum efficiency. It helps entrepreneur to work out the
quantity of material manpower, machine and money requires for producing predetermined
level of output in given period of time.
Routing
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Under this, the operations, their path and sequence are established. To perform these
operations the proper class of machines and personnel required are also worked out. The main
aim of routing is to determine the best and cheapest sequence of operations and to ensure that
this sequence is strictly followed. In small enterprises, this job is usually done by entrepreneur
himself in a rather
adhoc manner. Routing procedure involves following different activities.
(1) An analysis of the article to determine what to make and what to buy.
(2) To determine the quality and type of material
(3) Determining the manufacturing operations and their sequence.
(4) A determination of lot sizes
(5) Determination of scrap factors
(6) An analysis of cost of the article
(7) Organization of production control forms.
Scheduling
It means working out of time that should be required to perform each operation and also the
time necessary to perform the entire series as routed, making allowances for all factors
concerned. It mainly concerns with time element and priorities of a job. The pattern of
scheduling differs from one job to another which is explained as below:
Production schedule: The main aim is to schedule that amount of work which can easily be
handled by plant and equipment without interference. Its not independent decision as it takes
into account following factors.
(1) Physical plant facilities of the type required to process the material being scheduled.
(2) Personnel who possess the desired skills and experience to operate the equipment and
perform the type of work involved.
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(3) Necessary materials and purchased parts.
Master Schedule:
Scheduling usually starts with preparation of master schedule which is weekly or monthly
break-down of the production requirement for each product for a definite time period, by
having this as a running record of total production requirements the entrepreneur is in better
position to shift the production from one product to another as per the changed production
requirements. This forms a base for all subsequent scheduling acclivities. A master schedule is
followed by operator schedule which fixes total time required to do a piece of work with a
given machine or which shows the time required to do each detailed operation of a given job
with a given machine or process.
Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved.

It is very useful where single or few products are manufactured repeatedly at regular intervals.
Thus it would show the required quality of each product and sequence in which the same to be
operated
Scheduling of Job order manufacturing:
Scheduling acquires greater importance in job order manufacturing. This will enable the
speedy execution of job at each center point.
As far as small scale industry is concerned scheduling is of utmost importance as it brings out
efficiency in the operations and s reduces cost price. The small entrepreneur should maintain
four types of schedules to have a close scrutiny of all stages namely an enquiry schedule, a
production schedule, a shop schedule and an arrears schedule out of above four, a shop
schedule is the most important most suited to the needs of small scale industry as it enables a
foreman to see at a glance.
1. The total load on any section
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2. The operational sequence
3. The stage, which any job has reached.
Loading
The next step is the execution of the schedule plan as per the route chalked out it includes the
assignment of the work to the operators at their machines or work places. So loading
determines who will do the work as routing determines where and scheduling determines
when it shall be done. Gantt Charts are most commonly used in small industries in order to
determine the existing load and also to foresee how fast a job can be done. The usefulness of
their technique lies in the fact that they compare what has been done and what ought to have
been done.
Most of a small-scale enterprise fails due to non-adherence to delivery schedules therefore

they can be successful if they have ability to meet delivery order in time which no doubt
depends upon production of quality goods in right time. It makes all the more important for
entrepreneur to judge ahead of time what should be done, where and when thus to leave
nothing to chance once the work has begun.
Production control
Production control is the process of planning production in advance of operations, establishing

the extract route of each individual item part\ or assembly, setting, starting and finishing for
each important item, assembly or the finishing production and releasing the necessary orders
as well as initiating the necessary follow-up to have the smooth function of the enterprise. The
production control is of complicated nature in small industries. The production planning and
control department can function at its best in small scale unit only when the work manager, the
purchase manager, the personnel manager and the financial controller assist in planning
production activities. The production controller directly reports to the works manager but in
small scale unit, all the three functions namely material control, planning and control are often
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performed by the entrepreneur himself production control starts with dispatching and ends up
with corrective actions.
Dispatching
Dispatching involves issue of production orders for starting the operations. Necessary
authority and conformation is given for:
1. Movement of materials to different workstations.
2. Movement of tools and fixtures necessary for each operation.
3. Beginning of work on each operation.
4. Recording of time and cost involved in each operation.
5. Movement of work from one operation to another in accordance with the route sheet.
6. Inspecting or supervision of work
Dispatching is an important step as it translates production plans into production.
Follow up
Every production programme involves determination of the progress of work, removing

