Toyota Motor Corporation

History:
Toyota started in 1933 as a division of Toyoda Automatic Loom Works devoted to the production of automobiles. Its first vehicles were the passenger cars in 1935. Toyota Motor Co. was established as an independent company in 1937. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father’s company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries , it created its first product, type A engine , and, in 1936, its first passenger car, the Toyota AA.

Company overview:
Toyota Motor Corporation is a multinational corporation. Its headquartered is in Japan, and it is the world's largest automaker. Toyota employs approximately 320,808 people worldwide. The company strives to sustain its profitability position and growth in the long term by improving its business in North America, other parts of the world. Further, Toyota aims to be an ecologically sensitive car manufacturer. Toyota also owns and operates Lexus and Scion brands and has a majority shareholding stake in Daihatsu and Hino Motors, and minority shareholdings in Fuji Heavy Industries Isuzu Motors, Yamaha Motors , and Mitsubishi Aircraft Corporation. The company includes 522 subsidiaries. Toyota is headquartered in Toyota City and Nagoya (both in Aichi), and in Tokyo. In addition to manufacturing automobiles, Toyota provides financial services through its division Toyota financial services and also builds robots. Toyota Industries and Finance divisions form the bulk of the Toyota Groups, one of the largest conglomerates in the world.

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On May 8, 2009, Toyota reported a record annual net loss of US$4.4 billion, making it the latest automobile maker to be severely affected by the 2007-2009 financial crises. Vehicles were originally sold under the name "Toyoda", from the family name of the company's founder, Kiichiro Tyoda. In September 1936, the company ran a public competition to design a new logo. Out of 27,000 entries the winning entry was the three Japanese katakana letters for "Toyoda" in a circle. But Risaboro Toyoda, who had married into the family and was not born with that name, preferred "Toyota" because it took eight brush strokes (a fortuitous number) to write in Japanese, was visually simpler (leaving off two ticks at the end) and with a voiceless consonant instead of a voiced one (voiced consonant is considered "murky" or "muddy" sound compared to the voiceless consonant, which is "clear"). Since "Toyoda" literally means "fertile rice paddies", changing the name also helped to distance the company from associations with old-fashioned farming. The newly formed word was trademarked and the company was registered in August 1937 as the "Toyota Motor Company". From September 1947, Toyota's small-sized vehicles were sold under the name "Toyopet” The first vehicle sold under this name was the Toyopet SA but it also included vehicles such as the Toyopet SB light truck, Toyopet Stout light truck, Toyopet Crown and the Toyopet Corona . However, when Toyota eventually entered the American market in 1957 with the Crown, the name was not well received due to connotations of Toys and pets. The name was soon dropped for the American market but continued in other markets until the mid 1960s. Toyota’s financial services business consists primarily of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles. Toyota’s financial services also provide retail leasing through the purchase of lease contracts made by Toyota dealers.

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In fiscal 2007, the company recorded a total sale of 8,524,659 units, as compared to the total sale of 7,974,563 vehicles in 2006. Out of the total sales, the company sold 2,273,152 vehicles in Japan; 2,942,661 vehicles in North America; 1,223,628 vehicles in Europe; 789,637 in Asia; and the remaining 1,295,581 vehicles in other countries

Toyota’s philosophy:
Toyota's management philosophy has evolved from the company's origins and has been reflected in the terms Lean Manufacturing and Just In Time Production, which it was instrumental in developing. The Toyota Way has four components:

1. Long-term thinking as a basis for management decisions. 2. A process for problem-solving. 3. Adding value to the organization by developing its people.
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Recognizing that continuously solving root problems drives organizational learning.

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TOYOTA MISSION AND VISION

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TOYOTA respects and honors the rights of all people working for it and will not discriminate against them or permit the infringement of their rights. Foster a corporate culture that enhances individual creativity and teamwork value. Creating a Harmonious and Lively Work Environment . 3. 2. TOYOTA endeavors to improve its business performance in order to make it possible to provide equal employment opportunities and to maintain fair and stable working conditions. 5 . while honoring mutual trust and respect between labor and management. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. Pursue growth in harmony with the global community through innovative management. TOYOTA strives to create a safe and harmonious work environment for its employees.GUIDING PRINCIPLES 1. long term growth and mutual benefits. Work with business partners in research and creation to achieve stable. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. as well as the spirit thereof. 6. TOYOTA encourages and supports the personal growth of all people working for TOYOTA. while keeping ourselves open to new partnerships. Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide. Based on “Mutual Trust and Mutual Responsibility”. Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world.Acting with integrity and in line with sound social norms TOYOTA will use its best efforts to comply with all labor and employment laws and regulations of the countries where it is active. 4. 5.

we should each also endeavor to fully utilize our capabilities and to put forth our best efforts in allmatters in order to strengthen and build TOYOTA’s business performance globally. as well as conduct our duties/work with integrity and in a socially acceptable manner.Therefore. As valuable contributors to TOYOTA. 6 . all of us must recognize our essential roles in contributing to the success of TOYOTA and should make a commitment to comply with internal rules.

ORGANAZATION STRUCTURE OF TOYOTA 7 .

