Last month each of us was asked to prepare a 30 page handwritten
assignment on a company of our choice by Pundir Sir. A month later, our batch
now has a compendium of 145 companies, Indian and International.
Last week Prasad Sir had an idea – why don’t we open up our research to
the world? Let them visit our blogs to find information about their dream
company.
So here I am.
Overview
Toyota Motor Corporation is a multinational automaker headquartered in
Toyota, Aichi, Japan. In 2010, Toyota employed 317,734 people worldwide, and
was the world’s largest automobile manufacturer in 2010 by production. Toyota
is the 9th largest company in the world by
revenue.
The company was founded by Kiichiro Toyoda on 28th August, 1937 as a spinoff from his father’s company, Toyota Industries.
Following is a brief overview:
Key People: Fujio Cho
(Chairman)
Akio Toyoda (President and CEO)
Parent: Toyota
Group
Divisions: Lexus
Scion
Subsidiaries: Toyota India
Hino Motors, Ltd.
Daihatsu Motor Company Ltd
Toyota Financial Services
DENSO
Toyota Industries
Fuji Heavy Industries
Production: 7,308,039 units
Output
Revenue:
18.583 Tn Yen
Operating: 355.62
Bn Yen
Income
Profit:
283.55 Bn Yen
Total Assets: 30.650 Tn Yen
Total Equity: 10.550 Tn Yen
This phase of Toyota’s evolution was characterised by the foresight of
its founders. They first started a textile company and invented an automatic
handloom machine. After a trip to Europe, they realised that the future lies in
car-making. They sold the patent to their handloom and started the Toyota Motor
Corporation.
The Organisation – the Philosophy
Toyota’s organisation structure is a highly centralized one. It is a
family concern. Toyota’s board consists of 29 Japanese men, all of them company
insiders. The decision making is also rigid, with information flowing only one
way, back to Japan where all the decisions are made. Also, every country where
Toyota has an office in, has a Japanese boss. Such rigid power structure
results in a very high reaction time of the company to any issue that arises.
An example of this is the 8 Mn recalls it had to conduct in 2008 due to
unintended acceleration. No employee was authorized to make a decision like
this in any country. The company responded only when its US operations were in
jeopardy – it was confronted by Transportation Secretary Ray LaHood.
The company expanded rapidly in the 90s. Now we must understand that
Toyota had institutionalized what Japanese culture teaches – high discipline
and low wastage. But as the company grew, it was stretched across the globe.
Now each culture has its own way of working. So obviously Toyota’s culture was
diluted and the one thing it was built on was lost – reliability; and the rest
is history.
An other side of the story is the way it institutionalized culture.
Toyota has been hailed as the pioneer of the JIT, or Just In Time production system. Its founder,
Kiichiro Toyoda, wrote a book called The Toyota Way back in the 50s, and to this day that book is studied and applied,
either directly or indirectly, in almost every manufacturing concern in the
world.
The Toyota Way, and the resultant Toyota Production System, tries to design out overburden
(muri) and inconsistency (mura), and to eliminate waste (muda). There are seven kinds of muda that are
addressed in the TPS:
1. Waste of overproduction (largest waste)
2. Waste of time on hand (waiting)
3. Waste of transportation
4. Waste of processing itself
5. Waste of stock at hand
6. Waste of movement
7. Waste of making defective products
The elimination of waste has come to dominate the thinking of many when
they look at the effects of the TPS because it is the most familiar of the
three to implement. In the TPS many initiatives are triggered by inconsistency
or overburden reduction which drives out waste without specific focus on its
reduction.
This system, more than any other aspect of the
company, is responsible for having made Toyota the company it is today. Toyota
has long been recognized as a leader in the automotive manufacturing and
production industry.
It is a myth that "Toyota received their inspiration for the
system, not from the American automotive industry (at that time the world's
largest by far), but from visiting a supermarket." The idea of
Just-in-time production was originated by Kiichiro Toyoda, founder of Toyota. The question was how to
implement the idea. In reading descriptions of American supermarkets, Ohno saw
the supermarket as model for what he was trying to accomplish in the factory. A
customer in a supermarket takes the desired amount of goods off the shelf and
purchases them. The store restocks the shelf with enough new product to fill up
the shelf space. Similarly, a work-centre that needed parts would go to a
'store shelf' (the inventory storage point) for the particular part and 'buy'
(withdraw) the quantity it needed, and the 'shelf' would be 'restocked' by the
work-centre that produced the part, making only enough to replace the inventory
that had been withdrawn.
While low inventory levels are a key outcome of the Toyota Production
System, an important element of the philosophy behind its system is to work
intelligently and eliminate waste so that only minimal inventory is needed.
Many American businesses, having observed Toyota's factories, set out to attack
high inventory levels directly without understanding what made these reductions
possible. The act of imitating without understanding the underlying concept or
motivation may have led to the failure of those projects.
Jidoka, in Japanese, means
automation. At Toyota, it means “Automation with a human touch”. This principle of designing equipment and processes to stop and call
attention to problems immediately when someone senses a problem is a central
concept of TPS.
Following the TPS involves continuous improvement
and innovation by continuously optimizing the thought
processes that go into designing
business solutions. Its principle of Genchi
Genbutsu emphasizes
going to the source to find the facts and then making correct decisions.
