INFORMATION SYSTEM FOR MANAGERS

CASE STUDY ON DATA MANAGEMENT HELPS SAVE TOYOTA

Submitted to: Prof. Ratnesh Dabra

Submitted by: Nakul Gupta Gopal Bagra Ayush Tanveer Aishwarya Section G

INTRODUCTION

Toyota Motor Corporation is the worlds largest automaker with total sales and production of over 8.4 million. TMC, based in Japan, was founded in 1937 and employs over 3,20,000 people worldwide. It manufactures a wide range of vehicles like cars, minivans, trucks, SUVs, Crossovers, Hybrids etc. 10 years ago, Toyota Motors Sales USA was suffering with a hopelessly backward IT structure. The Toyota USA was rapidly generating massive amounts of sales and market data, but it had no way to use the information strategically. Departments were struck in Mainframe Mindset and did not share information. The lack of data integration were costing Toyota USA millions of dollars.

SWOT ANALYSIS
Strengths
Generates massive amounts of sales and market data. High growth rate: Toyota USA increased the volume of cars it handles by 40 % in just eight years. Cost efficiency: The Company increased the volumes of cars it handles by 40 % in just eight years while increasing the number of employees by just 3%. Toyota Motor Corporation has the highest profit margin in automobile business. The companys stock is a perennial high performer.

Weaknesses
Toyota USA carries a finance charge of $8 per day per car until they unload the cars on the dealers. Negligence in work as evident from years of human error. Lack of data integration. No support from Management or Business executives as IT employees were running the reports.

Opportunities
Making the right use of its success the company can expand its operations and increase its market share. Toyota can use latest technologies to improve its operations. Adapting to market dynamics as and when they change can give the automaker competitive advantage. The company can stay ahead of its competitors by staying on the path of innovation.

Threats
The uncertain global economic environment especially in developed markets. Rising oil prices and increasing maintenance cost of vehicles. Changing customer preferences Government policies Environmental regulations and associated apprehension concerning carbon emissions Increasing challenges from major competitors.

Conclusion
With the poor IT performance Toyota USA faced lots of challenges and losses for years which affected its sales and profitability. By the use of newer technologies Toyota U.S.A can improve its productivity and performance. For instance, the proper use of Data Warehousing including Dashboard feature gave positive results to the employees and also helped them identifying the problems. This helped Toyota saving millions of dollars.

Describe the mainframe mindset at Toyota U.S.A. and the problems it caused with respect to data and information.

Toyota U.S.A., being one of the worlds leading motor manufacturing industry, differentiates itself from others in sales service and support. Toyota U.S.A, around 10 years back had suffered from a backward IT infrastructure. This component purchases the vehicles from Toyota Japan. This was then resold in the U.S.A. Shipping these and then selling them to the dealers involved finance charge of $8 per day. And on an average delivery time was of nine days. Multiplying that by 2 million cars per year, there was a default loss of nearly $144 million per year. The problem faced here by this component was that there was manual entry of data about every purchase and sale of the vehicle or the spare parts. This entry was done by the high level officials. Thereby others including the sales and other departments had no access to the data as such. This is nothing but the mainframe mindset. This was like a communication gap, which led to few problems. For example, employees could not gain access to the data and hence could not report as to what the dealers exactly wanted or demanded for. All the entries were single-handedly carried out, thus, it was a time consuming process.

Describe the benefits that Toyota U.S.A. received from its data warehouse implementation.

There were few IT solutions which were applied. First, the Toyota Logistics System (TLS) focused on precision tracking and supply chain management. The high level officials could understand the market, thus eliminating the communication gap between the high level officials and the other employees (precision tracking). This ensured that the right cars and the spare parts to the right dealers in a timely fashion. Data warehouses were implemented for TLS. The information was quite inaccurate here also because of few, precisely three important, problems with this solution. One, human errors got unchecked. Two, transferring files from the old system into the warehouse was quite a problem. Conversion of a legacy system was not possible. Three, the data warehouses required IT professionals to handle, rather than the company executives. Finally, data warehouse with the dashboard was used. This helped the executives to analyze the business by the dashboard which was used as a stop light. Executives took decisions depending on the stop light. Green indicated good, yellow indicated acceptable but questionable and red indicated danger. Thus the executives would concentrate on the yellow zone in order to improve and invest on the red zone and so on. Thus, data warehouse which included dashboard helped this component of Toyota a lot, as a result of which, Toyota U.S.A. had increased the volume of cars it handles by 40% in eight years while it increased the number of employees by just 3%.

Toyota U.S.A. had suffered from the bad IT infrastructure about 10 years back. But, now, because of the IT solutions like implementation of data warehouse which includes a dashboard, helped this component. In the long run, the IT solution implemented may help Toyota U.S.A. But they may face challenges if the information system they have may not be compatible with the change in the market that they concentrate on. This means it may require a better information system to handle such issues as well as those handled previously.