VARIOUS DIVISION IN TOYOTA 8 .

stolen or used illegally or wrongfully. and to abide by sound social norms in all aspects of our work.CODE OF CONDUCT IN TOYOTA 1. its trade secrets) and to use such information in an appropriate manner. TOYOTA does not tolerate the illegal use of another party’s assets or intellectual property or the unauthorized use of another party’s confidential information. • TOYOTA endeavours to manage and protect confidential information (e. regardless of whether an unlawful act is motivated “in the interests of the company” or “in the interests of the customer”. abide by sound social norms. Compliance with Laws and Regulations . 9 . • TOYOTA manages such assets with a firm hand in order to prevent such assets from being lost. 2. internal company policies and rules.With sound social norms in mind TOYOTA will comply with applicable laws . and take appropriate action against any illegal or criminal acts or acts in violation of the company’s policies and rules.g. In order for TOYOTA to use such assets effectively and at any time during the course of its business activities. or carried out under the instructions of one’s superior. as well as internal company policies and rules. At the same time. Use and Management of Assets and Confidential Matters . TOYOTA will not make any exceptions to this commitment.Ensuring asset maintenance and confidentiality management • TOYOTA possesses a wide variety of tangible 1 and intangible 2 assets that are indispensable and invaluable to its successful business operations.. We should implement the “Toyota Code of Conduct” and make a commitment to comply withapplicable laws.

as well as respect the assets. 3. Confidential corporate matters such as product and technology information. company secrets (such as trade secrets etc. production. but it also destroys the mutual trust that TOYOTA has built with its investors. program. know-how etc.. merchandise. securities and bonds.Enhancing vehicle safety For an automotive manufacturing company such as TOYOTA. We must understand that insider trading is clearly not permitted. Insider Trading . the pursuit of safer vehicles is always one of its main challenges and mission. 10 . affiliatedcompanies and business partners. we shall not engage in or permit any insider trading. such as using confidential information to buy and/or sell stocks. office supplies. data). equipment. trademarks. 1 Examples of tangible assets: Land.) and personal information. quality control and after-sales services in order to deliver its customers Toyota and/or Lexus vehicles that display sophisticated safety levels under various conditions and that provide a comfortable experience for drivers. software (e. Therefore. in cooperation with our suppliers and dealers.g.We must manage and protect TOYOTA’s assets. corporate credit card. materials. etc. design. design rights. cash and deposits. buildings. products. copyrights. 4. networks. personnel and accounting information. intellectual property. intellectual property and confidential information of others.Act as an investor with sound common sense TOYOTA possesses a large amount of valuable internal (confidential) information and does not allow people working for it to engage in insider trading. to engage in research and development. 2 Examples of intangible assets: Intellectual property rights such as patent rights. Not only is it illegal in many countries. Activities Promoting Safety . facilities. procurement and sales information. TOYOTA endeavors as a group. office equipment.

TOYOTA has developed a proactive policy and plans to assure continual improvements in environmental performance in the “Toyota Earth Charter” and “Toyota Environmental Action Plan”. Driver Education) and with improving the “Traffic Environment. dealers. 25.TOYOTA will also be actively involved with “People Education” (i. TOYOTA promotes compliance with international environmental standards. 27. We must endeavor to attain the highest level of environmental stewardship in each country and area. Furthermore. including development. etc. Therefore. Environmental Preservation Activities .e.” We should endeavor to think from the standpoint of our customers and pursue ways to make vehicles safer and offer our customers safety and trust. TOYOTA has decided to “dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities” (Guiding Principles 3).Reasonable and sincere transactions Based on following three basic policies. including quality. implementation of enhanced environmental assessments. TOYOTA evaluates candidates based on their overall strengths.. and realizing the principle of “building people and environmentally friendly vehicles” in cooperation with its suppliers. usage and disposal. TOYOTA offers fair opportunities to all candidates. production. Procurement Activities . 11 . TOYOTA engages in fair and open procurement activities: (a) Fair competition based on an open-door policy Regardless of nationality or size of transaction. TOYOTA regards environmental issues as one of the company’s major challenges and takes environmental impact into consideration at all life-cycle stages of its vehicles.Building environmentally and people friendly vehicles TOYOTA has a deep understanding of the necessity of environmental conservation on a global scale.

price. 2 6.Developing vehicles from the standpoint of our customers In order to provide innovative. We engage in procurement activities with fairness and integrity. In addition. TOYOTA does not tolerate research and development that violates any applicable laws or breaches of its agreements with its research and development partners. TOYOTA and its suppliers strive for mutual collaboration and close communications as equal partners. TOYOTA also does not tolerate the illegal or unauthorized use of another party’s intellectual property. volume and reliability of delivery. Research and Development Activities . Our goal is to develop vehicles from the customers’ perspective and to promote research and development. in order to strongly promote research and development of advanced technologies in various fields. as well as the stability of their business management and technological development capabilities. 12 . TOYOTA has established research and development centers around the world. (b) Mutual growth based on mutual trust In order to build relationships that result in mutual growth.technology. (c) Promoting localization in view of good corporate citizenship In order to contribute to its local communities. safe and outstanding high-quality products and services that meet the needs of customers through “research and innovation”. We respect the views of our research and development partners and seek to cultivate and maintain mutual trust. as well as universities and research institutes. These centers are well-staffed with leading innovators and actively cooperate with other TOYOTA group companies. we use our best efforts to build a relationship of mutual trust by satisfying our obligations to our partners. in consideration of the above three basic policies and compliance with the law. TOYOTA globally promotes local production of Toyota and/or Lexus vehicles and endeavors to actively promote local procurement of parts and materials.

