The start. The Toyota Motor Corp. (TMC) had its beginning in 1933 when it was established as a division within the Toyoda Automatic Loom Works, Ltd. The founder of Toyota was Kiichiro Toyoda (1894–1952), the son of Sakichi Toyoda (1867–1930). The values that have underpinned Toyota success startedwith Sakichi who was the son of a carpenter. Sakichi went from carpentry, which he had learned from his father, to making looms for weaving.
He then came up with many inventionsthat resulted in remarkable improvements in looms.
For example, by 1924 he had developed the famous “Type G” automatic loom, but not without much of that “hard work and persistence. ” One of the important features of Toyoda’s looms was a device that would automatically stop the loom should a thread break. This prevented any defective cloth from being produced. This concept of building into a machine features that prevent poor quality is know as jidoka and would become one of the TMC’s two “pillars” of the Toyota Production System (TPS)
According to Wikipedia (Sakichi Toyoda, 2006) Sakichi is often referred to as the “King of Japanese Inventors” and as the “father of the Japanese industrial revolution.
” Toyota Motor Corporation the name was changed from Toyoda to Toyota for three reasons: to differentiate the founders’ work from his personal life, ease of pronunciation to give the company a happy beginning as “Toyota” has eight strokes in katakana and eight is considered a lucky number in Japan. In 1926 Sakichi started the Toyoda Automatic Loom Works that, due to the superiority of the Toyoda looms, became highly successful.
Even today, Toyota produces highly praised spinning and weaving machines. However, to Sakichi’s credit he recognized that more than weaving machines, the automobile was the wave of the future. Therefore he encouraged his son, Kiichiro to get into the automobile business. Drawing on the resources of the Toyoda loom business, in 1930, Kiichiro began doing research into small gasoline-powered engines and, as mentioned, an automobile division was established within the Toyoda loom works in 1933. But it wasn’t just to increase the Toyoda fortunes that caused the elder Toyoda to encourage his son.
As quoted this is what Sakichi told Kiichiro: “Everyone should tackle some great project at least once in their life. I devoted most of my life to inventing new kinds of looms. Now it is your turn. You should make an effort to complete something that will benefit society. ” Which exemplifies another part of the Toyota philosophy that a company should always do what it can to better society. There was a lot of hard learning for Toyota in those early years: Toyota Motor Corporation struggled through the 1930s, primarily making simple trucks.
In the early years, the company produced poor-quality vehicles with primitive technology and had little success. But, with persistence in 1935 Toyota came out with its first prototype car, the A1. Early units broke down a lot, so customers were carefully chosen for loyalty. Aftermarket sale support was so strong that entire trucks were often replaced without question. Development and production engineers were loaned to dealers so that repairs could be done and so that the engineers could learn about what needed to be changed in production. And, in 1936 Toyota came out with its first production car, the Model AA Sedan.
In 1937 the Toyota Motor Co (TMC) was established as an independent company. One year later the first TMC plant started operations and the just-in-time system was launched on a full-scale basis This plant (Honsha), near Toyota’s head office in Aichi Prefecture (near Nagoya), is still operating making Land Cruisers. The 1940s. This was a time of dramatic change for Toyota. It was expanding rapidly trying to meet the demands of WWII and later the consumer market. During the Pacific War the company was dedicated to truck production for the Imperial Army.
Because of severe shortages in Japan, military trucks were kept as simple as possible. For example, the trucks had only one headlight on the center of the hood. Fortunately for Toyota, the war ended shortly before a scheduled allied bombing run on the Toyota factories in Aichi. Following the war, production returned to the needs of the consumer with the introduction of the SB small truck and the SA compact passenger car in 1947. That same year Toyota celebrated the production of its 100,000th vehicle. The 1950s. The 1950s were again a time of remarkable change for Toyota.
Two people now took on prominent roles in Toyota’s development: Eiji Toyoda and Taiichi Ohno. In a way one can say their contributions were “just-in-time. ” Towards the end of the 1940s Toyota was experiencing a severe cash flow problem. In trying to stave off bankruptcy, it called for strict cost cutting and a request for “voluntary” retirements. This led to a labor dispute that was only quelled when the president, Kiichiro, accepted responsibility and resigned. This personal sacrifice on the part of Kiichiro reflects one of the foundational elements of Toyota’s philosophy.
