Professional Documents
Culture Documents
wastage of material.”
After the Second World War, the distribution of World economic power was totally rearranged.
Before the war, Europe and the USA ruled the world market. The management of Western
companies was based on the "Scientific Management" by Frederick Winslow Taylor (1856-1915)
and on "Modern Sociology" by Max Weber (1864-1920). This intellectual basis characterizes the
begin of industrialization, led to mass production and to tremendous productivity increases. Yet
after the war, new players appeared on the playground, whose work was based on a philosophy,
on methods and rules unknown before. Whilst Western managers turned to short-term thinking to
satisfy shareholders and to endless restructuring, the new actors concentrated on continual
improvement in the quality of products, uniformity of processes and qualification of employees.
Toyota is one of these new players, which despite the fierce competition due to excess
production capacity in the automobile industry of around 25 % outperforms Western competition
in every aspect, in technological innovation, in customer satisfaction, in continuous growth and
in profit. In 2004 Toyota passed Ford to become he second largest automobile producer. Before
long, Toyota will overtake General Motors becoming the biggest car company in the world
probably having no less than 15% of the world market. Toyota will prevail. Most others will
have the choice between shrinking or sinking. This paper tries to shed light on the root causes of
the Toyota Phenomenon, which for some reason or another Western companies find so hard to
understand and much less on how to apply, despite their struggle for its survival.
“To be the most respected and successful enterprise, delighting customers with a wide
range of products and solutions in the automobile industry with the best people and the
best technology.”
2. Respect the culture and customs of every nation and contribute to economic and social
development through corporate activities in the communities.
3. Dedicate ourselves to providing clean and safe products and to enhancing the quality of
life everywhere through all our activities.
4. Create and develop advanced technologies and provide outstanding products and services
that fulfill the needs of customers worldwide.
5. Foster a corporate culture that enhances individual creativity and teamwork value, while
7. Pursue growth in harmony with the global community through innovative management.
8. Work with business partners in research and creation to achieve stable, long-term growth
and mutual benefits, while keeping ourselves open to new partnerships.
9. The Toyota Way includes a set of tools that are designed to support people continuously
improving and continuously developing. For example, one-piece flow is a very
demanding process that quickly surfaces problems that demand fast solutions, or else
production will stop. This suits Toyota’s employee development goals perfectly because it
gives people the sense of urgency needed to confront business problems. The view of
management at Toyota is that they build people, not just cars.
The result is a bewildering array of over 60 models in Japan and loads of different versions in big
overseas markets such as Europe and America. Of course, under the skin, these share many
Just-In-Time (Jit)
Just-in-time (JIT) production or so-called lean manufacturing. The pioneers of these methods
were Taiichi Ohno, a former Toyota executive, and Shigeo Shingo, an eminent engineer and
consultant. In his 1989 book The Study of the Toyota Production System from an Industrial
Engineering Perspective, Shingo identified these basic features of TPS:
3. It reduces production cycle time drastically with innovations like the Single-Minute
Exchange of Die (SMED) system, which cuts downtime and enables small-lot
production.
Process Improvement
An important aspect of eliminating waste is designing efficiency into production processes and
methods. For example, in the Toyota system heavy emphasis was placed on lowering the time
and complexity required to change a die in a manufacturing process. A time-consuming die-
changing process is wasteful in two ways. First, while it is happening production is often at a
standstill, increasing cycle times and all the costs associated with longer cycle times. (However,
it is important to note that idle time for individual machines in a system is not always viewed as
wasteful under the TPS philosophy.) Second, workers' time and effort are spent on activities that
aren't directly related to production (i.e., no value is being added by changing a die). As a result
of such concerns, the push at Toyota was to reduce significantly the time it took to change dies.
VALUE ADDED
TPS and similar Japanese manufacturing techniques distinguish between activities that add value
to a product and those that are logistical but add no value. The primary—even the sole—value-
added activity in manufacturing is the production process itself, where materials are being
transformed into progressively functional work pieces. Most other activities, such as transporting
materials, inspecting finished work, and most of all, idle time and delays, add no value and must
be minimized. When processes are examined for potential improvements and cost cutting,
reducing non-value-added activities is often the highest priority. Conversely, processes that add
the most value, even if they are expensive, will usually not be compromised to achieve lower
costs at the expense of quality.