bottlenecks in the flow of work and ensuring that the productive operations are taking place in
accordance with the plans. It spots delays or deviations from the production plans. It helps to
reveal detects in routing and scheduling, misunderstanding of orders and instruction, under
loading or overloading of work etc. All problems or deviations are investigated and remedial
measures are undertaken to ensure the completion of work by the planned date.
Inspection: This is mainly to ensure the quality of goods. It can be required as effective agency
of production control.
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Corrective measures: Corrective action may involve any of those activities of adjusting the
route, rescheduling of work changing the workloads, repairs and maintenance of machinery or
equipment, control over inventories of the cause of deviation is the poor performance of the
employees. Certain personnel decisions like training, transfer, demotion etc. may have to be
taken. Alternate methods may be suggested to handle peak loads.
Inspection
This is mainly to ensure the quality of goods. It can be required as effective agency of
production control.
Corrective measures
Corrective action may involve any of those activities of adjusting the route, rescheduling of
work changing the workloads, repairs and maintenance of machinery or equipment, control
over inventories of the cause of deviation is the poor performance of the employees. Certain
personnel decisions like training, transfer, demotion etc. may have to be taken. Alternate
methods may be suggested to handle peak loads.
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RESEARCH METHODOLOGY
RESEARCH METODOLOGY
Toyota hopes that the 21st century will be truly prosperous for society, and aims to grow as a
company together with its stakeholders, including customers, shareholders, business partners,
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and employees, through making things and making automobiles, while seeking harmony with
people, society, the global environment and the world economy.
The study is carried out at TMC (Toyota Motors Corporation) Productions officers are
likewise selected who serve as the respondents of the study. The study extensively explores
both the primary and secondary sources of information.
Pertinent information is gathered from the respondents using a structured questionnaire. The
structured questionnaire is consisting of descriptive questions to get the description of various
aspects of Production Planning and Control. The initial questions are to cover the variables
characterizing the various production planning and control practices such as demand
forecasting, inventory, capacity utilization, and scheduling techniques while the last segment
will purely on Control practices.
Unstructured personal interview is also conducted in order to augment the responses that may
not be explicitly cleared in the questionnaire. Like this the data is properly collected,
organized, and presented.
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SWOT ANALYSIS
SWOT ANALYSIS
SWOT ANALYSIS
 STRENGTH
 Brand image
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 Market Leadership
 Easy availability of spare parts
 Dealership network
 Suitable for rural area
 WEAKNESS
 Always charge the premium price
 Management Control by local partner
 OPPORTUNITY
 Switching diesel market toward petrol and CNG market
 Failure of competitor model
 Unacceptability of competitor model
 Price increase in 1000cc
 THREAT
 Government reducing the excise duty on imported car
 IR interest rate Higher
 Reduction in Diesel prices
 Entrance of the new Firms
4 P’s of Toyota
PRODUCT is anything that can be offered to the market to satisfy a want or need
That includes
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 Physical goods
 Services
 Experiences
 Events
 Person
 Organization
 Information and ideas
DEMOGRAPHIC SEGMENTATION
FAMILY SIZE:
Large family size as in india would increase opportunities for growth in sales of Innova or
Fortuner.
INCOME:
People falling in category of upper middle high income group and who have ability and
willingness to buy,would go in for Toyota cars like land cruiser,prado,camry,etc.
PRICING STRATEGY
OPTIONAL-FEATURE PRICING: e.g. an Innova customer can order mud flaps,side