The philosophy of Toyota to this day is to think beyond individual concerns to the long-term good of the company, as well as to take responsibility for problems. Kiichiro Toyoda was leading by example At this same time when Toyota was near collapse Eiji Toyoda and Taiichi Ohno were busy devising ways that the company could better compete with its American counterparts, Ford and GM. Towards this end Eiji, who had been given a leading role in the company, visited U. S. plants to learn the secret of their success.
What he found was both good and bad: the good was the continuous flow system of the assembly line, the bad was the batch and queue system of making parts. Large companies like Ford and GM could afford to make a lot of one part at one time and have huge inventories of it sitting around to be used, Toyota didn’t have that luxury. This led Eiji and Taiichi Ohno (a production genius) to continue perfecting the just-in-time system with the idea of not making and delivering a part to the assembly line until it is called for; in other words, a “pull” system. About this time Toyota began applying some of W.
Edwards Deming’s ideas such as everyone being responsible for meeting the customer’s expectations, the idea of an internal customer, the PDCA cycle – Plan, Do, Check, Act (PDCA) cycle is a way of approaching almost any task: based on “customer” expectations, plan the task, then do it, then check to see how well the results conform to what the customer wanted, finally act to improve the results , and kaizen (continual incremental improvement). In fact, in 1965, Toyota won Japan’s top quality award named after Deming. As these ideas were adopted and put into practice, the now famous ToyotaProduction System (TPS) gradually emerged.
By the 1960s, TPS was a powerful philosophy that all types of businesses and processes could learn to use, but this would take a while. Toyota did take the first steps to spread “lean” by diligently teaching the principles of TPS to their key suppliers. The 1950s saw Toyota, despite its earlier difficulties, continue to come out with new models of cars and trucks such as the famous Crown introduced in 1955. In fact by 1955 Toyota was making 8,400 cars per year and 600,000 cars per year by 1965. Some other notable events that took place during the 1950s were.
The Publica—for “Public Car”—was small, cheap, economical, and plain. It fact it proved too plain for a Japanese public that was moving upscale faster than Toyota realized. So Toyota, in typically fashion, reacted to give the customer what he or she wanted, the famous Corolla. It was sized between the Publica (700cc) and Corona (1500cc), looked classy, had modest power, yet was economical and inexpensive. The Corolla was announced in 1966 and by March 1968 more than 3,000 were being exported every month. In fact, once it was introduced into America in 1968 with its selling price of $1,800, sales there grew at a rapid pace.
According the Union of Japanese Scientists and Engineers (JUSE) When it is recognized that an applicant’s implementation of TQM has improved substantially beyond the level at the time it won the Deming Application Prize, the company is awarded the Japan Quality Medal. This was also the decade when Toyota came out with the Celica, it’s popular sports car. In 1965 Toyota produced the sporty but small Sports 800, and then in 1967 a much beefier 2000GT. Some other models that came out during the 1970s were: Carina (now Allion), Light Ace, Publica Starlet, Town Ace, Chaser, Tercel, and Corsa.
By 1972 Toyota had produced its ten millionth vehicle domestically and cumulative exports reached five and ten million units respectively in 1975 and 1979. The 1980s. Toyota’s production and sales continue to soar. By 1985 cumulative exports had reached 20 million units and by 1986 Toyota had produced its 50 millionth vehicle domestically . The New United Motor Manufacturing, Inc. (NUMMI) was established as a joint 50/50 venture with GM to reactivate a GM plant in Fremont, California. This huge plant continues to this day as a benchmark against which other U. S. plants measure themselves.
By 1994 annual overseas output had exceeded one million units and was on the rise . Toyota would continue to add new brands to its line up such as the Estima, Windom, RAV4, Avalon, Harrier, and, most significantly, the Prius hybrid. In fact, introduction of the Prius in 1997 was to change the auto industry for all time, as it was a radical departure from the use of a gasoline or diesel engine only to power the vehicle. Now a gasoline engine would be coupled with a battery- powered electric motor to improve the car’s fuel mileage. But the Prius didn’t start as a hybrid.