Sales Activities . and a meticulous customer and revenue management system. which continues to evolve according to the characteristics of particular regions of the world and aims to achieve worker and environmentally friendly plants. and to bring mutual growth and support for fair competition and transactions. To achieve this.Winning the trust of customers and dealers Based on the following three ideas. TOYOTA endeavors to build the “world’s optimum production network” and a “global distribution network”. TOYOTA endeavors to build relationships with dealers based on mutual trust. In addition. (a) Philosophy of “Customer First” Based on a “Customer First” philosophy. (b) Mutual growth based on mutual trust TOYOTA develops and provides attractive product lineups. in order to enhance the global competitiveness of Toyota and Lexus vehicles. TOYOTA strives to build a sales and service structure that meets various customer needs in a timely manner. 29. We endeavor to maintain the safety and quality of products and to comply with laws related to production and distribution. TOYOTA developed the Toyota Production System. Production and Distribution Activities . 13 .We shall be mindful of respecting the intellectual property rights of others when conducting research and development and when realizing production. In order to realize such production and supply goals. 8. In order to achieve such structure.Building vehicles that win customer trust and faith TOYOTA endeavors to produce high-quality Toyota and Lexus vehicles and parts and deliver them in an efficient manner in order to meet customers’ expectations. various styles of dealer showrooms and sales styles. TOYOTA develops products that meet customer expectations and implements a marketing strategy and sales style that matches the product profiles and various customer needs. TOYOTA strives to create a sale and service structure that promptly responds to the various needs of customers worldwide.

When determining investments or financing for various domestic and overseas projects. TOYOTA assesses business management efficiency and profit make-up on both an individual and consolidated basis. to build mutual trust and to bring mutual growth. etc.To become a global company trusted worldwide TOYOTA engages in business worldwide and many of its activities are conducted outside Japan. We conduct our sales activities with the above ideas in mind. In order to realize such disclosure. and to timely and fair disclosure of its financial condition and to make appropriate payment of taxes. TOYOTA’s decisions are made after conducting thorough pre-studies. Based on the appropriate financial performance indices. the specificity of each local area in terms of its own rules and customs. including not only manufacturing activities. TOYOTA respects international rules and laws. customs and history of local societies. as well as the culture. TOYOTA places the highest priority on safety and certainty. achieve sustainable increases in profit and strengthen the foundation of its management and profit. but also research and development. including anticipated profitability. implements ambitious sales strategies in order to obtain customer satisfaction and support in various areas of the world. TOYOTA recognizes the ever-changing environment surrounding its business operations. Overseas Business Activities . and endeavors to engage in fair competition and transactions. global diversity. TOYOTA strives to appropriately oversee the financial condition of its subsidiaries and affiliates. Profitability Enhancement Activities . 11.TOYOTA does this to contribute to the improvement of sales efficiency and profitability of its dedicated dealers.. TOYOTA endeavors to perform various measures to improve business management efficiency.Building a stronger profit foundation In order to respond to the expectations of investors and society. and the rapid changes in world political and economic climate. TOYOTA does its best to continuously improve these. (c) Importance of fair market competition TOYOTA respects free trade and market competition. As for fund management. 14 . 10.

Thus. regional and international laws and rules. as well as national. TOYOTA promotes its business activities from “both a global and local” standpoint so as to contribute to the development of local economies and society. customs and history of each country. We contribute to expansion of TOYOTA’s business overseas by respecting the culture. 15 .

The Toyota Way Principles: 16 .

Principle 1. grow. Strive to decide your own fate. ■ Be responsible. Base your management decisions on a long-term philosophy. Create a continuous process flow to bring problems to the surface. and align the whole organization toward a common purpose that is bigger than making money. ■ Generate value for the customer. Even at the expense of short-term financial goals. It is the key to a true continuous improvement process and to developing people. society. Your philosophical mission is the foundation for all the other principles. continuous flow. Understand your place in the history of the company and work to bring the company to the next level. Accept responsibility for your conduct and maintain and improve the skills that enable you to produce added value. Work. Evaluate every function in the company in terms of its ability to achieve this. ■ Redesign work processes to achieve high value-added. 17 . Principle 2. ■ Create flow to move material and information fast as well as to link processes and people together so that problems surface right away. and the economy—it is your starting point. ■ Have a philosophical sense of purpose that supersedes any short-term decision making. Act with self-reliance and trust in your own abilities. Strive to cut back to zero the amount of time that any work project is sitting idle or waiting for someone to work on it. ■ Make flow evident throughout your organizational culture.

) ■ Eliminating waste is just one-third of the equation for making lean successful. ■ Work to level out the workload of all manufacturing and service processes as an alternative to the stop/start approach of working on projects in batches that is typical at most companies. 18 . ■ Provide your downlink customers in the production process with what they want. when they want it.Principle 3. Principle 4. not the hare. (Work like the tortoise. Uses “pull” systems to avoid overproduction. Level out the workload. and in the amount they want. ■ Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory. ■ Minimize your work in process and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away. Material replenishment initiated by consumption is the basic principle of just-in time. Eliminating overburden to people and equipment and eliminating unevenness in the production schedule are just as important—yet generally not understood at companies attempting to implement lean principles.

■ Build into your culture the philosophy of stopping or slowing down to get quality right the first time to enhance productivity in the long run. ■ Build into your equipment the capability of detecting problems and stopping itself. ■ Use all the modern quality assurance methods available. to get quality right the first time. ■ Quality for the customer drives your value proposition. Develop a visual system to alert team or project leaders that a machine or process needs assistance.Principle 5. 19 . ■ Build into your organization support systems to quickly solve problems and put in place countermeasures. Jidoka (machines with human intelligence) is the foundation for “building in” quality. Build a culture of stopping to fix problems.

not to replace people. Principle 7. ■ Use stable. and regular output of your processes. to support flow and pull. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.Principle 6. It is the foundation for flow and pull. manufacturing systems. then incorporate it into the new standard so that when a person moves on you can hand off the learning to the next person. regular timing. ■ Use simple visual indicators to help people determine immediately whether they are in a standard condition or deviating from it. ■ Avoid using a computer screen when it moves the worker’s focus away from the workplace. Often it is best to work out a process manually before adding technology to support the process. 20 . Allow creative and individual expression to improve upon the standard. ■ Conduct actual tests before adopting new technology in business processes. ■ New technology is often unreliable and difficult to standardize and therefore endangers “flow. thoroughly tested technology that serves your people and processes. ■ Use technology to support people. ■ Design simple visual systems at the place where the work is done. repeatable methods everywhere to maintain the predictability. or products. ■ Capture the accumulated learning about a process up to a point in time by standardizing today’s best practices. Use visual control so no problems are hidden. Principle 8.” A proven process that works generally takes precedence over new and untested technology. Use only reliable.

stable culture in which company values and beliefs are widely shared and lived out over a period of many years. and predictability. encourage your people to consider new technologies when looking into new approaches to work. ■ Grow leaders from within. Principle 9. Principle 10. ■ Create a strong. Develop exceptional people and teams who follow your company’s philosophy. live the philosophy. Grow leaders who thoroughly understand the work. ■ Do not view the leader’s job as simply accomplishing tasks and having good people skills. Work very hard to reinforce the culture continually. ■ Use cross-functional teams to improve quality and productivity and enhance flow by solving difficult technical problems. Leaders must be role models of the company’s philosophy and way of doing business.■ Reject or modify technologies that conflict with your culture or that might disrupt stability. rather than buying them from outside the organization. Empowerment occurs when people use the company’s tools to improve the company. and teach it to others. reliability. ■ A good leader must understand the daily work in great detail so he or she can be the best teacher of your company’s philosophy. ■ Nevertheless. 21 . ■ Train exceptional individuals and teams to work within the corporate philosophy to achieve exceptional results. Quickly implement a thoroughly considered technology if it has been proven in trials and it can improve flow in your processes.

move quickly and continuously down the path. Principle 11. Go and see for yourself to thoroughly understand the situation ■ Solve problems and improve processes by going to the source and personally observing and verifying data rather than theorizing on the basis of what other people or the computer screen tell you. Respect your extended network of partners and suppliers by Challenging them and helping them improve. so they will have more than a superficial understanding of the situation. Principle 13. 22 . implement decisions rapidly ■ Do not pick a single direction and go down that one path until you have thoroughly considered alternatives. thoroughly considering all options. Principle 12. ■ Have respect for your partners and suppliers and treat them as an extension of your business. Make decisions slowly by consensus. When you have picked. ■ Even high-level managers and executives should go and see things for themselves. ■ Challenge your outside business partners to grow and develop. Set challenging targets and assist your partners in achieving them. It shows that you value them. Teamwork is something that has to be learned. ■ Think and speak based on personally verified data.■ Make an ongoing effort to teach individuals how to work together as teams toward common goals.

and very careful succession systems. use continuous improvement tools to determine the root cause of inefficiencies and apply effective countermeasures. This consensus process. Become a learning organization through relentless reflection and continuous improvement. Once waste is exposed. have employees use a continuous improvement process to eliminate it. though time-consuming. ■ Once you have established a stable process. Principle 14. to collect their ideas and get agreement on a path forward. ■ Design processes that require almost no inventory. the stage is set for rapid implementation. helps broaden the search for solutions.■ Nemawashi is the process of discussing problems and potential solutions with all of those affected. 23 . and once a decision is made. This will make wasted time and resources visible for all to see.

manufacturing or assembling vehicles for local markets. Brazil.and Mexico. 24 . Toyota would use plants in Thailand.the UK. Toyota initiated the "Innovative International Multi-purpose vehicle" project (IMV) to optimize global manufacturing and supply systems for pickup trucks and multipurpose vehicles.Indonesia .Colombia . Scientific American called the company its Business Brainwave of the Year in 2003 for commercializing an affordable hybrid car. and to satisfy market demand in more than 140 countries worldwide. Indonesia. Latin America and the Middle East with three IMV vehicles: The Toyota Hilux(Vigo) . India .Turkey . Malaysia. the Philippines. Australia. the Fortuner. Venezuela. IMV called for diesel engines to be made in Thailand. gasoline engines in Indonesia and manual transmission in the Philippines. Argentina. Toyota has invested heavily in vehicles with lower emissions. For vehicle assembly. and the Toyota Innova . Toyota successfully road-tested a new version of the RAV4 which was powered by a Hydrogen fuel cell. France. China. In 2002. In 2002. Canada.SouthAfrica . Toyota has manufacturing or assembly plants in Japan. Egypt.UAE. for supply to the countries charged with vehicle production. for example the Prius.Poland . These four main IMV production and export bases supply Asia. Oceania. Africa. Portugal. South Africa and Pakistan. Europe. Thailand.the US. and Russia. based on technology such as the Hybrid Synergy Drive. Vietnam.Toyota Worldwide presence: Toyota has factories in most parts of the world.

