Click here for Toyota history.
Click here for a list of Toyota plants in North America.
Why is Toyota successful? (The Toyota Production System)
Toyota is known for its reliable cars among the general public, but it has also been known in management and leadership circles for its unusual use of people. While most companies tend to make employee policies around the idea that people are lazy and expensive, at Toyota, labor strife is rare and people are an integral part of the quality process. The company’s only strike was in 1950, and resulted in a commitment to mutual trust.
Many credit Toyota’s success to aspects of the Toyota Production System, established by Taïchi Ohno and Shigeo Shingo from the late 1950s through 1970 (when it gained the name). It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects. The system is used worldwide, but is only one of the reasons for Toyota’s success.
Jidoka is not letting a defect go from one machine to the next, particularly in automated machinery; essentially, it adds the ability to detect unacceptable quality during the process of production rather than waiting until the end, when it may be hidden. The name itself is a Japanese pun on the term “automation,” adding the character for a person into the middle. Jidoka was actually implemented by the Toyoda power looms before Toyota was created. Jidoka both reduces costs and increases reliability.
Just-in-time production is the principle of having parts ready just as they are needed, rather than maintaining inventories across an assembly plant and in warehouses. Most writers tend to focus on the cost savings from having less capital tied up in inventory under this system, but there is another advantage: engineering changes (to increase reliability or functionality, or to cut cost) can take effect much more quickly, since stockpiles of parts do not need to be cleared out; and problems with individual parts can be detected much more quickly since they are used closer to the time they are made.
The system was partly a result of Ohno and Shingo's observations of American production. They looked at Ford with an objective eye, and saw problems with Ford's treatment of people as machines at best, and enemies at worst. (Ford, at that time, had a hired army complete with spies which would invade workers' homes to make sure they were living as good Christians, and beat them if they were suspected of union sympathies or were caught in the wrong place at the wrong time.) Quite aside from the humanitarian issues which were perhaps inevitable in a company founded by a man idolized by Adolph Hitler, Ford did not use the knowledge or expertise of its workers. Toyota would lead the world in that regard.
Ohno and Shingo also read the works of American and Japanese management experts, including Ishikawa, Deming, and Juran. They were impressed by the statistical quality control and quality circle approaches. Years before Pehr Gyllenhammar was to turn Volvo around, using similar techniques, Toyota organized around team development and cellular manufacturing. Using people as people, rather than ornery machines, also allowed for more flexibility than Ford's more automated approach would allow. This was to make rapid changes easier, also helping quality and increasing responsiveness to competitors.
Those who are interested in the original work of Taiichi Ohno and Shigeo Shingo may be interested in Ohno's work, Toyota Production System.
Note
The following sections are also found in the history page.
Toyota success today
Toyota participates in community activities, sponsoring educational and cultural programs as well as research.
Today, Toyota is the world's second or third largest manufacturer of automobiles in both unit sales and in net sales, and the #1 seller of retail vehicles in the US. In the United States, Toyota has roughly double the sales of Honda, and has replaced Chrysler Group as the #3 seller. It produces over 5.5 million vehicles per year, equivalent to one every six seconds.
It is worth noting that, while German automakers tend to use symbols and numbers, and Americans tend to throw away names frequently, Toyota sticks by a name as long as a car is successful, and doesn't toss names onto cars that don't fit them. The Land Cruiser started in 1950; the Corolla in 1966; the Celica in 1970; the Camry in 1983; the 4Runner in 1984. Notable "dropped" names include the Corona (with its tendency to die from severe rust), Cressida (dropped for the introduction of Lexus in the US), unpopular pickups (T100, HiLux, Compact Pickup), and minivans (Van, Previa).
Toyota Motor Corporation today
In April 2002, Toyota adopted the 2010 Global Vision, a vision for meeting mobility needs in a way that respects our earth and all people. It is made of long-term policies centered on the basic theme of 'innovation into the future.' Four key themes based on trends seen as developing from 2020 to around 2030 are:
- Toward a recycle-oriented society
- Toward the age of IT and ubiquitous networks
- Toward a mature society (the decline of nationalism and war and the rise of respectful exchange of ideas)
- Toward motorization on a global scale (societies with little private transport gaining more)
These are linked to the pursuit of a new global image for Toyota with four key components: kind to the earth, comfort of life, excitement for the world, and respect for all people. The encompassing motto of "innovation into the future" is "working with passion and dedication to create a prosperous society."
Who runs Toyota now?
As of May 2005:
- Hiroshi Okuda, Chairman. Born in 1933 - about the same time as Toyota itself - Hiroshi Okuda has been a member of the Board of Toyota Motor Corporation since 1982, and has been the Chairman of the Board since 1999. Mr. Okuda was the president of Toyota from 1995 to 1999, and is also a director of KDDI Corporation. Hiroshi Okuda joined Toyota in 1955, at about the time of the company's entrance to the United States market. He mainly worked in Toyota's international operations, and oversaw preparation of manufacturing plants in North America. He graduated from Hitostubashi University with a degree in business, and has a black belt in judo.
- Fujio Cho, President. Born in 1937 - not long after Toyota itself - Fujio Cho helped to speed Toyota's decision-making but cutting the number of board members in half, appointing three non-Japanese managing officers, and generally streamlining the management structure. He graduated from the University of Tokyo in 1960 and became a production specialist, mentored by none other than Taiichi Ohno. He opened the first Toyota-owned factory in America in 1988. He is a third dan in kendo.
- It is worth noting the martial arts experience of the two top Toyota leaders. Martial arts require discipline, patience, and study; American leaders tend to be lawyers and accountants with experience in obfuscation.
Toyota and the environment
Toyota is fairly well known for having the best-designed hybrid-electric car, the Prius, which former Chrysler engineer Evan Boberg claimed in 2004 was the only car that actually saved fuel because of its hybrid design rather than coincidental features (such as lighter weight, efficient tires, and such). But Toyota's commitment goes much further. Their Australian unit's Earth Charter notes four principles:
- Contribution towards a prosperous 21st century
- Aim for growth that is in harmony with the environment, and to challenge achievement of zero emissions throughout all areas of business activities and set as a challenge the achievement of zero emissions throughout all areas of business activity.
- Pursuit of environmental technologies
- Pursue all possible environmental technologies, developing and establishing new technologies to enable the environment and economy to coexist harmoniously.
- Voluntary actions
- Develop a voluntary improvement plan, not only based on thorough preventative measures and compliance laws, but one that addresses environmental issues on the global, national and regional scales, and promotes continuous implementation.
- Working in co-operation with society.
- Build close and cooperative relationships with a spectrum of individuals and organisations involved in environmental preservation including governments, local municipalities as well as with related companies and industries.
No environmental statement is meaningful unless it is actually followed - which is one reason why many are so angry at Ford, which made many brash promises, yet continued to push gas mileage downwards and fought even the slightest changes in Federal fuel economy requirements in the US. In Australia, and probably elsewhere in the world, Toyota has a balanced scorecard which notes specific outcomes and measures of environmental action, and uses a plan-do-check-act cycle to carry them out.
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