The Strategic Alignment Case Study

27 Oct

For years Toyota led the way in developing revolutionary manufacturing techniques that transformed western thinking on management and production whilst also recording profits and becoming the world’s leading car manufacturer in the process. What was also remarkable is that all this was achieved through staying aligned with the Toyota ethos of “pursuit of harmonious growth and enhancement of profitability.” It is powered by Toyota Production System (TPS), a series of process, philosophies and approaches to achieving this goal. This in turn is powered by a set of I.T. tools that enhancing decision making, alert suppliers and enhance efficiency.

What makes the Toyota approach extraordinary, and profitable, is it sees a business strategy rather than an I.T. strategy. There is much discussion about how I.T. can improve manufacturing, and debate whether there is payoff from such investment. The TPS model proves that there categorically is.

How they achieved this is the subject of today’s post.   

4 rules govern Toyota Motor Company’s approach to business. Through the use of Information Technology Toyota has been empowered to align its business and goals.

Continuous improvement or “Any improvement must be made in accordance with the scientific method” (Spears and Bowen, 1999) can be seen through the Dealer Daily inventory a car swap service that allowing dealerships to swap cars through an internet portal so customer can avoid any unnecessary wait for their vehicle.

The second rule or cornerstone as outlined by Bowen and Spears is “All work shall be highly specified as to content, sequence, timing and outcome”. This refers to producing products of the highest standard and naturally without defects. Toyota answer to this is the Light curtain, a beam of light that sends a signal to a computer who can flag up defects and halts the workflow while the employee retrieves the missing part.

The third cornerstone is to Toyota incorporate stakeholders into their decision-making process or “Every customer supplier relationship must be direct”. Meeting suppliers on a monthly basis to iron out potential problems, the benefit of this is a clear and common understanding. I.T. plays a key role in cementing this relationship as the Just-in-Time delivery. A sophisticated Supply Cain Management approach where the idea that is for minimal warehousing of stock while maintaining enough stock to produce.  Baselinemag.com uses the example of when a car comes out of the paint shop in Georgetown, the system sends seat supplier Johnson Controls an electronic message detailing the exact configuration of the seats required (leather upholstery, bucket seats, etc.); Johnson Controls has four hours to ship those seats to the plant in the exact sequence required. The role of I.T is perfectly aligned through Toyota’s Assembly Line Control System (ALCS) software, a monitoring tool which alerts suppliers when a shortage has occurred.

The fourth and final cornerstone is “The pathway for every product must be clear and direct”. The one-piece flow technique has long been a source of competitive advantage. Software tools help manage this precarious balancing act of deadlines, dwindling stock and high standards. Activplant Performance Management System essentially monitors all of the various machines, robots and computerized devices on the factory floor, keeping track of things such as malfunctions, uptime and reliability. It is responsible for producing a car every 55 seconds, and is further proof of an I.T. system perfectly aligned with the goals of the system.

Many of the attributes of successful strategic alignment have been outlined by Pm1083, 04ac. I hope that this post provides further insight. A key conclusion I would take from this is how Toyota achieved strategic alignment. Many of their approaches were developed in the sixties and therefore prior to many I.T. systems. Toyota first developed their unique style and framework and then invested in I.T. to enhance. What I also found surprising is the level of process reengineering Toyota undertake in pursuit of strategic alignment.

Any thoughts welcome

Advertisements

6 Responses to “The Strategic Alignment Case Study”

  1. d112221671 November 2, 2012 at 11:45 am #

    Hi thestrategicblogger,I though this was a really interesting read, you may find my post also interesting as it shows what can happen when the business and is strategies do not align as see in the example of the video standards war. You can find “Good Technology, Bad Business Strategy” at https://sopinion8ed.wordpress.com/2012/10/27/good-technology-bad-business-model/ . Thanks!

  2. agblogail November 4, 2012 at 4:22 pm #

    Great post, i feel it is much easier to truly grasp the importance of strategic alignment when you can show concrete examples of its success. I would to get your opinion, what do you feel is stopping competitors from copying toyotas innovations such as the light curtain and ALCS. Is it not a matter of time before they are copied, if not already, and toyotas loses its competitive advantage?

    • thestrategicblogger November 5, 2012 at 2:08 pm #

      A great point Agblogail which I’m glad you raised. Toyota in fact allow competitors in to see their technology, however by the time competitors DO catch up, they have advanced again. Therefore continuous innovation is their source of competitive advantage.
      Another far harder element to replicate is their organizational culture. It is this that allows the firm to strategically align its technology with its goals

  3. agblogail November 5, 2012 at 5:07 pm #

    Excellent point. I would also feel, building on your point, that brand recognition and loyalty would become a factor after a period of continuous innovation.

Trackbacks/Pingbacks

  1. Good technology, bad business model. « So Opinionated … - October 27, 2012

    […] pointed out by thestrategicblogger (https://sopinion8ed.wordpress.com/2012/10/27/the-strategic-alignment-case-study/), as in the example of VHS, Toyota was also able to use technology as part of its overall business […]

  2. How Strategic Alignment can help a business gain competitive advantage « So Opinionated … - November 3, 2012

    […] https://sopinion8ed.wordpress.com/2012/10/27/the-strategic-alignment-case-study/ […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: