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History
In 1926 Toyoda Automatic Loom works was founded by Sakichi Toyoda. Later in 1930, he sold
the rights of the Loom and gave the proceeds to his son Kiichiro Toyoda to start an automobile
business. Kiichiro started working on Automobile division under the Loom works. When
automaker legislation passed in Japan, Kiichiro split the automobile division from Loom and went
public (1937) with new name called “Toyota Motor Co.”. During WWII, Toyota manufactured
military vehicles, but due to the war they had to suffer financial problems. However, after the war
they invested heavily into R&D and introduced four-wheel drive Land Cruiser (1951).
Toyota entered into USA market in 1957 with Toyopet Crown a four-wheel sedan, but it failed
badly. They introduced Corona in 1965 and Corolla in 1968, which turned out to be the best-selling
cars of all time. Toyota grew rapidly into USA market through fuel-efficient cars. By 1970’s
Toyota was world’s fourth largest car maker. Toyota had witnessed success in the growth of their
The Toyota Production System is Toyota’s unique approach to manufacturing. It is the basis for
much of the lean production movement that has dominated manufacturing trends around the world.
Toyota developed TPS system through various observations from US automakers and principles
of jioka and one-piece flow. After many years of practice and innovation, they introduced total
lean extended enterprise, which extended even to their supplier. They also integrated the Pull
system concept, which was inspired by American Supermarkets. Lean manufacturing requires
continuous improvements in the system; therefore, Toyota used Kaizen workshops. Kaizen is the
Japanese term for continuous improvements and is the process of making incremental
improvements, no matter how small, and achieving the lean goal of eliminating all waste that adds
One of the main pillar of lean manufacturing is eliminating the waste or non-value adding activity.
Toyota closely followed their processes and analyzed it from Customer’s perspective. Through
customer perspective, it is easier to differentiate the value-added steps from the non-value-added
(Appendix – 1.1). They found overproduction as fundamental waste because it leads to other
wastes. Manufacturing more than customer demand can lead to build-up of inventory, which is
just waiting to be processed further. Thus, eliminating non-value-added activities from process
Challenges
In 1980’s Toyota formed Joint venture with General Motors to enter into USA market. Toyota
followed TPS system in Japan, but it was very difficult to implement those strategies in US because
of unionized workers. Workers of the plant went on strike for no reasons and complete ignorance
of TPS system made very difficult for Toyota. Then, Toyota decided to teach TPS to GM, so that
they both can benefit. They guided workers of the plant and decided to take management from the
GM under the joint venture. The result was astonishing, it exceeded all GM’s plant in productivity,
1.1
Activities Definition