production. The system takes into consideration rate of acceleration. Toyota's new Japanese-market vehicle models with automatic transmissions are equipped with an Eco Drive Indicator. engine and transmission efficiency. and disposal. "arrival of a revitalized recycling-based society. fuel efficiency." Since October 2006. and speed. The plan contains four major themes involving the environment and the corporation's development. The assessment includes. The five-year plan is directed at the. and sales.. the disposal recovery rate. usage. emissions and noise during vehicle use.Environmental Record: The Toyota Motor Corporation (TMC) implemented its Fourth Environmental Action Plan in 2005.."Toyota had previously released its Eco-Vehicle Assessment System (Eco-VAS) which is a systematic life cycle assesment of the effect a vehicle will have on the environment including production. the reduction of substances of environmental concern. When the vehicle is 25 . ". Themes of the 2008 program consist of "Global Warming Countermeasures" and "Biodiversity Conservation. design." 2008 marks the ninth year for Toyota's Environmental Activities Grant Program which has been implemented every year since 2000. and CO2 emission throughout the life cycle of the vehicle from production to disposal.

26 . Toyota gets enormous lift from the alignment of individual actions with the company’s strategic intent.S. initial quality.2 mpg-US (7. Individual results vary depending on traffic issues. the ¨Toyota Way¨.operated in a fuel-efficient manner. but the Eco Drive Indicator may improve fuel efficiency by as much as 4%. Lexus. 9% in2000 and 13% in 2006) is now a triple crown winner in profitability. 8% in 1990. is an instructive example of how culture can create the conditions for extraordinary and sustainable achievement. and long-term durability. the company plans to donate $1 million and five vehicles to the Everglades National Park. 36.3 mpg-imp). quality.79 L/100 km.05 mpg-imp) exceeded all other major manufactures selling cars within the United States.”In evaluating the reasons for Toyota’s success. For almost 15 years J. and market value. The money will be used to fund environmental programs at the park. The United States EPA has awarded Toyota Motor Engineering & Manufacturing North America. among the top automotive brands in terms of reliability. D. 2008 and 2009 In 2007. and total distance travelled. Toyota’s consciously cultivated set of behavioural norms. the company’s president spotlights perseverance and alignment rather than strategic brilliance. Toyota is turning heads.813 L/100 km. Only Lotus Cars which sold the Elise and Exige powered by Toyota's 2ZZ-GE engine did better with an average of 30. Inc (TEMA) with a ENERGY STAR Sustained Excellence Award in 2007. 32. market share rose from 2% in 1970.Along with Toyota's eco-friendly objectives on production and use. Toyota's Corporate Average Fuel Economy (CAFE) fleet average of 26. culture is the single most powerful lever for tapping the collective intelligence of an organization and aligning individual behaviours with an overall strategy. The company that clawed its way into foreign markets over a 40 year period (its U. Set to become the world’s largest auto manufacturer. This donation is part of a program which provides $5 million and 23 vehicles for five national parks and the National Parks Foundation. starting and stopping the vehicle.69 mpg-US (8. Power and other research firms have consistently rated Toyota and its luxury line. to 3% in 1980. the Eco Drive Indicator on the instrument panel lights up.

Genchi Genbutsu (“Go and see for yourself”). c. take responsibility. Challenge. and do our best to build mutual trust. Kaizen (“Continuous Improvement”). meeting challenges with courage and creativity to realize our dreams. We go to the source to find the facts to make correct decisions. Teamwork: We stimulate personal and professional growth. Individuals’ actions maximizing the chances of achieving a strategic goal—in Toyota’s case. always driving for innovation and evolution. 27 . Respect: We respect others. Quality. make every effort to understand each other. Toyota Way—brings into alignment the discrete choices made by individuals every day and the broad intentions of the world’s largest auto manufacturer. build consensus. and maximize individual and team performance. 2) Respect for People a. We form a long-term vision. share the opportunities of development. and achieve our goals. b. We improve our business operations continuously. b.The Toyota Way 1) Continuous Improvement a.

