The evolution of TOYOTA Production

System
HISTORY OF THE COMPANY
CHRONOLOGY
 GLOBAL
VISION
Toyota will lead the
way to the future of
mobility, enriching
lives around the world
with the safest and
most responsible
ways of moving
people.
 MISIO
N
Offer our customers the
prestigious car brand
Toyota. Based on quality
delivery, after-sales
tracking and quality
service at reasonable
prices, to meet customer
needs with technological
support and quality, while
achieving a return for our
shareholders
KEY QUESTION
How the
revolutionary
production system
developed at
Toyota during the
quarter of a
century after 1950
paved the way for
the company’s
current success?
FLIPPING AND SKIMMING

Toyota: The Autor: Charles

evolution of the Number of Pages: W.L. Hill, the
Toyota Production 11 University of
System Washington

Case’s Content:
Introduction, The origins of Toyota, The evolution of the
Toyota production system
Distribution and customer relations, Overseas Expansion,
Transplants , Operations, Product Strategy, Toyota in 2001, 2
tables
 Today Toyota is the  The best and original
worlds third largest idea behind the founding
automobile company of the Toyota motor
with global production of company came from the
fertile mind of toyota
5.8 million vehicles and Takichi.
revenues of 108 billon
 In 1993 it was able to get
permission to set up and
automobile department
with in toyota automatic
loom.

BEGINNING OF ENDING OF THE

THE CASE CASE
 GENERAL TECHNOLOGY
ENVIRONMENT Demand at Capacity
• It is considered the most Operational Cycle Time
widely rolled-out Total Product Cycle Time
environment-friendly system
in the automotive industry to Line Balancing
date Kabans
LABELING

INDUSTRY
• The industry has been successful
from the day it was established.
• There are several strong brands
around the world so there are
High barriers of entry.
• Growing market and changing
consumer’s preferences.
LEGAL
• some countries impose
restriction on foreign countries to
enter their markets in order to try
to sustain the export and adopt
new precautions of the
competition law.

COMPETITION ECONOMICAL
• GENERAL MOTORS
• The innovation and lowest
• FORD
costs made that Toyota has
• NISSAN
an sustainable financial
• VOLKSWAGEN
situation.
• AUSTIN
• HONDA
PORTER ANALYSIS
Bargaining power • Low. There are various types of suppliers in the vehicles
industry, including the cooling system, electrical system, braking
of suppliers system and fuel supply system distributed across the globe.

• Medium. This mean that there are a lot of consumers but there’s
Bargaining power also a lot of substitutes or competitors so if the consumer doesn’t
agreed with the automobile,
of buyers
• Low. The entrants cannot enter to the automotive industry easily,
Threat of new as automobiles are special products that require a large amount
of money on the design, electronic functions, and safety issues
entrants
• High. The top eight auto companies have occupy large part of
Rivalry among global revenues, and these automobile manufacturers
strengthened the globalization and consolidation across the
competitors worldwide range

• Medium. There are a lot of substitutes to the automobile industry,

Threat of but the automobiles have especial advantages over the
substitutes that´s why the threats of substitutes is medium
substitutes
 • Flexible Production
• Quality, durability and reliability
• Strong management philosophy

S • Increased worker productivity

• Product strategy

• Idle time of workers while the dies are changing

• Long production creates Massive inventories and that had to be store.
• The lack of capital to build a manufacturer of automobiles in another country.
• The assemble line made that the workers had little incentive to minimize defects and if the initial machine

W settings were wrong, long production runs resulted in a production of a large number of defects.
• Capital expenditures in create components in- house for essential subassemblies and bodies.

• Growing market
• Changing customers preferences
• Lower wage scales in smaller firms
• Government support

O • Innovative work practices

• Increasing maintenance and oil costs

• New labor laws
• North American and Western Europe were establishing operations in Japan and Market saturation
• Japanese economy was starved of capital,that made it difficult to finance new investments.

T • Unknown new markets

 OPPORTUNITIES THREATS

TOWS
1) Growing market 1) Increasing maintenance and oil
2) Changing customers costs
preferences 2) New labor laws
3) Lower wage scales in smaller 3) Competitors and Market
firms saturation
4) Government support 4) Japanese economy
5) Innovative work practices 5) Unknown new markets

STRENGHTS SO Strategies: ST Strategies:

A) Flexible Production 5a. Apply the Kanban, a scheduling 5e. Learn about the needs of the
B) Quality, durability and system that helps to determined new markets and redesigned
reliability what to produce, when to several of its models based on
C) Strong management produce it, and how much to feedback of consumer surveys
philosophy produce, is a scheduling system and road test.
D) Increased worker productivity for lean and just-in-time (JIT)
E) Product strategy production.