Quality by Design
Another feature thought to be defining in Japanese manufacturing is a marked attention to quality
throughout the production process. Specifically, under the influence of such luminaries as W.
Edwards Deming and Joseph M. Juran, Japanese manufacturers have sought to achieve quality
by designing it into the production process rather than simply trying to catch all the errors at the
Order-Based Production.
A natural and necessary extension of the non-stock goal is that manufacturers need specific
customer information to drive their production decisions. Obtaining this information necessitates
effective market research/forecasting and communication with customers. As much as possible,
production under the Japanese system is guided by actual orders, rather than anticipated demand
based on less reliable information such as past sales. The order-based system is said to provide
production "pull" from the actual market, as opposed to "push" that stems only from the
manufacturer's conjecture.
Transportation.
The Toyota Production System also recognizes waste in the excess movement of items or
materials. In general, the more transportation required, the less efficient the process, since
moving goods back and forth is normally not a value-adding procedure. Transport waste is
usually addressed by changing the layout of a factory, its geographic location relative to its
customers, and so forth. While sometimes transportation problems can be mitigated through
automation, the ideal under the Japanese system is to minimize it altogether. Cell and flexible
manufacturing layouts are one approach to controlling transport waste.
Market-Driven Pricing
In contrast to the traditional practice of setting prices by marking up some percentage over the
cost of manufacturing, the Japanese system attempts to identify the market-determined price for
a good and then engineer the manufacturing process to produce at this price profitably. Under
Worker Flexibility
Maximizing returns on human capital is another goal of Japanese manufacturing practices.
Driven by the theory that human time is more valuable than machine time, the Japanese system
attempts to optimize labor efficiency by deploying workers in different ways as order-based
production requirements fluctuate. The main two dimensions of this flexibility are skills and
scheduling.
Lean Principles
Pursue perfection
Growth comes from the inside out and not through mergers and acquisitions, in other
words, growth through continual improvement of products and services and not through
continued restructuring.
Qualified employees are attracted with the possibility to participate in the company’s
striving to meet and exceed customer expectations with products of unparalleled quality
and not with compensation schemes. Toyota employees work for a winner. Who wants to
work for an employer, whose products have to be forced onto the customers with
discounts and incentives? Who wants to work for a looser?
No unions are admitted which force both management and employees to defend their
own interests and by so doing distract from the shared responsibility to satisfy customers.
Build a culture of stopping to fix problems, to get the quality right the first time.
Use only a reliable, thoroughly tested technology that serves your people and
Processes.
Grow leaders who thoroughly understand the work, live the philosophy, and teach it to
others.
Develop exceptional people and teams who follow your company’s philosophy.
Respect your extended network of partners and suppliers by challenging them and
helping them improve.
Go and see for yourself to thoroughly understand the situation (genchi genbutsu).
Conclusion
As one of the leading automobile manufacturers in the world, Toyota ranks within the top three
worldwide. Due to their unique business model, they are now having a market share of 14% in
the first four months of this year. That is an astonishing 2.3% jump from the previous year.
According to Autodata.com, the Toyota City based automaker ranks fourth in United States sales.
References
www.toyota.co.uk
http://www.enotes.com/biz-encyclopedia/japanese-manufacturing-
techniques#eliminating-waste
http://www.strategosinc.com/just_in_time.htm
http://en.wikipedia.org/wiki/The_Toyota_Way
http://www.springerlink.com/content/f432382q8x486312/
http://www2.toyota.co.jp/en/vision/production_system/index.html
http://www.1000ventures.com/business_guide/cs_efficiency_toyota_ps.html
http://www.vorne.com/learning-center/tps.htm
http://www.toyoland.com/history.html
http://www.toyota-europe.com/experience/the_company/index.aspx
http://homepages.ius.edu/GCENTER/Toyota%20Project.htm
http://www2.toyota.co.jp/en/vision/index.html
http://wapedia.mobi/en/The_Toyota_Way
http://www.toyota.co.jp/en/csr/principle/policy.html
http://www.toyota.co.jp/en/environment/communication/glossary/glossary_02.
html