Toyota’s IT Strategy That Align To Its Strategic Business Goals

An IT strategy encompasses all aspects of technology management, which include cost management, hardware and software management, vendor management, risk management and all other factors in the enterprise IT of an organization. Proper execution of an IT strategy requires an organization to have strong IT leadership. Therefore, the chief information officer (CIO) and the chief technology officer (CTO) should work closely with other relevant departments of the organization to ensure the IT strategy is executed successfully. Most organizations formalize their IT strategy using a document. The plan and documentation of the IT strategy should be flexible to ensure that that it is responsive to changes in the organizational circumstances and priorities. The flexibility of the IT strategy would also enable it to be responsive to budgetary constraints, new technologies, and changes in available skill sets and core competencies of an organization. This paper will detail the IT strategy of Toyota, one of the most respected companies across the globe. It will highlight how Toyota uses its IT to support its famous Toyota Production System (TPS).

Toyota Business Goals and Objectives

Toyota’s business goal within the next two years is to increase its profitability by 50% within the next two years. The company is currently the market leader in the sale of automobiles. Maintaining its position would help in improving its revenues and profitability.

Toyota’s business goal is to sell 15 million cars annually within the next two years. In 2014, the company sold 10.23 million vehicles beating General Motors and Volkswagen, which are its fiercest rivals. Selling 15 million cars annually within the next two years would help in improving the company’s profitability and strengthening its position as the market leader.

To improve its profitability, Toyota needs to reduce its cost of production even further. Information technology is one of the major tools at the company’s disposal that may help in reducing its operational costs. Use of robots to manufacture cars would reduce its operational costs as it would reduce the need to hire employees.

For Toyota to sell 13 million cars annually in the next two years, it should develop more vehicle models. Hybrid vehicles promise to account for a significant proportion of the company’s vehicle sales due to the increased need for environmental sustainability among its customers. Toyota should also improve its market penetration in the emerging markets, which have the highest growth potential due to the bulging middle class in the markets. It should not focus on the North American and European markets, which are saturated (Carnall & Roebuck, 2015).

Toyota IT Strategies

Use of robotics in Toyota’s assembly lines would help in reducing the company’s operational costs. The robots would reduce the need for the company to maintain a huge workforce, which is one of the major operational costs of the company.

Toyota uses the Dealer Daily, a proprietary tool that enables the company to improve its communication with its dealers. Dealer Daily enables Toyota to know customer needs and respond to them efficiently in a timely manner. Dealers use Dealer Daily in the ordering and return of motor vehicles (Bidgoli, 2014). The company intends to undertake major improvements in the tool to improve its ability to communicate with dealers. This would help the company sell 15 million cars annually within the next two years.

Use of hybrid technology in various models of Toyota’s automobiles would also help in increasing the number of cars that the company sells annually. The company has invested heavily in R&D to help in the development of new technologies that would be incorporated in its cars to improve its competitiveness.

Organizational Structure

Toyota uses its organizational structure to support its business goals and objectives. The company used a divisional organizational structure. In 2013, Toyota undertook major changes in its organizational structure. This was in response to the safety issues that led to massive recalls of its vehicles since 2009. The previous organizational structure had a strong centralized global hierarchy that made all the major decisions of the company. Individual business units of the company did not communicate with each other. All communications had to go through the company’s headquarters. This organizational structure was highly criticized due to its slow response time to tackle the safety issues. The reorganization of the company’s structure made it be characterized by the following features; a global hierarchy, geographic divisions, and product-based divisions (Gao, 2014).

Also Read Toyota Sales Force And its Compensation Plan 

Having a global hierarchy ensures that leaders in the company’s headquarters still wield so much power. However, after the reorganization, the company increased the decision-making of its regional heads and the heads of business units. This reduced the centralization of the decision-making process of the company. The new organizational structure has eight regional divisions. These include Japan, Europe, North America, China, East Asia and Oceania, Asia, Middle East and Africa, and Latin America and the Caribbean. The regional divisions have regional heads who report to the company’s headquarters. Use of this organizational structure enabled Toyota to respond to customer needs according to the regional market conditions. Use of product-based divisions is also one of the features of the reorganizational of Toyota’s organizational structure. Toyota has four product-based divisions. These include Lexus International, Toyota No.1, which is responsible for the company’s operations in Japan, North America, and Europe, Toyota No. 2, which is responsible for the company’s operations in other regions, and the Unit Center, which is in charge for engine, transmission, and other relevant operations. Use of a product-based organizational structure facilitates the development of new brand and product lines (Carnall & Roebuck, 2015).