WEAKNESSES WO Strategies: WT Strategies:

A) High cost of specialist 5d. Place a cord above every 3c. Joint venture with a competitor
workers. workstation and instructed that provided a chance to find
B) Massive inventories workers to stop the assembly out whether it could build cars.
C) The lack of capital to expand line if a problem emerged that
D) The assemble line could not be fixed. So the
E) High cost of create workers learn to identify and
components. resolve problems.
SUMMARY
TOWS
 Apply the Kanban
 Redesigned models according to new
markets
 Identify and resolve problems before
ending of the assemble line
 Joint venture with competitors
 IFE-MATRIX
WEIGHT RATING SCORE
STRENGHTS
Flexible Production 0,12 4 0,48
Quality, durability and
reliability 0,12 4 0,48

Management
philosophy 0,05 4 0,20

Worker productivity 0,14 3 0,42

Product strategy 0,10 4 0,40
WEAKNESSES
High cost of specialist
workers. 0,05 1 0,05

Massive inventories 0,05 2 0,10

Capital to expand 0,13 1 0,13
Assemble line 0,15 1 0,15
Cost of create
components 0,09 2 0,18

TOTAL 100/100 2,59

EFE-MATRIX WEIGHT RATING SCORE
OPPORTUNITIES
Growing market 0,13 4 0,52
Changing customers
0,10 3 0,30
preferences
Wage scales in smaller
0,12 2 0,24
firms
Government support
0,08 2 0,16

Innovative work
0,09 4 0,36
practices
THREATS
Increasing
maintenance and oil 0,07 3 0,21
costs
New labor laws 0,05 3 0,15
Competitors and
0,12 4 0,48
market saturation
Japanese economy 0,12 2 0,24
Unknown new markets
0,12 3 0,36

TOTAL 100/100 3,02

SUMMARY
IFE – EFE
 The Internal – External Matrix shows
that Toyota is a strong company in the
automobile industry and the analysis
recommended that Toyota should keep
growing and building to reach the Vision.
The Toyota Company should take
advantage of its efficient production
system, innovation, brand internationally
known and the growing market situation
SPACE-MATRIX
Internal Strategic Position
Y
FINANCIAL (FS)
+6 best, +1 worst
(+6) Work Strategy
(+4) Market Share
(+3) Capital to expand
(+5) Total Revenue
(+3) Export Sales
Avg. = 4.2
X
COMPETITIVE (CA)
-1 best, -6 worst
(-3) Low Price
(-2) Variety
(-2) Control over supplier
(-1) Productivity
(-1) Product Quality
Avg. = -1.8
External Strategic Position
ENVIRONMENTAL (ES)
-1 Best, -6 Worst
(-2) Demand Variability
(-4) Competitive pressure
(-3) Competition Price
(-3) Barriers to entry
(-1) Growing demand
Avg. = -2.6
INDUSTRY (IS)
+6 best, +1 worst
(+6) Growth potential
(+6) Profit potential
(+2) Ease of entry
(+5) Productivity
(+6) Resource Utilization
Avg. = 5
SPACE-MATRIX
SUMMARY
SPACE
 Toyota is has a strong competitive
position in the market with rapid growth.
It needs to use its internal strengths to
develop a market penetration and
market development strategy. This can
include product development, integration
with other companies and acquisition of
competitors.
 ALTERNATIVES
ALTERNATIVE PROS CONS
Kanban system Determined what to Disruptions with workers
produce, when to Cost of capacitating
produce it, and how
much to produce
Joint venture with Facilities to expand to Trust Issues
General Motors America and build quality
cars.
Deal with American
Union
Redesigned models Successful enter to new Additional invest in
according to new markets technology
markets Increase revenues High cost of market
research
RECOMMENDATION
 Toyota has to keep the same innovation,
productivity and commitment level as they
did at the beginning, the
 Toyota model of production has been
globally recognized because the strategies
that had applied are correct and it success
and utility taking advantage of all their
recourses and with a low general cost.
 The vision is too ambitious and the people
who work in TOYOTA believe in it, that’s
why they work so hard to reach it.