STRATEGIC OPERATIONS MANAGEMENT FOR TOYOTA INNOVA PRODUCTS IN VIETNAM MARKET - Table of contents I ENTERPRISE INTRODUCTION: II BUSINESS STRATEGY, MARKET SEGMENTATION, COMPETITIVE PRIORITY: Business strategy: Market segmentation: Competitive priority: III LONG-TERM OPERATION STRATEGIC DECISION: Product design and technology: Quality control: Capacity management: Manufacturing location: .5 Manufacturing layouts and space: IV OPERATION STRATEGIC DECISION General Plan: Material demand planning: Database management: Production plan in moderation: Supply chain and distribution system management: Customer service: 7 Transport chain management: -THE END REFERENCES I ENTERPRISE INTRODUCTION: - Company name: Toyota Motor Corporation of Vietnam (TMV) - Headquarters: Phuc Thang Ward, Phuc Yen town, Vinh Phuc province Tel : (0211) 868100-112 Fax : (0211) 868117 Website: http://toyota.com.vn - Date of establishment: September 1995 (officially went into operation in 10/1996) - Total investment: USD 89.6 million Legal capital: USD 49.14 million - Scope of activities: + Manufacturing, assembling and trading all types of Toyota + Repairing, maintaining and trading Toyota genuine parts in Vietnam + Exporting Toyota spare parts manufactured in Vietnam - Products: + Manufacturing and assembling in Vietnam: Hiace, Camry, Corolla Altis, Innova, Vios and Fortuner + Trading imported cars: Land Cruiser, Hilux - Capacity: 20,000 units/year/2 shifts - Partners: The Toyota Motor Corporation of Vietnam (TMV) is a joint venture between three partners: + Japan Toyota Motor Corporation (70%) + Vietnam Dynamics and Agricultural machinery Corporation (20%) + Kuo Singapore Ltd (10%) - Human resources: more than 1,500 employees http://www.toyotavn.com.vn/profiles/index/127 Some information about Toyota INNOVA products: In Vietnam, the first product of IMV project - Global Utility Vehicle - was introduced in Vietnam as Toyota Innova in January 2006 Since its launch, Innova has achieved resounding success thanks to its utility (multiple uses), excellent quality, competitive price and high resale value, Innova has quickly become a common vehicle and is known to be the vehicle for all families Innova has continued to occupy a "best-selling vehicle" on the automotive market with cumulative sales reached an unmatched record: over 60,000 cars, get 64% of the average market share in multi-utility vehicle market segment (as at end of May 2012) II BUSINESS STRATEGY, MARKET SEGMENTATION, COMPETITIVE PRIORITY Business strategy: Toyota is the first automobiles manufacturer in Vietnam and always implements many strategies to maintain this position Appearing soon in Vietnam with luxury Toyota Crown for senior officials in the 90s of this century, Toyota's product has recently become so popular, diverse and very much productive Price, quality and service are top priorities that Toyota gives to its consumers Therefore, it would not be surprised to see approximately every 10 cars that have Toyota cars in the Vietnam streets Market segmentation: Toyota INNOVA is the midrange model of the multi-purpose vehicle SUV / MPV Along with this line of SUVs, there are many models of its competitors in the market like the Chevrolet Captiva, Ford Everest But so far, INNOVA is still the leader in vehicles consumption For comparison, let me give sales figures of the Innova, the MPV / SUV cars in Vietnam market, of TMV (source: VAMA Vietnamese American Medical Association): Unit: Vehicle 2006 Innova (SUV) MPV/SUV in the market 2007 9,934 62.65% 12,433 53.85% 15,855 100% 23,088 100% Competitive priority: Greatest competitive advantage of INNOVA is the convenience Most people who owned and used Innova are evaluating that the "driver" is very convenient, not to luxury but not too popular It is used for both going to working and going out, especially when going to family home it is very comfortable because the wide interior to carry more people and furniture Moreover, Toyota spare parts are readily available, reliable and economic This is very meaningful in this period when the fuel prices often increase Innova is suitable for family use and commercial activities as well because of its good quality and affordable price III LONG-TERM OPERATION STRATEGIC DECISION: Product design and technology: Toyota placed its design office in different country and regions: Japan, America, Europe (Belgium, France), Asia Pacific (Thailand, China, Australia); Each office has it owned design, and then Toyota shall select the best design that meet the tastes of consumers, cultural diversity of different country and regions all over the world to put into production to meet the best response to the user Being the models of Infantry Mobility Vehicle Project (IMV), Toyota Innova has been designed to provide comfortable and extensive usage This is strengths of the model and it is retained And new renovation in the latest design is to improve the image of Toyota Innova - advanced, more luxurious; more comfortable and more opened space Vehicles design is modern, dynamic and powerful with the angular lines of the exterior, but subtle and stylish traits of the interior Quality control: Both short and long-term, Toyota is committed to implement the high quality strategy at all stages: from sales, manufacturing, to sales service Its slogan is “Always better cars, Develop vehicles which exceed customer expectations” The success secret of Toyota is the production system and advanced management methods named "Toyota Way" It is a business philosophy towards the highest quality and meet the best, most completed and timely customers’ needs It never ceases efforts to get the perfect, creative continuous improvement of all methods and processes of production and consumption, from the first stage to the finished product and from manufacturring to customer service, maintenance, product warranty Capacity management: Maximum capacity of TOYOTA Vietnam is about: 30,000 unit/year/2 shifts However, Toyota's strategy is to maintain low inventories, production based on purchase orders (because when the customer chose Toyota, they are completely acceptable to wait a while to get the car) For INNOVA vehicle, at the peak in October 2007, there are 1,320 units had been sold in a month and customers still have to stand in a queue to wait for new arrivals At the present time, due to economic difficulties, there is a decrease in the market demand; however; this kind of car is still considered as expected leader for consumption in the market Manufacturing location: Toyota Vietnam 's headquarters located in Phuc Thang Ward, Phuc Yen town, Vinh Phuc province It is a young and dynamic province, and has many preferential policies for foreign investment enterprises The location of the main plant has particular advantages for transportation: located on Highway and just 20km from Noi Bai airport, about 160km to Haiphong port There are many of the parks hightech enterprises around the plant such as North Thang Long – Dong Anh industrial zone; Khai Quang - Vinh Yen industrial zone, Noi Bai - Soc Son industrial zone to ensure the supply of logistics systems for a stable plant Manufacturing layouts and space: INNOVA has a localization rate of 37% - the highest rate for the Vietnam Automotive Industry in the present time Except for the critical parts such as engines that are imported, the remaining stages include: Stamping detailed bodywork, welding, painting and assembling all are done in Vietnam The increase in localization rate is to ensure the production cost is still low That helps TMV maintain its competitive advantage of the price for INNOVA line with competitors in the market http://www.toyotavn.com.vn/news/index/94 IV OPERATION STRATEGIC DECISION General Plan: - Preparation of manufacturing space and machinery capacity - Preparation of human resources: always looking for excellent candidates who are capable, progressive and passionate about the work and attract talented by a fair and attractive human resource policy Build a modern, friendly, dynamic and equitable working environment for all employees in the spirit of "Mutual confidence and shared responsibility" - Preparation of finance: Including the cost of construction plant, machinery, raw materials costs, labor cost - Preparation of raw materials for production: From July 2004, with the introduction of Automotive Parts Export Center of Vietnam, TMV has opened a new era for Vietnam Car industry, the era that Vietnam participate in Toyota global production system Every year, with spare parts exports averaged US$ 20 million, TMV products including antennas, exhaust air conditioning valve and the throttle pedal that have now been exported to 13 areas of 10 countries around the world Material demand planning: Toyota always applies the principle: "Treat your partners and suppliers as your business extension" This means Toyota maintains association rules; considers its supplier as its associates Toyota required suppliers in quite meticulous and rigorous in terms of quality and technical parameters But it is also to say that the suppliers are selected by Toyota considered a great blessing As a result, Toyota has asserted their credibility on the automotive market Toyota usually orders long-term contracts and little change its suppliers unless big mistake is happened Moreover, Toyota also gives guidelines and development to its suppliers All of these help Toyota significantly reduce its pressure on the competitiveness of suppliers Currently TMV has established a solid network of 11 suppliers in both the South - North Number of details unit that the vendor has provided TMV has more than 300 