Organizational Culture

The reorganization of Toyota’s organizational structure led to corresponding changes in its organizational culture. Toyota’s organizational culture is characterized by teamwork, continuous improvement, and quality. The company uses teams in undertaking most activities. Use of teams improves the company’s capabilities and success. As such, it is vital for employees to be highly involved in their teams. The company ensures that all employees go through a teambuilding program to facilitate the integration of this aspect of the organizational culture (Daft & Marcic, 2014).

Toyota’s organizational culture emphasizes the need for continuous learning. The company stresses the importance of continuous learning in solving problems. Emphasis on continuous learning enables the company to continuously improve its processes and output, which help in improving its competitiveness. Quality is also one of the major features of Toyota’s organizational culture. Provision of quality automobiles has enabled the company to be the global leader in automobile manufacture. Quality is emphasized in Principle #5 of The Toyota Way, which highlights the need to get quality right the first time (Daft & Marcic, 2014).

Leadership

The type of leadership employed by Toyota is rooted in genchi genbustu or “see for yourself.” The leaders of the company get out of their office and visit locations where there are various operations to get their hands dirty. This enables them to know what is going on within the organization. This is highlighted by the company’s president, Akio Toyoda, who visited a Toyota dealership in 2008 to personally investigate the recall of a pickup truck of a Toyota dealership in Ann Arbor, Michigan. Use of this leadership style ensures that the leaders understand what is happening in the organization, thereby, enabling them to make good decisions (Daft & Marcic, 2014).

Business Processes

Business processes refer to the coordinated activities that are structurally implemented to facilitate the development of a product. Business processes are vital to any organization since they enable an organization to earn revenue. Business processes are dependent on each other. Toyota has a business process management system that supports its business processes. Toyota uses the world-famous Toyota Production System (TPS). TPS is characterized by continuous improvement (kaizen), Just In Time, and Jidoka (Richardson, 2014).

The Toyota business process requires all activities to be precisely defined to ensure they lead to maximum quality, eliminate wastes, and improve efficiency. All members of the company are required to not only adhere to the standardized work guidelines but also ensure that they seek continuous improvement. This helps in reducing inefficiencies in the company’s business processes (Richardson, 2014).

Use of the Just In Time manufacturing necessitates the company to ensure that the natural laws of demand and supply guide the entire production process. This enables the company to manufacture the right materials and parts are manufactured and provided to relevant parties in the exactly amount they need. Therefore, use of Just In Time manufacturing helps in improving the efficiency of Toyota (Richardson, 2014).

Jidoka simply means automation of an organization’s processes. However, Toyota ensures that there is automation with a human touch. Automation enables Toyota to detect problems immediately to facilitate the solution of the problems. Automation with a human touch is highlighted by the andon cord above the company’s assembly lines. The andon cord enables any team member to bring production to a halt to enable a certain problem to be solved (Richardson, 2014).

Physical Layout

Toyota has 54 manufacturing and assembly plants located in 28 countries across the globe. The countries are divided into eight regions to facilitate easy management of Toyota’s global operations. The regions include Japan, Europe, North America, China, East Asia and Oceania, Asia, Middle East and Africa, and Latin America and the Caribbean. The company’s headquarters are located in Toyota, Japan.

IT Infrastructure

Toyota acknowledges the importance of IT in its processes. In the late 2000s, the company standardized all its business application systems to ensure that it uses information in a better manner. The IT infrastructure of the company shifted to TCP/IP systems. Toyota has continuously strived to improve the maintenance and efficiency of its IT system. The company has undertaken structural reform to ensure that there is efficient system development and maintenance of its IT systems (Bidgoli, 2014).

Toyota’s IT infrastructure consists of hardware, software, network, and IT resources. Some of the hardware that constitute Toyota’s IT infrastructure include servers in the company’s data centers and one computer per employee. Toyota has several software applications. The software applications of the company may be classified into several categories. These include R&D applications, manufacturing applications, sales applications, corporate applications, and an infra & Data center. The company’s software applications help in supporting its application architecture. The IT infrastructure of the company ensures that there is integration of various applications. Toyota defined IT standards and technology roadmaps to facilitate the integration of software applications that guide its operations. Toyota has an application referred to as Toyota Friend, which is a private social networking site for people who own Toyota automobiles. The application enables Toyota owners to interact with their vehicles, dealers, and Toyota. Toyota Friend also enables thousands of the company’s employees across the globe to interact with each other. On the other hand, Dealer Daily enables Toyota to interact with its dealers. Toyota uses Workday software to manage its human resources (Bell & Orzen, 2013).

Toyota.com is the primary method with which people may communicate with the company. However, the company has several networks in various regions such as China, India, and Europe. Toyota Digital Cruise Inc. services facilitate the networking of business sites of the company. Toyota’s network is protected by a firewall that improves the security of the information relayed using the network.

Toyota uses the cloud technology that is provided via websites and apps. Use of cloud computing has enabled Toyota to free up its employees to undertake more meaningful activities. In 2012, Toyota signed a deal with Microsoft, which enabled Microsoft to provide cloud computing services through Microsoft 365.  Office 365 would enable hundreds of the company’s employees to exchange information securely. The company also uses Azure, Microsoft cloud computing service to host various apps in its vehicle models. Toyota also uses Box, an online storage service to distribute its executive reports instead of simply sending emails. Toyota also uses Amazon to host its marketing websites. Use of Software-as-a-service (SaaS) has enabled Toyota to reduce the number of data centers it has. Toyota uses DataDirect Connect to manage and query the data stored in its Oracle, SQL Server, and other database platforms. This enables the Toyota’s IT staff to meet the business needs of the company by accessing and analyzing data regardless of where it is stored (Bai, 2014).

IT Challenges

Obsolescence is one of the major IT challenges that Toyota faces. Obsolescence reduces the productive life of systems, software, and equipment. This would necessitate Toyota to spend significant sums of money in purchasing new or upgraded systems, software, and equipment. Planned obsolescence of Microsoft products highlights the impact of obsolescence on a company. The company keeps producing new versions of its Windows operating system. It would be hard for Toyota to justify spending significant sums of money on new or upgraded versions of systems, software, or equipment if there is no known productivity increase of the systems, software, or equipment (Bidgoli, 2014).

It is difficult of companies to meet their budgets especially when they are facing financial problems. IT budgets are expected to grow in the foreseeable future. The increase in IT budget would require Toyota to pay more attention to its available resources. The company should ensure that it makes decisions that ensure that it meets its existing budget needs while simultaneously planning for the future, which is a very difficult undertaking (Kelley, 2008).

Data storage and retrieval is also one of the major IT challenges that Toyota faces. Despite the fact that the data needs of most companies are short-term, the companies may need certain critical data after a long time. Going back to retrieve may be difficult since the data may no longer be readable. For instance, if one had stored information in a floppy disk a long time ago, when the floppy disks were the most common means of storing data, it may be difficult for the individual to retrieve the data since the device for reading the media may not be available. In addition, the shelf life of data varies with the type of media and the manufacturer. With a shelf life of 30 years under optimal conditions, the magnetic tape is deemed to be the best media for storing data. However, it would ultimately succumb to time (Jain, 2009).

Cloud computing is one of the major technological tools that Toyota employees. However, use of this technological tool raises privacy and security issues. The information in the “cloud” may be accessed by unauthorized parties who have malicious intent. In addition, access of the information by unauthorized parties would violate the privacy of various stakeholders of the company (Morabito, 2014). Currently, Toyota uses Microsoft 365 for information sharing among its employees. It is vital for the company to ensure that it addresses privacy and security concerns of this tool.

IT Risks

Implementing a new IT system does not imply that the end users would use it in undertaking their activities. Failure to use the new IT system would make it difficult for the company to attain the benefits of the new IT system. Involvement of the end users during the development and implementation of the new IT strategies is one of the main strategies that organizations use to ensure that the end users embrace the changes (Kouns & Minoli, 2011).

Ensuring that implementation of changes in IT would align with business rules is one of the major risks of IT implementation. It is vital to determine whether the new IT system would meet the business requirements and deliver the expected benefits (Kouns & Minoli, 2011).

Scope creep and unstable requires is a major risk of all projects involving the implementation of an IT system. Constant user involving helps in mitigating these risks. Revisiting the business process and analyzing the changes introduced by the new IT system would also help in mitigating the risks (Kouns & Minoli, 2011).

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