SMART SYSTEMS AND SMART WAYS OF WORKING HELP TOYOTA BECOME NUMBER ONE

Toyota Motor Corporation is about to surpass GM as the world's largest auto maker, selling over 9 million vehicles (in 2006). It is also considered the world's best auto maker. The quality and reliability of Toyota vehicles are the gold standard of the industry, even among its lower-priced models. Customer loyalty is so high that Toyota can make sales without heavy discounting.

Toyota stands head and shoulders above fierce competition because it has been so skillful at combining quality with efficiency. One key to Toyota's success is its vaunted Toyota Production System, which is based on lean production-eliminating waste while optimizing value. Toyota has based its business processes and information systems on the principles of just-in-time delivery, quality, and continuous improvement.

By organizing its business processes and information systems around these principles, Toyota delivers value to the customer at a competitive price. As Ludo Vandervelden, vice president of Finance and Accounting, Information Systems, and Vehicle Logistics for Toyota Motor Europe points out, "you can achieve cost reductions and, at the same time, make your customers happy through implementation of smarter business processes."

Toyota Motor Europe and other Toyota divisions around the world use information systems to support these business processes. Vehicle production is based on actual customer orders rather than "best guesses" of what to stock in dealer showrooms, so the company only builds cars that customers want, when they want them, without additional delays or quality problems.

Toyota Motor Europe uses a vehicle orders management system based on Oracle E-Business Suite software to reduce the time it takes between placing a customer order and delivering the vehicle to the customer. The software integrates easily with the company's existing systems and also with those of Toyota's independent dealerships and national marketing and sales companies, which run their own separate information systems based on a variety of technologies.

This system encompasses several business processes. It starts with the customer selecting a car and various options, such as tinted windows or a navigation system. The dealer uses the system to configure a car with all of the selected options in front of the customer and then locates the best available car and options in the Toyota supply chain, including vehicles scheduled for production in the future. The dealer then uses the system to place the order through national distributors, who consolidate the order with those of their other retailers and place an order through Toyota Motors Europe. Toyota Motor Europe consolidates orders from the national distributors and places an order with Toyota's factories. Each car is then shipped and invoiced from the factory to headquarters to national distributors to retailers, triggering all related accounting processes at each step. National distributors can use the system to monitor their orders and those of different dealers and even "swap" cars with various retailers.

Question

The ways that organizations accomplish their business processes can be a source of competitive strength. Discuss this statement, illustrating your answer with the facts from the case above.