In the early 1990s there was concern that Toyota needed to begin thinking about how it could do a better job of developing and manufacturing cars as the company moved into the 21st century. This concern then morphed into the Global 21 (G21) project to build a car that was just the opposite of the gas-guzzlers of the time. In fact the challenge was to build a car that was relatively small yet roomy inside and with radically better fuel economy. The initial goal was for a 50% improvement over the then current fuel economy. In 1994 management changed this to 100%.
Given the state of technology at the time, this essentially eliminated everything except a hybrid gas/electric power combination. Once the hybrid concept was decided on, the project began to move along, not a little influenced by Hiroshi Okuda, who became Toyota’s president in 1995. When Okuda asked about when the G21 would be ready he was told the development team was “aiming for December 1998, ‘if all goes well. ” To which Okuda replied: “That is too late; no good. Can you get it done a year earlier? There will be great significance in launching the car early.
This car may change the course of Toyota’s future and even that of the auto industry. ” So the target launch date was now December 1997. As related in Liker, remarkable, even heroic efforts allowed the engineering team to not only meet that date but also better it by two months with an October 1997 launch 1998: Toyota Motor Manufacturing Indiana, Inc. (TMMI, Inc. ) starts operations—current main products: Tundra truck, Sequoia, Sienna. Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) starts operations—current main products: engines, transmissions. Toyota Motor Tohoku, Inc. tarts operations—current main products: mechanical and electronic parts. The 2000s. The 2000s might be described as the decade of globalization for Toyota.
Toyota today. Toyota Motor Corporation is one of the world’s leading auto manufacturers, offering a full range of models, from minivehicles to large trucks. Global sales of its Toyota and Lexus brands, combined with those of Daihatsu and Hino, totaled 8. 12 million units from January 1, 2005 to December 31,2005. Besides its own 12 plants and a number of manufacturing subsidiaries and affiliates in Japan, Toyota has 53 manufacturing companies in 27 countries and regions, which produce Lexus- and Toyota-brand vehicles and components.
As of March 2005, Toyota employs approximately 265,800 people worldwide (on a consolidated basis), and markets vehicles in more than 170 countries. Toyota’s automotive business, including sales finance, accounts for more than 90% of the company’s total sales, which came to a consolidated ? 18. 55 trillion14) in the fiscal year to March 2005. Its diversified operations include telecommunications and prefabricated housing. Having somewhat briefly covered the history of Toyota let’s now look at what makes Toyota tick so successfully. 3. The Toyota Way This section is based on the work of Dr.
Jeffrey K. Liker, which he published in his 2004 book The Toyota Way. Liker is a Professor of Industrial and Operations Engineering at the University of Michigan (Ann Arbor) and has been studying Toyota for more than twenty years. The basic idea of Liker’s Toyota Way is that there is much more to Toyota’s success than the commonly accepted view that it is due to the Toyota Production System (TPS). As we shall see, the TPS is only a part of the Toyota Way. Having just reviewed Toyota’s history we have already picked up some clues as to why Toyota has been successful besides practicing its TPS.
Take, for example, Sakichi Toyoda’s and son Kiichiro’s belief in hard work and persistence, and that they should think longterm and be contributing to the good of society. Take also the example of Kiichiro accepting responsibility for the company’s troubles in 1950 and stepping down from the presidency. Take also the almost heroic efforts that went into the Lexus and Prius developments demonstrating Toyota’s stick-to-itiveness in tackling the toughest problems until they are solved. These examples are but a few reflecting the Toyota Way that has becoming the very fabric of the company’s culture.
We will now take a look at the fourteen principles that comprise Liker’s Toyota Way. To add some structure to these fourteen principles, Liker came up with his “4P” model. The 4Ps are: Philosophy, Process, People & Partners, and Problem Solving. Associated with each P is one or more principles thusly: Philosophy (Long-Term Thinking) Principle 1: Base your management decisions on a long-term philosophy even at the expense of short-term financial goals. Process (Eliminate Waste) Principle 2: Create continuous process flow to bring problems to the surface.
