Process and Product Innovations of Toyota

Introduction

Established in 1937, Toyota Motor Corporation (TM) is currently the 8th largest company in the world. Its annual revenue hovers around US$186 million dollars and it hires a workforce of approximately 290,000 people worldwide.

Besides being a mammoth economic entity, Toyota has also influenced the world in many ways; Toyota is renowned for its amazing cost cutting initiatives as well as highly influencing corporate philosophies which permeates through every layer of TM. Put together, they are known as the Toyota Production System (TPS), and this radical process innovation strategy, though once scoffed upon by many industry insiders, has brought the standard of efficiency to new levels.

ToyotaЃfs Process Innovation

TPS is the essential framework and philosophy organizing ToyotaЃfs manufacturing facilities, and the interaction of these facilities with the suppliers and customers. Its main objective is to eliminate Muda, -Ñ-'К (waste), a term now familiar even with its American subsidiaries. As quoted by Bruce Bremer, facility engineering manager at ToyotaЃfs North America manufacturing system, ЃgWhereЃfs the Muda? Is it overtime? Reduce it. Is it your indirect material costs? Find out why your costs are higher than the benchmark and find ways to reduce them,Ѓh he said .

An important part of the TPS is the Just-in-Time (JIT) inventory system, which all of ToyotaЃfs manufacturing facilities are required to inculcate into their production lines. The JIT technique was actually first used by Henry Ford back in 1920s. However, it was adopted by Toyota in the 1950s and refined to an elevated level of efficiency, one that made it the worldЃfs leader in employing the JIT system.

JIT is the principle of having parts ready just as when they are desired, thus eliminating the need and more importantly the cost of holding inventory. Besides having less capital held up in inventory with the JIT system, more flexibility is also given to the facility as engineering improvements can also take place much more quickly, with no stockpile of parts needing to be cleared; problems with specific parts can be also be detected much more efficiently since they are used as soon as they are delivered.

Kaizen, ‰ÑŒ'P is the philosophical outworking of continuous improvement in the TPS. When the art of Kaizen is perfected, it goes beyond delivering improvements; it makes the workplace a warmer environment, reduces menial work, and teaches employees to do rapid experiments via scientific methods and to identify and hence eliminate the Muda within the business. It is applicable for anything from bottlenecks to neck soreness to soaring energy costs and everything in between. As put by Taiichi Ohno, TMCЃfs former executive vice president, ЃgSomething is wrong if workers do not look around each day, find things that are tedious or boring, and then rewrite the procedures. Even last monthЃfs manual should be out of date.Ѓh To date, Kaizen has become a hallmark of the TPS.

A specific example in which Toyota operates Kaizen is in its ЃgObeyaЃh methods of improvements. Obeya, which stands for big room, is where workers usually from different departments or even external stakeholders like suppliers meet face to face in a think-tank like meeting to suggest ways to improve efficiencies or pre-empt production problems. Prior to the production of the Avalon model, Toyota brought all of its key suppliers into a common workroom to identify problems and work out solutions. According to Mr. Nakao, executive chief engineer of Toyota Technical Centre (USA), this process has reduced the number of engineering changes that would otherwise emerge later in the project.

Jidoka, Ћ©"­‰» (human automation) is where Toyota combines the elements of the efficiencies of automation with the benefits of human intuition and passion. Within most TM manufacturing facilities, most of the productions take place not within long pathways of assembly lines, but in U-shaped work cells. The cells are conveniently grouped machines staffed with cross-trained operators. They are designed to minimize operation to complement the JIT system with minimum inventory, product handling and movement. Such a flow of work can be seen in the diagram shown below:

Besides the efficient blend of man and machine, Jidoka also encompasses other concepts to production. For example, under the Jidoka philosophy, one should fix a problem when it occurs, and not wait nor put off for a more convenient time. Secondly, it also consist of the belief that the person closest to the production process should typically know most about it and should hence possess the skills and knowledge to improve it or rectify problems.

What makes Toyota unique in its outworking of Jidoka is that it empowers ordinary workers with the authority and responsibility to ensure the quality of its products. Within most TM manufacturing facilities, each worker is given access to a switch that can be used to activate call lights to halt or slow production. Though frowned upon by people who didnЃft accept this new initiative, the Jidoka way of doing things quickly proved them wrong.

During the initial stages, line stops occurred almost hourly. But by the end of the first month, the rate had fallen to a few line stops per day. After half a year, such stops had such a minimal economical effect that an overhead pull-line was installed to permit any worker on the production line to order a line stop for a process or quality problem.

Even with this, line stops fell to a few per week. The result was a factory that became the envy of the industrialized world, and has since been widely emulated.

ToyotaЃfs Product Innovation

Toyota proved its devotion towards environmental preservation by setting up the Toyota Environment Committee in 1992, chaired by the president of Toyota Motor Corporation, Mr Katsuaki Watanabe himself. This committee meets at least twice a year, discussing issues such as exhaust emissions, fuel efficiency and even noise reduction.

With soaring crude oil prices and increasing awareness of environmental issues around the world, Toyota has been shifting its focus towards ЃecleanerЃf cars. Hybrid cars are cars that make efficient use of both an internal combustion engine and another source of energy, such as electricity. The harmful emission produced by a hybrid car is less than 10% of that produced by the average petroleum or diesel powered car.

For this reason, though having many product innovations in its myriad of models, we decided to focus on ToyotaЃfs foray in