Professional Documents
Culture Documents
Bahria University
Page 15
Introduction
Ever since the company was founded in 1937, The TOYOTA MOTOR OR!ORAT"O# and their su$sidiaries %&TOYOTA'(, have continuous)y strived to contri$ute to the sustaina$)e deve)opment of society and the earth throu*h the manufacturin* and provision of hi*h+,ua)ity and innovative products and services- Throu*h these continuous efforts, they have esta$)ished a corporate phi)osophy that has $een passed down from *eneration to *eneration throu*hout the company and which has come to $e .nown as the &/uidin* !rincip)es at Toyota' %ori*ina))y issued in 1990, revised in 19971 the &/uidin* !rincip)es'- they have a)so put TOYOTA2s va)ues and methods in written form, in the &Toyota 3ay' %issued in 0441(- 5uch va)ues and methods must $e shared *)o$a))y amon* us to rea)i6e the &/uidin* !rincip)es' and they are see.in* to pass these on to future *enerations- Throu*h these efforts and $y !assin* down corporate phi)osophy and va)ues and methods, they are steadfast)y strivin* to rea)i6e the &creation of a prosperous society $y ma.in* thin*s'- TOYOTA has )on*+demonstrated its dedication to contri$utin* to sustaina$)e deve)opment- As their $usiness operations have $ecome increasin*)y *)o$a), they need to reconfirm their corporate phi)osophy and have issued an e7p)anatory paper in 8anuary 0449 entit)ed & ontri$ution towards 5ustaina$)e :eve)opment'- This paper interprets the /uidin* !rincip)es from the stand point of how TOYOTA can wor. toward sustaina$)e deve)opment in its interactions with its sta.eho)ders- They $e)ieve that $y imp)ementin* the /uidin* !rincip)es in operation, TOYOTA wi)) successfu))y fu)fi)) its e7pected contri$ution towards sustaina$)e deve)opment- Therefore, as stated in the /uidin* !rincip)es and e7p)anatory paper, we must comp)y with )oca), nationa) and internationa) )aws and re*u)ations, inc)udin* the spirit thereof, and act with humi)ity, honesty and inte*rityompared to when the & ode of onduct for Toyota Emp)oyees' was first issued in 199;, TOYOTA2s presence in society has *reat)y increased and a)so new )aws and re*u)ations have $een esta$)ished, such as for the protection of persona) data- 3ith this $ac.*round in mind, we have revised the e7istin* code of conduct and created the &Toyota ode of onduct' in order to communicate the fundamenta)
Bahria University
Page 15
approach necessary to inspire continued confidence in TOYOTA, to respect and comp)y with the )aws, and to maintain our honesty and inte*rity- " wou)d particu)ar)y )i.e to as. each one of you, as a person wor.in* for TOYOTA, to $e aware that you are an essentia) contri$utor to the success of TOYOTA- "n this era of *)o$a) competition, $order)ess trade, and diversification, TOYOTA wishes to conduct $usiness in an open and fair way- TOYOTA aims to $ecome the most va)ued, respected and trusted company in the wor)d $y its customers and societyAccomp)ishin* this *oa) re,uires that each one of us is aware of TOYOTA2s respected reputation and standin* in the community, the *ratitude their owe to customers and society, and the necessary respect of )aws and re*u)ations- Therefore, they must each act in a &steadfast, sure+ footed, and thorou*h' way, and in accordance with common sense and *ood <ud*ment- " e7pect and as. you to carefu))y read this &Toyota ode of onduct' and to imp)ement the spirit within March, 044=After the 5econd 3or)d 3ar, the distri$ution of 3or)d economic power was tota))y rearran*ed>efore the war, Europe and the ?5A ru)ed the wor)d mar.et- The mana*ement of 3estern companies was $ased on the @5cientific Mana*ement@ $y Arederic. 3ins)ow Tay)or %1;9=+ 1919( and on @Modern 5ocio)o*y@ $y Ma7 3e$er %1;=B+1904(- This inte))ectua) $asis characteri6es the $e*in of industria)i6ation, )ed to mass production and to tremendous productivity increases- Yet after the war, new p)ayers appeared on the p)ay*round, whose wor. was $ased on a phi)osophy, on methods and ru)es un.nown $efore- 3hi)st 3estern mana*ers turned to short+term thin.in* to satisfy shareho)ders and to end)ess restructurin*, the new actors concentrated on continua) improvement in the ,ua)ity of products, uniformity of processes and ,ua)ification of emp)oyees- Toyota is one of these new p)ayers, which despite the fierce competition due to e7cess production capacity in the automo$i)e industry of around 09 C outperforms 3estern competition in every aspect, in techno)o*ica) innovation, in customer satisfaction, in continuous *rowth and in profit- "n 044B Toyota passed Aord to $ecome he second )ar*est automo$i)e producer- >efore )on*, Toyota wi)) overta.e /enera) Motors $ecomin* the $i**est car company in the wor)d pro$a$)y havin* no )ess than 19C of the wor)d mar.et- Toyota wi)) prevai)- Most others wi)) have the choice $etween shrin.in* or sin.in*- This paper tries to shed )i*ht on the root causes of the Toyota !henomenon, which for some reason or