The basis of our activities is “product quality”. Maintaining and enhancing quality is our most important responsibility to our customers. on the assembly line the person at the next workstation is also your customer. as embodied in product durability. Respect is necessary to work with people. By ‘people’ we mean employees. it will lead to kaizen: continuous improvement. and customers. and if you closely observe things. so that even when faced with challenges they are likely to be courageous and persistent. safety and eco-friendliness. in sales and service. Toyota’s core principles The Toyota Way has two main pillars: continuous improvement and respect for people. The following diagram depicts this approach. That nurtures your ability to identify problems. reliability. so you’re not troubling your customer. The behaviour expresses a “way of being” that is potentially appealing and meaningful to participants. That leads to teamwork. Adhering faithfully to his teachings. and forms the basis of our social responsibilities. you’ll also keep analyzing what you do in order to see if you’re doing things perfectly. and “total quality. The root of the Toyota Way is to be dissatisfied with the status quo. supply partners. TOYOTO INDUSTRIES’ APPROACH TO QUALITY All Toyota Industries employees are engaged in comprehensive corporate activities aimed at maintaining and enhancing “quality” in its broadest sense. “Customer first” is one of the company’s core tenets. but we also adhere to “marketing quality”.The behaviour is consistent with the company’s core values. We believe that it is an important responsibility of all employees to participate in creating levels of “quality” that meets the expectations of our customers 28 . you have to ask constantly. We don’t mean just the end customer.” in corporate image and brand. Toyota Industries believes quality is our lifeline and a key management issue. If you adopt that principle. “Why are we doing this?” QUALITY IS THE LIFELINE OF TOYOTA Toyota Industries’ founder Sakichi Toyoda once said that “A product should never be sold until it has been carefully manufactured and tested thoroughly and satisfactorily”.

In manufacturing. 29 . As a result of these activities. everything possible is done to ensure that at all times.PROVIDING EVEN BETTER PRODUCTS Develop and provide products from the customer’s viewpoint. we are able to provide even better products that meet our customers’ expectations. This summarizes Toyota Industries’ comprehensive “market-in” approach. Distributors and dealers work together to optimize their response to customers while Toyota Industries has established customer consultation desks that enable it to interface with customers directly. endeavouring to develop products that are always ahead of the times. customers can use our products in excellent condition and free of material defects. Toyota Industries devotes enormous efforts to research and development of new functions and other features. In the area of sales and service. The company also carries out questionnaires in relation to products and visits customers to conduct fact-finding surveys of actual usage. It also uses a design reviews (DR) system to evaluate product planning based on customer needs and to ensure product reliability and post-sales customer satisfaction.

As mentioned above. the integrity of the overall system is assured through a design review (DR) system to assess quality. In addition to dealers in Japan. while everything is done in the production process to prevent defective products proceeding to the next stage of the production process or leaving the factory. Adopting a “marketing” approach. including cleanliness and neatness. from product planning and design to production preparations. predetermined procedures must be carried out according to instructions to ensure no defective items proceed to the next stage. developing staff and securing the next generation of human resources. Europe. The company actively provides dealers in Japan and overseas distributors with support in reinforcing management practices. Once new products are launched and important customer information reaches the quality assurance department of each division. whereby general managers of divisions inspect every step of the production process. SYSTEM OF QUALITY ASSURANCE AND QUALITY CONTROL In all processes. it is fed back to the responsible department (such as design and manufacturing) and countermeasures are quickly developed. which 30 . This is vital for ensuring that the company only manufactures high quality products. Australia and Asia. it is very important to maintain and improve “marketing quality” by strengthening the capabilities of distributors and dealers that directly respond to customers. production. All businesses have taken a positive approach to ensure they comply with requirements of ISO9001 and TS16949 (an ISO technical specification for the automotive industry).WORKING TO IMPROVE MARKETING QUALITY To ensure that customers can use our products with confidence at all times. Toyota Industries’ business divisions develop new products based on customer needs. Toyota Industries has also established distributors overseas to strengthen dealerships in key regions such as North America. At the same time. the DR system is reviewed to prevent a recurrence in subsequent models. This ensures that no product progresses to the next stage of the production process unless established target levels have been achieved. initial quality and customer satisfaction levels. we also proactively tackle quality improvements on five levels.

including affiliates and business partners in Japan and overseas. the Quality Assurance Department of the responsible division must. After the Global Quality Control Department reports to the President via the Director responsible for quality. the President submits an application form to the relevant regulatory authority if required. the company is considering setting up Recall Preparation Conferences within divisions to devise countermeasures.are international standards for quality management systems. the reliability in quality levels is synonymous with the Toyota Industries brand. The company also informs customers by direct mail. and is considered to be a precious element of our corporate value that must be preserved. in accordance with our Rules for Dealing with Critical Quality Issues. QUALITY ASSURANCE OF SUPPLY CHAIN THROUGHOUT THE WORLD As a company that supplies products to the global market. The Audit Office at the 31 . or property damage”. This mechanism is also incorporated into our internal reporting system used for collecting information pertaining to compliance. We therefore aim to implement quality assurance activities that cover our entire global supply chain. Toyota Industries’ vehicle division has achieved ISO9001 certification and is now engaged in independent efforts aimed at establishing even higher quality assurance levels. DEALING WITH CRITICAL QUALITY ISSUES In cases where serious quality issues arises. For critical quality issues that require recalls. and functions in conjunction with that system. In particular. and carries out repairs and other measures free of charge as soon as possible. minimize trouble to customers by promptly devising countermeasures. After confirming the actual progress of the recall. the President then submits a recall report and an implementation report to the relevant regulatory authority. It is also encouraging its main affiliates in Japan and overseas to achieve certification. such as “accidents due to quality that result in personal injury. The details on the form are then reported to the President through the Director responsible for quality. while at the same time report the issue to the Global Quality Control Department at the Corporate Center using the “ Critical Quality Issues Notification Form”.

The company adopted two approaches based on these Guidelines – “Build quality into the original stages of design and production 32 . and reflects the results in the President’s Guidelines for the coming fiscal year INITIATIVES AND FUTURE POLICIES The slogan adopted for the FY 2005 Quality Guidelines was “Customer First” with the established aim of achieving “Zero Defects”. and reports the results to the President. Bearing these results in mind.Corporate Center also monitors whether these integrated mechanisms for dealing with market quality issues are functioning properly QUALITY GUILDLINES The Global Quality Control Department at Toyota Industries’ Corporate Center periodically audits the quality assurance departments of divisions. and collects information relating to the critical quality issues referred to above. The President himself confirms the implementation of the Guidelines through two special shop quality inspections held at all plants each year. once a year the President issues the President’s Guidelines (Quality Guidelines) to the entire company.

and “Build quality into processes at individual manufacturing stages”. the company is working to increase the quality assurance levels of individual processes through measures to deal with problem origins and prevent the emergence of defective items. and problems that could be expected to occur from past experience. In doing so we must focus on fundamental quality principles and aspire to achieve higher quality awareness throughout the organization and among our personnel.engineering”. the company used FMEA* for activities at the new product design stage to prevent the recurrence of problems that had arisen in the past. The company is now deploying this production technology methodology and is looking to adopt FMEA for the production planning stage. especially in terms of building in quality at production sites. In addition to reinforcing the guidelines adopted in FY 2005 – “Customer First” and “Zero Defects” – the FY 2006 Quality Guidelines call for the “Creation of a Workplace that Continually Pursues Quality-first”. Under the “Build quality into processes at individual manufacturing stages” approach. The new slogan added for the FY 2006 Quality Guidelines – Creation of a Workplace that Continually Pursues Quality-first – is intended to encourage all employees involved in manufacturing to insist on rigorous quality standards established from the viewpoint of the customer. Under the “Build quality into the original stages of design and production engineering” approach. Raising quality awareness among workers is also indispensable as facilities become more sophisticated and the number of temporary workers is increasing. As a result of these endeavors. claims arising in connection with newly launched products have fallen substantially. Toyota Industries will continue to utilize these measures to strengthen its quality assurance efforts. Toyota Industries is striving to enhance quality even further by developing systems and strong human 33 . This approach is essential for ensuring quality and developing human resources at overseas production sites at a time when overseas production is expanding.

nothing gets started until we train and educate our people. ACHEIVING HIGHER QUALITY THROUGHOUT THE SUPPLY CHAIN In FY 2005. the headquarters Global Quality Control Department played a central role in identifying the inspection situation (market claims. HUMAN RESOURCE DEVELOPMENT “Because people make our automobiles. It has also conducted two-day internal/external education programs on quality on seven occasions to date. and was involved in on-the-spot surveys of QC circle activities at two affiliates in North America and in providing support measures. Toyota seeks to develop human resources through the activity of making things. undertaking global actions for the development of human resources has become a priority issue. etc.resources that can respond to changes in the various environmental conditions facing manufacturing. In conjunction with the geographic expansion of business and the growth of business areas. Toyota is building both tangible (a new learning facility) and intangible (course content) structures relating to team member development that 34 .) at subsidiaries in Japan and abroad. which were expressed by Honorary Advisor Eiji Toyoda. Toyota believes that the development of human resources requires the handing down of values and perspectives.” As seen in these words. Toyota Industries jointly held a quality meeting with the BT Industries Group (see Topics below). Quality training has been conducted for 450 employees responsible for quality education at internal production departments. Additionally. It also followed up on the quality guidelines of key individual business partners in Japan. quality managers at domestic affiliates and management and quality managers of business partners. such as utilizing QC circles in which all employees participate.

Toyota has defined the required qualifications of “professional staff”1 for office and engineering positions. In October 2002. Company-wide training is conducted based on employee qualifications. and special knowledge and skill training. as well as specialized training for individual divisions. Toyota created the booklet “Toyota — Developing People” and distributed it to all associates to create a common understanding that “the source of Toyota’s competitiveness is human resources development” and to promote the creation of workplaces where personnel development takes place at all sites and at all levels. Toyota conducts systematic company-wide and divisional training and assignments for training purposes with an emphasis on on-thejob training (OJT) to ensure that associates can fully utilize their abilities.ensures a secure and steady flow of qualified human resources to conduct Toyota’s global business in the 21st century. language training. 35 . and “T shaped human resources”2 who are able to perform day-to-day activities and expand their skills in technical positions.

as well as utilize their strengths and exercise teamwork. such as English language skills and operational knowledge (the crossbar of the “T”) as well as highly specialized knowledge and experience in a particular field (the vertical bar of the “T”) In order to carry out the Guiding Principles at Toyota Motor Corporation. were codified. in April 2001 Toyota adopted the Toyota Way 2001. values and business methods. Toyota’s management philosophies.” the following five key principles sum up the Toyota employee conduct guidelines: Challenge. 36 . Based on the dual pillars of “Respect for People” and “Continuous Improvement.1. PROFFESIONAL STAFF Associates who can create added value on their own and contribute to society. In order to promote the development of Global Toyota and the transfer of authority to local entities. 2. that previously had been implicit in Toyota’s tradition. an expression of the values and conduct guidelines that all employees should embrace. T SHAPED HUMAN RESOURCE Team members with a broad range of skills.

procurement. A Shared Toyota Way In order to carry out the Guiding Principles at Toyota Motor Corporation. In 2002. that previously had been implicit in Toyota’s tradition.” the following five key principles sum up the Toyota employee conduct guidelines: • • • • • Challenge. with 16 full-time associates managing the business. Genchi Genbutsu (go and see). 37 . In 2002. Kaizen (improvement). including overseas sales. these policies were advanced further with the adoption of the Toyota Way for individual functions. in April 2001 Toyota adopted the Toyota Way 2001. etc In January 2002. Respect. Teamwork. Genchi Genbutsu (go and see). Toyota’s management philosophies. Based on the dual pillars of “Respect for People” and “Continuous Improvement. values and business methods. TMC President Fujio Cho is the Toyota Institute’s first president. The purpose behind the Toyota Institute’s establishment is to promote the human resources development of global Toyota in order to promote true globalization and to realize the advancement of Toyota’s core values.Kaizen (improvement). and Teamwork. the Toyota Institute was established as an internal human resource development organization that aims to reinforce the organic integration of global Toyota companies by way of sharing the Toyota Way as well as to promote self-sufficiency. enable best practice sharing and drafting of action plans. human resources. the Toyota Institute conducted training programs targeting global leadership candidates from TMC and overseas companies and for middle management personnel to enhance understanding of the Toyota Way. an expression of the values and conduct guidelines that all employees should embrace. were codified. as well as contribute to the creation of a global human network. domestic sales. In order to promote the development of Global Toyota and the transfer of authority to local entities. Respect. accounting. Within the Toyota Institute. the Global Leadership and the Management Development Schools constitute the specific content of the training programs.

the Global Leadership and the Management Development Schools constitute the specific content of the training programs. procurement. TMC President Fujio Cho is the Toyota Institute’s first president.In 2002. The purpose behind the Toyota Institute’s establishment is to promote the human resources development of global Toyota in order to promote true globalization and to realize the advancement of Toyota’s core values. enable best practice sharing and drafting of action plans. domestic sales. including overseas sales. etc. with 16 full-time associates managing the business. these policies were advanced further with the adoption of the Toyota Way for individual functions. Within the Toyota Institute. THE TOYOTA INSTITUTE In January 2002. the Toyota Institute conducted training programs targeting global leadership candidates from TMC and overseas companies and for middle management personnel to enhance understanding of the Toyota Way. accounting. the Toyota Institute was established as an internal human resource development organization that aims to reinforce the organic integration of global Toyota companies by way of sharing the Toyota Way as well as to promote self-sufficiency. In 2002. as well as contribute to the creation of a global human network 38 . human resources.

including our subsidiaries. We are promoting group-wide environmental management activities by offering extensive support to subsidiaries for constructing their environmental management systems and launched environmental management programs based on the Environmental Action Plans. 39 .Group-wide Management Toyota Industries feels that environmental protection efforts should go beyond the parent company. and should cover the entire Group.

LCA · Amount of CO2 emissions · Zero landeill waste · Amount of environmental pollutants emitted. etc.Requirements for Subsidiaries of Toyota Industries Classification Requirements Production (1) Acquisition of ISO 14001 certification at new production bases (2) Setting environmental targets · Amount of SOCs contained in products. Consolidated Sales NonConsolidated Other Set a goal for the environmental management system (recommend acquiring ISO 14001 certification) # Require the following of logistics related firms: · Acquire environmental management system certification · Global warming countermeasures (reduced CO2 emissions) 40 .

41 . with the president at the top. We will continue to work to strengthen our environmental governance based on an environmental management structure compatible with Toyota Industries' business management structure. We will also strive to reduce environmental impacts that accompany our business activities in product development and manufacturing. however. Aiming for greater environmental management. in fiscal 2008 we newly established a Company-wide EMS.Scope of Group-Wide Environmental Management Our environmental management system (EMS) was previously operated independently at respective plants.

both in the private sector and in government. two of its manufacturing plants have been designated as zero landfill-producing operations. Pollution prevention business partnerships represent a significant cultural change and philosophical shift to the historic way of doing business. 42 . it is also at the forefront of developing tomorrow’s fuel cell vehicles. . In doing so.TOYOTA POLLUTION CONTROL Toyota has entered into a partnership with the California Department of Toxic Substances Control (DTSC) to develop pollution prevention training programs. Toyota’s “green” complex in California has one of the largest commercial solar panel systems in North America and conserves more than 11 million gallons of drinking water annually through special pipelines that supply recycled water for cooling and landscaping. For instance. which influences all aspects of its operation. Toyota has demonstrated its commitment to environmental stewardship. Toyota’s commitment to preserving the environment doesn’t stop with its vehicles. Pollution prevention is most effective if it is approached through partnerships. Not only did Toyota create the world’s first mass-produced gas/electric hybrid car. The results make both good business and environmental sense. Toyota has integrated environmental responsibility in its corporate policy. Toyota is leading the way in lowering emissions and improving fuel economy in gasoline powered vehicles.

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