steppers or other accessories.
PROMOTINAL PRICING:
1. Low Interest Financing: This technique is for short period and is mainly used in
festive seasons.
2. Longer Payment Terms: The company stretchers loans over longer period and thus
lower the monthly payments.
33
PRODUCT MIX:
SEDAN
1. COROLLA ALTIS
2. COROLLA ALTIS SPORT
3. CAMRY
SUV/MUV
1. TOYOTA INNOVA
2. FORTUNER
3. PRADO
4. LAND CRUISER
PROMOTION:
 TOYOTA uses many different techniques of advertising as most of print

advertisement of TOYOTA COROLLA is individually targeted at factors like
comfort,performance,styling,power,leg room and driving pleasure.
 The commercials mainly target at youth and young executives.
PSYCHOLOGIACAL SEGMENTATION:
SOCIAL CLASS:
 People who belong to upper middle class and higher social status would opt for
SUVs/MUV’s or sedan likecamry etc.
34
PERSONALITY:
People who are in sporty attitude having unique style statement would settle for Toyota Altis
sport model or Fortuner which would exhilarate their senses.
35
DATA ANALYSIS & INTERPRETATION
DATA ANALYSIS & INTERPRETATION

36
Q1. Do you think production planning and control is central to the success of any
manufacturing unit?
Options Yes No
Response 10 0
Interpretation
All the 100% respondents believe that production planning and control is central to the success
of any manufacturing unit. Production planning and control gives direction to the best use of
capacity with optimum utilization of production line, resources, and other equipment’s. It
helps in waste reduction and leads to increased profitability.
Q2 Capacity planning contributes to the efficient use of facilities and equipments?
If Yes, then how?

37
Options Yes No
Response 8 2
Interpretation
Most of the respondents i.e. 80% are in favor of the statement that “capacity Planning
contributes to the efficient use of facility and equipment’s.
Proper Capacity planning leads to optimum utilization of capacity reduces idle time, under or
over utilization of capacity.
Q3. What are the main objectives of Production Planning?
a) Optimum Utilization of Capacity
b) Inventory control
38
c) Economy in Production Time
d) Ensure Quality
e) Waste reduction and increased profit
Options A b c d E
Response 8 6 4 2 10
Interpretation
All the respondents believe that waste reduction and increased profit is the main objective of
production planning, some of them also believe that optimum utilization of capacity is another
objective of production planning.
The other objective of production planning is inventory control, economy in production time,
and quality insurance.
Q4. Production Planning and Capacity Planning are interrelated?
If yes, then how?
Options Yes No
Response 7 3
39
Interpretation
Majority of the respondents i.e. 70% believe that production planning and capacity planning
are interrelated. Long term Production planning becomes the basis of capacity planning. Size
of production and type of production depends on capacity; hence both are interrelated.
40
If we see the financial report of Toyota, then we find in 2009 financial year Toyota beared the
loss of 437 billion yen. It only happens when any company could not sell up to that volume in
which that company take out its costs of production and other cost which is related to
production and final sales.
41
FINDINGS
FINDINGS
The PPC department of Toyota Motors Corporation believes in making plans and decisions
unanimously, in cooperation with production department, marketing department, material
department, and quality control department. So, that a feasible plan can be made, executed
properly, and optimum results can be achieved. Hence, production planning and control is an
integrated activity and can’t be done in isolation by any particular department.
Toyota’s approach to automobile production, with its inherent quality controls, revolutionized
the industry. Its “just-in-time” supply-chain concept has become a model for manufacturers
around the world, and not just for automakers.
42
The Toyota Production System (TPS) calls for the end product to be “pulled” through the
system. This means the right parts reach the assembly line at the right place, just as they are
needed, and with no excess.
This approach represented a radical departure from conventional manufacturing systems,

