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Saturday, January 29, 2005

Toyota : The Automobile Manufacturer In Front

Economist magazine just published an excellent article about Toyota's splendid success story. Excerpts with edits:

- Half of the three million increase in global industry output since 2000 came from Toyota.
- Toyota will soon be making more cars abroad than at home. It has overtaken Ford in global production terms and is set to pass Chrysler in sales to become one of America's Big Three. - In an industry , where hardly any volume producer makes a real return on its capital, Toyota is exceptional in that it consistently makes good returns.
- Market capitalisation says it all. Toyota is worth more than the American Big Three put together, and more than the combination of its successful Japanese rivals, Nissan and Honda- Toyota taught the modern car industry how to make cars properly. At the core of TPS is elimination of waste and absolute concentration on consistent high quality by a process of continuous improvement (kaizen). The catchy just-in-time aspect of bringing parts together just as they are needed on the line is only the clearest manifestation of the relentless drive to eliminate muda (waste) from the manufacturing process. The world's motor industry, and many other branches of manufacturing, rushed to embrace and adopt the principles of TPS .
- Toyota's success starts with its brilliant production engineering, which puts quality control in the hands of the line workers who have the power to stop the line or summon help the moment something goes wrong. Walk into a Toyota factory in Japan or America, Derby in Britain or Valenciennes in France and you will see the same visual displays telling you everything that is going on. You will also hear the same jingles at the various work stations telling you a model is being changed, an operation has been completed or a brief halt called.Everything is minutely synchronised; the work goes at the same steady cadence of one car a minute rolling off the final assembly line. Each operation along the way takes that time. No one rushes and there are cute slings and swivelling loaders to take the heavy lifting out of the work. But there is much more to the soul of the Toyota machine than a dour, relentless pursuit of perfection in its car factories.

- Spend some time with Toyota people- there is something different about them. The rest of the car industry raves about engines, gearboxes, acceleration, fuel economy, handling, ride quality and sexy design. Toyota's people talk about “The Toyota Way” and about customers. - There is one more ingredient that adds zest to all these. Toyota people always put themselves “outside the comfort zone”: whenever they hit one target, they set another, more demanding one. That relentless pursuit of excellence certainly explains much of what has been happening to the company in recent years, at home and abroad.
- In 1980 Toyota had 11 factories in nine countries; in 1990 it had 20 in 14 countries; today it has 46 plants in 26 countries. In addition, it has design centres in California and in France on the Côte d'Azur, and engineering centres in the Detroit area and in Belgium and Thailand.Such international growth and globalisation is the biggest change happening to the company.
- The greatest challenge is maintaining Toyota's high standards in such areas as quality while it grows so fast across the globe. For Toyota has only recently started to transform the way it is run to make itself a truly global company rather than a big exporter with a string of overseas plants.
As GM's bonds sink towards junk status, and as Japanese carmakers steadily overhaul America's Big Three, it must be a chilling thought that Detroit's nemesis is working on ways to improve its performance.

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