Principle 3: Use “pull” systems to avoid overproduction. Principle 4: Level out the workload (heijunka). (Work like the tortoise, not the hare. ) Principle 5: Build a culture of stopping to fix problems to get quality right the first time. Standardized tasks are the foundation for continuous improvement and employee empowerment. Principle 7: Use visual controls so no problems are hidden. Principle 8: Use only thoroughly tested technology that serves your people and processes. People and Partners (Respect, Challenge, and Grow Them) Philosophy (Long-Term Thinking)—One principle
Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. Principle 10: Develop exceptional people and teams who follow your company’s philosophy. Principle 11: Respect your extended network of suppliers and partners by challenging them and helping them improve. Problem Solving (Continuous Improvement and Learning) Go and see for yourself to thoroughly understand the situation (genchi genbutsu). Make decision slowly by consensus, thoroughly considering all options; implement decisions quickly.
Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Let’s now learn more about each principle and see how it has contributed to Toyota’s success. Process (Eliminate Waste)—Seven principles Point 1: Create constancy of purpose towards improvementof product and service, with the aim to become competitive and to stay in business,and to provide jobs. Principle 2: Create continuous process flow to bring problems to the surface. Continuous flow is the opposite of traditional batch and queue.
Companies often believe they can be the most efficient by making or working on as many of the same part as possible at the same time; i. e. , taking advantage of the economies of scale. Therefore a traditional manufacturing company might have separate departments for stamping, welding, assembly,etc. As Liker points out once you have set up your operation this way the next question is how do you move these batches from one department to another, and when? This means you need another system to plan all this, which also means adding to the non-value adding bureaucracy.
Applying this idea to manufacturing, the question became how to best signal the source of supplies for any operation when more supplies are needed. Thus was born the famous kanban system. A kanban is simply some device to signal the next upstream supply source that more of whatever it supplies is needed. Kanban in Japanese means card and a card of some sort is usually used along with a standard size container for that particular item. At the far right an operator is using up parts from a standardized container.
Once those parts are used up, the empty container, along with it “parts retrieval kanban” goes back to a nearby replenishment store for refilling and return to the operator. Of course while this replenishment is going on another erations. This is called “pull” because the operation is “pulling” what it needs versus having it being “pushed” on to it for use. As mentioned, in a traditional batch and queue operation a lot of parts are made or processed at the same time and then placed in an inventory and moved to wherever they’ll be used next waiting to be used. Obviously this creates a lot of waste.
Although in a mass production system, such as Toyota’s, it is not possible to have perfect one-piece flow, the idea of pull is applied to the maximum extent possible. The idea for this, as the story goes, came when Taiichi Ohno visited the U. S. in the 1950s and became fascinated by the way supermarkets operated. Instead of a lot of inventory being held by these stores, the customer was “signaling” what should be bought from the wholesalers and when it should be bought. This “signal” was simply how much of each item was bought requiring it to be replenished to the shelf.
Another example is the gas gauge in our car signaling us when it’s time to fill up. Similarly, when assembly line workers begin to use parts from bins (hinges, door handles, windshield wipers), they take out a kanban card and put it in a mailbox. A material handler will come on a timed route and pick it up and go back to a store to replenish what is used on the assembly line. Another material handler will replenish the store based on parts from a supermarket of supplier parts. This will trigger an order back to parts suppliers. And so on.
Muri is overburdening your people and machines and mura is unevenness. Although in the process of oing lean a company is trying to get the most out of its processes, this doesn’t mean pushing those processes beyond their natural capability (muri). However, this is what usually happens in a company because of the unevenness (mura) that exists. Say a company is making two products, a fairly large and complicated one and a less expensive, simpler one. The time and effort required to make the more complicated model will always be greater than the time and effort required for the simpler one.
Therefore, when there is strong customer demand for one model or the other the manufacturing process will either be overburdened or under burdened. That is, when trying to meet demand for the more complicated model every worker and machine will be overworked and when the demand shifts to the simpler model there will probably be a lot of “free time. ” This is especially true for “build-to-order” type of operations. In such cases companies will often have a lot of the most popular products being held in expensive finished product inventory.