which require large inventories in order to “push” as much product as possible through
production lines, regardless of actual demand. The idea of TPS, the contrary, is to produce
only the products required in the precise quantities desired at a given point in time
VALUE CHAIN ANALYSIS OF TOYOTA
The value chain is a systematic approach to examining the development of competitive

advantage. It was created by M. E. Porter in his book, Competitive Advantage. The chain
consists of a series of activities that create and build value. They culminate in the total value
delivered by an organization. The 'margin' depicted in the diagram is the same as added value.
The organization is split into 'primary activities' and 'support activities.'
43
PRIMARY ACTIVITIES
Inbound Logistics:
Here goods are received from a company's suppliers. They are stored until they are needed on
the production/assembly line. Goods are moved around the organization. Toyota motors
purchase their raw material from all around the world. In order to maximize their availability
of raw material Toyota motors maintain good relationship with their suppliers. Toyota use JIT
(Just In Time) approach for handling of raw material.
Operations:
This is where goods are manufactured or assembled. Individual operations could include
organizing the parts to make new cars & the final tune for a new car's engine. Toyota motors
are known for their reliability which comes from efficient operations.
Outbound Logistics:
44
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer. Toyota motors manage their own Show rooms in different
countries. Toyota motors make their product easily assessable.
Marketing and Sales:
In true customer orientated fashion, at this stage the Toyota motors prepares the offering to
meet the needs of targeted customers. This area focuses strongly upon marketing
communications and the promotions mix.
Service:
This includes all areas of service such as final checking, after-sales service, complaints
handling, training and so on. Toyota value their customers.
BRRANDS:
CARS TRUCKS
 YARIS  TACOMA
 COROLLA  TUNDRA
 MATRIX  HILUX (VIGO)
 CAMRY
 CAMRY SOLARA
 PRIUS
 VENZA
 AVALON
45
SUVs & VANS HYBRIDS
 RAV4  PRIUS
 FJ CRUISER  CAMRY HYBRID
 HIGHLANDER  HIGHLANDER HYBRID
 SEQUORIA
 4 RUNNER
 LANS CRUISER
 SIENNA
WORLD WIDE CAR MANUFACTURERS
Alfa Romeo Australia Ford

HSV - Holden Special Vehicles
Holden
Mitsubishi
Citron Australia BMW
Porsche
AUDI
Suzuki
Toyota Avenue Honda
New Falcon
Jaguover
Ford Focus
Maserati Lexusar
Lotus Cars Australia
Land
DaimlerChrysler Australia
Mazda
46
SAAB Mercedes
Volkswagen Nissan
Peugeot
Proton
Daihatsu
CONCLUSION
47
CONCLUSION
Threat of New Entrants
The threat of new entrants is very low in the automobile industry. The industry is very mature
and it has successfully reached economies of scale.
In order to compete in this industry a manufacture must be able to achieve economies of scale.
For this to occur, manufacturers must mass-produce the automobiles so that they are
affordable to the consumer.
Another barrier to entry is that it takes an incredible amount of capital to manufacture the
automobiles.
It takes an extreme amount of capital not only to be able to manufacture the products but also
to keep up with the research and development that is necessary for the innovation
requirements. Access to distribution channels is another high barrier to entry.
A company must find a dealership to sell their automobiles or have their own dealership.
Space in the dealerships lots is very limited making it difficult to have a wider variety of
inventory.
48
Bargaining Power of Suppliers
The bargaining power of suppliers is very low in the automobile industry.
There are so many parts that are used to produce an automobile, that it takes many suppliers to
accomplish this.
When there are many suppliers in an industry, they do not have much power. There are so
many suppliers to this industry; manufactures can easily switch to another supplier if it is
necessary.
Bargaining Power of Buyers
The bargaining power of the buyers is moderately high. The buyers being consumers purchase
almost all of the industries output.
The manufacturers depend on them to stay in business. The buyers also are a significant
portion of the industries revenue. If they cannot keep their buyers happy then they risk losing
them to their competitors.
The buyers have low switching cost if they are not happy. All the buyer has to do is sell the car
they own and purchase a new one. The reasons why the power is not completely high is that
the buyers are not large and few in number.
The buyers do not have the ability to integrate backwards into the industry. If they want a car
then they have to purchase it from a dealership.
Threat of Substitute Products
There are not many substitute products for automobiles. Some of the substitutes are walking,
riding bike or taking a train.
Substitutes products all depend on the geographic location of the consumer. In some cities
such as New York or Chicago, a car is not as necessary. In cities such as those, the subway is
49
the most effective means of transportation. However, in most places a person must have access
to an automobile in order to get around.
Intensity of Rivalry among Competitors
Rivalry among the competitors is very strong is this industry. The major competitors are so
closely balanced that it increases the rivalry. In order to gain market share in the automobile
must gain market share by taking it from their competitors.
One of the other reasons there is such high rivalry is that there is a lack of differentiation
opportunities. All the companies make cars, trucks or SUV's. The competitors are compared to
one another constantly.
The price, quality, durability, and many other aspects of different manufacturers are greatly
taken into consideration when deciding what type of vehicle to purchase.
When the different manufacturers advertise they even compare their products to their
competitors. For example, the commercials will focus on areas where the company
outperforms its competitors.
50

