II. Location Decision for the RX 330 (Using Grid Analysis)
"Toyota believes in localizing its operations to provide customers with the products they need and where they need them; this philosophy builds mutually beneficial long-term relationships with local suppliers and helps the company fulfill its commitments to local labor" (Toyota Motor Corporation, 1998). To be aligned with the current trend called the North Americanization of the company, seven plants have been targeted as a potential production plant for the new Lexus RX330 line. In order to streamline this approach in the most efficient and effective manner, we have selected Toyota Motor Manufacturing Canada (TMMC) and New United Motor Manufacturing, Inc. (NUMMI). These two plants were selected based on their annual production capacity and current product lines. While it is important to point out that every Toyota plant has been awarded multiple awards, is ISO 14001 certified, and has great capacity and competency potential, we believe that each plant is operating effectively and efficiently within their current production line. Out of the 7 plants, we believe that it is these two plants that haves the greatest ability to fully optimize the production of the RX330 line.
There are several exogenous factors in selecting TMMC over NUMMI, some of which include government regulations, economic factors, location and social factors. These were some of the concerns of Ikebuchi Nakatanis, Chairman of Global Operations, who believed that that these factor could have an adverse effect the final decision of where to produce the e RX330 line. In regards to these exogenous factors, it is common knowledge that every state or providence has their own rules and regulations that may have an effect on the final decision. In addition, it is also important to note that the standard of living within Fremont, California is higher than that of Cambridge, Canada. So, in a comparison analysis, one can see that the strength in the value of the US dollar exceeds that of the Canadian dollar, therefore it can be concluded that Toyota's funds within Canada can potentially go a lot further. In order for Toyota to function both efficiently and effectively, the location of the plant has to be in close proximity to other facilities in order to ship and receive parts at a minimal cost. Finally, to a lesser degree of importance is the social factor. While many organizations have begun to notice the social factor, it is important to realize that something as simple as the weather condition can sway an employee's mood, potentially having an effect on the employee's work production.
In regards to the endogenous factors, consideration was given to the size of the plant, plant competencies, ISO 14001 certification and the plant capacity. Many of these concerns were also those shared by Mr. Nakatanis, who was concerned about the potential future growth of the organization. Taking into consideration that in order for a plant to grow, especially with its current capacity, there has to in fact be room for growth. With a lot size of 400 acre at TMMC, at almost double the size of the NUMMI plant, which stands at 211 acres, TMMC clearly holds the advantage. In addition, another major determining factor in selecting TMMC as the location to produce the new Lexus RX330 line is that both Ringo Sho and Nemawashi, which means "stamp of approval" and "prior consultation", were indeed enacted within the Cambridge, Canada location (Toyota Motor Corporation, 1998, p.3). These guiding principles have spread throughout the Toyota organization, to ensure that "the idea behind the initiative is well thought out, that people do their homework and that investment in the initiative is deemed necessary and beneficial to the stakeholders before putting forth ideas for an initiative" (Toyota Motor Corporation, , 1998, p. 4). Although these practices are being utilized within the NUMMI plant as well, the fact remains that they were enacted within the TMMC location.
As far as the ISO 14001 certification is concerned, Toyota has received certification for all of their plants one year prior to their targeted date, which was March of 1999. As Toyota prides themselves on their environmental concerns, which was an important factor that was weighted equally between TMMC and NUMMI, because Toyota as an organization decided to go above and beyond the call of environmentalist by beating their own forecast. Finally, with Toyota's current annual production capacity at TMMC of 200,000 vehicles and 150,000 engines, and current production of 375,000 vehicles at NUMMI, it can be deduced that the facility with more room for growth is TMMC. Seeing that NUMMI is the main producer of the Corolla and the Tacoma Pickup, both of which were recipients of consumers pick award, car/truck of the year awards, it is clear that this plant is being fully utilized
There are many factors that go into the final decision in selecting the most optimal location for a product line, for example, when Toyota makes the decision to produce a high quality luxury vehicle outside of their home country with the intent of selling in a foreign market. There are times when the market refuses to accept a situation, what many believe, that gives another country or region an unfair advantage, although we understand that this is probably may not be weighted heavily by those consumer's who make a decision to purchase an RX330, but it is important to realize in the process of the strategic planning to produce vehicles on the global scale. So, in the end with a averaged score as depicted in the Excel Spreadsheet (Week #6 Exercise 2), TMMC come out on top with a score of 85.5% over that of the 79.875% for NUMMI.