Another reason for this unevenness is companies tend to build a lot of one model at a time due to the time it takes to set up the tools and equipment for another model. Primarily based on the pioneering work of Shigeo Shingo who worked closely with Toyota, previous setup times that were measured in hours are now measured in mere minutes. A lot of this was accomplished by carefully studying what was required to effect the changeover—for example of a large stamping press—and doing as much of it as possible while the press was still operating. It turns out that often there are only a few things that still need to be done to affect the changeover thus allowing it to be accomplished quickly.
To minimize mura and thus minimize muri and the muda it causes, Toyota practices heijunka. Heijunka means leveling to even out the workload as much as possible. This is also known as “balancing the line” Klein (2006), for mixed model assembly lines such as Toyota’s, a key factor is solving the model-sequencing problem. This means finding “a sequence of all model units to be produced such that inefficiencies (work overload, line stoppage,off-line repair, etc. are minimized. ” Given Toyota’s ability to meticulously plan everything, they have essentially solved this problem. Toyota’s ability to quickly affect changeovers also greatly contributes to heijunka. One of the benefits of this line leveling is the stabilizing affect it has on the whole supply chain.
When a supplier knows he or she can almost always depend on the schedule planned by Toyota, their operation too becomes “evener” as doesthat of his or her suppliers in turn, etc. Although heijunka may entail making some customers wait a little longer for the particular car they want, the net effect benefits everyone. However, even with heijunka in place, Toyota has been working to make it possible for dealers to call in with “last minute” changes so that many times any change “except for the basic body type” can be accommodated One way to think of heijunka is like the race between the tortoise and the hare. As quoted from Ohno (1988) in Liker: The slower but consistent tortoise causes less waste and is much more desirable than the speedy hare that races ahead and then stops occasionally to doze.
The Toyota Production System can be realized only when all the workers become tortoises. Principle 5: Build a culture of stopping to fix problems to get quality right thefirst time. The traditional approach to manufacturing by companies like GM and Ford has been to keep the assembly line running at all costs. On the surface this seems to make sense. However, it also causes and hides a lot of problems since to expect a complicated operation such as an automobile assembly line to operate problem-free for any length of time really makes no sense. Therefore Toyota goes to great lengths to create an operation that can stop when there is a problem. The idea is to not only prevent bad product but also solve the problem, be it a temporary aberration or something that could cause long-term quality problems.
This building of a system that has the inherent ability to prevent bad quality from being produced goes back to Toyota’s automatic loom origins when Sakichi Toyoda invented a loom that would automatically stop if a thread broke. Devices to either prevent a wrong operation or alert the operator when one has occurred are called poka-yoke or, in English parlance, fail-safe devices. There are many examples such as the third prong on most U. S. electrical plugs meant to ensure it is inserted so a proper ground occurs. Liker gives the example of a certain cotter pin that needs to be inserted in assembling an axel. A light curtain must be passed through when reaching for the cotter pin. If this doesn’t happen a light goes on. Signals such as this are called andon and are used throughout Toyota.
An andon is simply a signaling device and could be a light or an audible signal. For example, above the Toyota assembly lines are light boards that will light up to show which work station is having a problem so the team leader can quickly attend to that problem. The line worker usually activates these andon lights on Toyota’s assembly lines when he or she sees a problem. Furthermore when activated the assembly line is temporarily stopped. The worker is not only authorized to stop the line but also is expected to do so—almost the ultimate empowerment. At the same time a highly trained team leader will immediately step in to assess the situation and take whatever action is required.
The team leader has until the vehicle moves into the next workstation zone to respond, before the andon turns red [from white] and the line segment automatically stops. This is likely to be a matter of 15–30 seconds… In that time the team leader might immediately fix the problem or note it can be fixed while the car is moving into other workstations and push the button again, canceling out the line stoppage. Or the team leader might conclude that the line should be stopped. However, since the line is divided up into segments with buffer in between, up to 10 minutes could pass before the entire line has to stop. As rarely happens. When I visited a Toyota plant recently I noticed while we were watching an assembly line that the andon lights were often coming on but almost as often they were quickly turned off as each “proble