Vision and values
One of the work ethics Toyota follows is basing the management decisions on a long term philosophy, even at the
expense of short-term financial goals.
On these lines, Toyota adopted the Global Vision 2020 in 2007, based on
its guiding principles:
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.
Through our commitment to quality,
constant innovation and respect for the planet, we aim to exceed expectations
and be rewarded with a smile.
We will meet challenging goals by
engaging the talent and passion of people,
who believe there is always a better
way.
I recently read that a vision statement must be unattainable and
inspirational; unattainable so as to make it everlasting, to make people
continuously in pursuit of it.
Product and Market Mix
 |
| Toyota RAV4 Electric |
 |
| Toyota Prius Hybrid |
 |
| Toyota Corolla |
 |
| Toyota 4Runner |
 |
| Toyota Pickup |
Toyota’s product line, across geographies and models, consists of Electric Technology, Cars, SUVs, Crossovers, Electric Hybrid vehicles and Pickup Trucks. It also sells Plug-in Hybrids and All electric vehicles.
Its manufacturing facilities are spread across the globe. It has
manufacturing facilities in North America (Toyota Motor North America) and
Canada. It also has nine manufacturing plants in Europe (Toyota Motor Europe):
UK, France, Portugal, Poland, Turkey, Russia and the Czech Republic.
 |
| Toyota Venza Crossover |
In India, Toyota operates in an 89:11 partnership with Kirloskar India
Ltd. (Toyota Kirloskar Motor Pvt Ltd). The company is headquartered in
Bangalore, Karnataka and has two plants there: at Bidadi and Bangalore. The
total manufacturing capacity of both the plants combined is
150,000 vehicles per annum. On 16th March, 2011 the company announced plans to hike production capacity to
210,000 units due ti high demand of its models Etios and Fortuner.
Toyota’s slowing global sales have put it behind GM into the no.2 worldwide
sales position. But GM’s advantage is tiny based on unit sales.
Toyota’s US market share is 13.3%, as against Japan
where it enjoys 45.8% of the market share. Toyota’s market share in India is a
measly 3%. However, Toyota plans to increase this figure to 10% in the next 6-7
yrs, hence the measures described above.
Corporate Social Responsibility
“Seeking Harmony between People, Society and the
Global Environment, and Sustainable Development of Society through
Manufacturing”
Toyota puts it like this in their own words:
We, TOYOTA MOTOR CORPORATION and our subsidiaries, take initiative to
contribute to harmonious and sustainable development of society and the earth
through all business activities that we carry out in each country and region,
based on our Guiding Principles.
We comply with local, national and international laws and regulations as
well as the spirit thereof and we conduct our business operations with honesty
and integrity.
In order to contribute to sustainable development, we believe that
management interacting with its stakeholders as described below is of
considerable importance, and we will endeavour to build and maintain sound
relationships with our stakeholders through open and fair communication.
We expect our business partners to support this initiative and act in
accordance with it.
We also participated in the formulation of and observe the standards
outlined in the Charter of Corporate Behaviour of the Nippon Keidanren (Japan
Business Federation), an alliance of Japanese leading corporations.
Awards and Distinctions
Toyota is known for its quality standards. Every year, JD Power and
Associates recognises the best assembly plants in the world. The competition is
fierce and Toyota has been a consistent winner.
It won the JD Power and Associates Gold Plant Quality Award in 1991,
1995, 1996, 2001, 2010 and 2012. In 2011, it also won the JD Power and
Associates Platinum Plant Quality Award.
Toyota production facilities took the top three Asia Pacific honours
including the Platinum Award, a global award that goes to the best plant
overall regardless of region, which went to Higashi-Fuji, Japan plant.
The Toyota nameplate finished sixth overall with 101 PP100 and had a 3
PP100 improvement. It also earned four segment awards overall. 4Runner was tied
Following are some links regarding the same:
Observations and Analysis
Any organisation is like a tree, whose values form the roots of the
organisation.
With huge expansions in the 1990s, Toyota lost touch with its culture in the overseas markets. A rigid
corporate structure, with control residing in Japan, made the matters worse.
The no. of recalls in 2008-09 suggests how far Toyota has moved from its
principles on a thought process level.
Going forward, Toyota must develop a system which can be followed across
boundaries to align its business units with its philosophy.
The decision making needs to change as well. Steps like reducing the
board of directors from 27 to 11 are a good start. The control needs to be passed on to regional heads
to capitalize on their regional knowledge and to improve reaction times.
Emerging markets present a huge opportunity, though they
still form only 40% of the company’s sales. However, Toyota must make the most
of it. In the markets where it already is a big player, it must aggressively
work on rebuilding its image as a reliable auto maker, something that helped it
surpass GM for a while in the later half of the last decade.
Whether or not this is going to work for the
company, no one really knows. However, it is a better plan than just sitting
around and waiting for the mess of recalls to fix itself, and by doing so they
are making a point to the public that they can bounce back and improve the
quality of their vehicles.
Total Links: 8
Videos: 1
Muda, Mura, Muri is part of Buddhism and also a popular phrase in Japan it seems. It is connected to Industrial Engineering and Productivity Management in Japan
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