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DATA ANALYSIS AND INTERPRETATION 37 – 42

Toyota established in 1937.

By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.

The Toyota Way has four components:

1. Long-term thinking as a basis for management decisions.

3. Adding value to the organization by developing its people.

Recognizing that continuously solving root problems drives organizational learning.

TOYOTA EVOLUTION, REASON FOR BECOMING LEADER AND PROBLEMS

The above scenario was due to a host of reasons like

 Focus on dealer network.

 Problems the company faced in this market later on: -

SPECIFIC DETAILS OF THE MAJOR AREAS ARE AS FOLLOWS: -

 In order to support Toyota's European manufacturing operations, Toyota Motor

 Exports of TMUK-produced cars to countries outside the EU, which began in

Asia and Oceania

 In 1998 vehicle production result in Vietnam was about 2,000 units.

II. INCREASING IMPORTS

1. Increase of TMC cars produced overseas, and foreign makers' cars

2. Purchasing and parts

 In April 1998, to further facilitate sales by suppliers, TMC opened a

1) New Supplier & New Technology Discovery Program,

2) Current Supplier Improvement Support Program, and

3) International Price Comparison System, etc., of the "Global Optimum Purchasing

3. Activities to promote understanding

COMPANY’S OWNERSHIP STRUCTURE

FUNCTIONS OF MARKETING DEPARTMENT

 Arrange the events of the government institutes

 Make region performance report

 Provide selling skills to dealers employee’s

 Contact with the Govt. institutes

 Contacts with the banks for leasing

 Establish the new dealership network

 Monitor the sale at dealers

TOYOTA – SUPPLY CHAIN

OBJECTVES OF THE STUDY

Production function encompasses the activities of procurement, allocation and utilization of

Production Planning and Control

Production Planning and control

Production Planning Production Control

adhoc manner. Routing procedure involves following different activities.

(2) To determine the quality and type of material

(3) Determining the manufacturing operations and their sequence.

(4) A determination of lot sizes

(5) Determination of scrap factors

(6) An analysis of cost of the article

(7) Organization of production control forms.

(3) Necessary materials and purchased parts.

Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved.

Scheduling of Job order manufacturing:

1. The total load on any section

2. The operational sequence

3. The stage, which any job has reached.

Most of a small-scale enterprise fails due to non-adherence to delivery schedules therefore

Production control is the process of planning production in advance of operations, establishing

1. Movement of materials to different workstations.

2. Movement of tools and fixtures necessary for each operation.

3. Beginning of work on each operation.

4. Recording of time and cost involved in each operation.

6. Inspecting or supervision of work

Dispatching is an important step as it translates production plans into production.

Every production programme involves determination of the progress of work, removing

 Easy availability of spare parts