diverse species, including more regular and detailed functional requirements and technical quality Database management: Production based on purchase orders, keep less inventory to reduce storage and other related costs To materials for production, it also keeps less inventory due to having materials management and optimization production system Production plan in moderation: TMV meet current production capacity of 30,000 units/year/2 shifts However, depending on market demand it can be adjusted faster or slower than normal capacity With the INNOVA 2012, TMV expected to product to meet demand of 550 cars / month Supply chain and distribution system management: To achieve long-term sustainable development, Toyota Vietnam has established closed relationships with agents Currently, TMV has a network of sales and services up to 15 agents in Vietnam With the establishment of agents’ network across the country, TMV ensure that its customers always receive high quality services to meet Toyota's standards TMV network has a team of skilled technicians, modern factory equipment and a systems to provide genuine parts In addition, to ensure quality services always meet the customers’ requirements, TMV has established training center at its headquarters (Phuc Yen town) with a function of providing additional training and knowledge for the technicians Customer service: In 2006, TMV decided to increase the warranty period for the car On 6/10, TMV Motor Company officially introduced the new warranty policy: increasing the warranty period from years to years or from 50.000km to 100,000 km (depending on whichever comes first) This policy applies to all vehicles delivered to customers of TMV from November 2006 Along with the new warranty policy, Toyota also introduced the free attacked services These services also apply for official vehicles to receive this new warranty policy from November 2006 Specifically include services check before delivery; general inspect vehicles at 1,000 km; maintenance fees at 50,000 km; maintenance fees at 100,000 km This is one of the typical methods of Toyota to expand markets and attract customers "Activities of Toyota Club " is a program introduced in 1998 and regularly reinforce the content and form of activity with the aims to bring more practical benefits to customers The club’s diversed activities is a "bridge" for Toyota and its customers together to explore the "quality of life" that Toyota is part of The club's activities are regularly and frequently organized It gives a chance for club members to meet each other, exchange experiences and tighten relations between clients and agents, producers and customers Up to now, this activity has created a good impression for club members In addition, club members also enjoy some of Toyota's preferentials of club partners system’s programs The partners are located in most big cities for various types such as hotels, restaurants, tourist resorts, recreation areas, shopping centers, English training centers… TMV always focuses on after-sales service and will strive to further develop its service’s quality and constantly upgrade its equipment to bring absolute satisfaction to customers as well Transport chain management: Cost leadership strategy was implemented Cars and accessories is the large- weighted and cumbersome goods, especially this product is car, therefore, customers have carefully compared, selected and weighted before purchasing As a result, it is fully acceptable for customer to wait for a certain time to pick up the car Finished goods: TMV is located in a particularly convenient location for transportation, on Highway and near the international airport, near the seaport For exported products, a transport scheme mainly is by sea For products sold in the country, motor roads transportation is used For materials: transporting by sea is used to reduce production costs, the highvalue and light-weight materials are transported by air way -The end 10 REFERENCES - Website of Toyota Vietnam - "Analysis of the growth strategy of TOYOTA multinational companies in Vietnam” - Master Do Van Tinh - http://giaothongvantai.com.vn/oto-xe-may/xe-moi/201203/Ra-mat-innova-va- Fortuner-moi-2012-34960/ 11 ... life" that Toyota is part of The club''s activities are regularly and frequently organized It gives a chance for club members to meet each other, exchange experiences and tighten relations between... vehicles to receive this new warranty policy from November 2006 Specifically include services check before delivery; general inspect vehicles at 1,000 km; maintenance fees at 50,000 km; maintenance... happened Moreover, Toyota also gives guidelines and development to its suppliers All of these help Toyota significantly reduce its pressure on the competitiveness of suppliers Currently TMV has established