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Toyota Production System (TPS): Lean Manufacturing

Toyota’s Global Competitive Advantage

Toyota’s global competitive advantage is based on a corporate philosophy known as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also on a highly efficient network of suppliers and components manufacturers.
The fundamental reason for Toyota's success in the global marketplace lies in its corporate philosophy - the set of rules and attitudes that govern the use of its resources. Toyota have successfully penetrated global markets and established a world-wide presence by virtue of its productivity. The company's approach to both product development and distribution is very consumer-friendly and market-driven. Toyota's philosophy of empowering its workers is the centrepiece of a human resources management system that fosters creativity and innovation by encouraging employee participation, and that likewise engenders high levels of employee loyalty. Knowing that a workplace with high morale and job satisfaction is more likely to produce reliable, high-quality products at affordable prices, Toyota have institutionalized many successful workforce practices. Toyota has done so not only in its own plants but also in supplier plants that were experiencing problems.
Although many car manufacturers have earned a reputation for building high-quality cars, they have been unable to overcome Toyota's advantages in human resource management, supplier networks and distribution systems in the highly competitive car market. Much of Toyota's success in the world markets is attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.
Specific Factors Underlying Toyota's Success
Ø Lean manufacturing system.
Ø An effective and efficient human resources management system, the cornerstone of which is a high level of employee loyalty and commitment to quality.
Ø A state-of-the-art assembly system incorporating the latest robotic technology.
Ø A well-coordinated network of world-class suppliers.
Ø A highly effective and efficient just-in-time (JIT) inventory system.