Bahria University
Page 15
another 3estern companies find so hard to understand and much )ess on how to app)y, despite their stru**)e for its surviva)-
FOUNDER OF TOYOTA
ran$e o! products and so"utions in the auto obi"e industry %ith the best peop"e and the
Bahria University
Page 15
0- Respect the cu)ture and customs of every nation and contri$ute to economic and socia) deve)opment throu*h corporate activities in the communities-
3- :edicate ourse)ves to providin* c)ean and safe products and to enhancin* the ,ua)ity of )ife everywhere throu*h a)) our activities-
B-
reate and deve)op advanced techno)o*ies and provide outstandin* products and services that fu)fi)) the needs of customers wor)dwide-
9- Aoster a corporate cu)ture that enhances individua) creativity and teamwor. va)ue, whi)e
7- !ursue *rowth in harmony with the *)o$a) community throu*h innovative mana*ement-
;- 3or. with $usiness partners in research and creation to achieve sta$)e, )on*+term *rowth and mutua) $enefits, whi)e .eepin* ourse)ves open to new partnerships-
9. The Toyota 3ay inc)udes a set of too)s that are desi*ned to support peop)e continuous)y
improvin* and continuous)y deve)opin*- Aor e7amp)e, one+piece f)ow is a very demandin* process that ,uic.)y surfaces pro$)ems that demand fast so)utions, or e)se production wi)) stop- This suits Toyota2s emp)oyee deve)opment *oa)s perfect)y $ecause it *ives peop)e the sense of ur*ency needed to confront $usiness pro$)ems- The view of mana*ement at Toyota is that they $ui)d peop)e, not <ust cars-
Bahria University
Page 15
)TPS*
Airst, of course, it tau*ht the modern car industry how to ma.e cars proper)y- Aew had heard of the Toyota !roduction 5ystem %T!5( unti) three academics in the car industry study pro*ramme run $y Massachusetts "nstitute of Techno)o*y %M"T( wrote a $oo. in 1991 ca))ed &The Machine that han*ed the 3or)d'- "t descri$ed the princip)es and practices $ehind the &<ust+in+time' manufacturin* system deve)oped at Toyota $y Taiichi Ohno- De in turn had drawn inspiration from 3- Edwards :emin*, an inf)uentia) statistician and ,ua)ity+contro) e7pert who had p)ayed a $i* part in deve)opin* the rapid+manufacturin* processes used $y America durin* the 5econd 3or)d 3ar- At the core of T!5 is e)imination of waste and a$so)ute concentration on consistent hi*h ,ua)ity $y a process of continuous improvement %.ai6en(- The catchy <ust+in time aspect of $rin*in* parts to*ether <ust as they are needed on the )ine is on)y the c)earest manifestation of the re)ent)ess drive to e)iminate mud waste( from the manufacturin* process- The wor)dEs motor industry, and many other $ranches of manufacturin*, rushed to em$race and adopt the princip)es of T!5- ToyotaEs success starts with its $ri))iant production en*ineerin*, which puts ,ua)ity contro) in the hands of the )ine wor.ers who have the power to stop the )ine or summon he)p the moment somethin* *oes wron*- 3a). into a Toyota factory in 8apan or America, :er$y in >ritain or Fa)entines in Arance and you wi)) see the same visua) disp)ays te))in* you everythin* that is *oin* on- You wi)) a)so hear the same <in*)es at the various wor. stations te))in* you a mode) is $ein* chan*ed, an operation have $een comp)eted or a $rief ha)t ca))ed- Everythin* is minute)y synchroni6ed1 the wor. *oes at the same steady cadence of one car a minute ro))in* off the fina) assem$)y )ine- Each operation a)on* the way ta.es that time- #o one ushers and there are cute s)in*s and swive)in* )oaders to ta.e the heavy )iftin* out of the wor.- >ut there is much more to the sou) of the Toyota machine than a dour, re)ent)ess pursuit of perfection in its car factories- Another triumph is the s)ic. product+deve)opment process that can ro)) out new mode)s in $are)y two years- As riva) ar)os /hosn, chief e7ecutive of #issan, notes in his $oo. &5hift' %a$out how he turned around the wea.est of 8apanEs $i* three(, as soon as Toyota $osses spot a *ap in the mar.et or a smart new product from a riva), they swift)y move in with their own version-
Bahria University
Page 15
The resu)t is a $ewi)derin* array of over =4 mode)s in 8apan and )oads of different versions in $i* overseas mar.ets such as Europe and America- Of course, under the s.in, these share many common parts- Toyota has )on* $een the champion of puttin* o)d wine in new $ott)esG over two+ thirds of a new vehic)e wi)) contain the unseen parts of a previous mode)- >ut T!5 a)one wou)d not <ustify the e7traordinary success of the company in the wor)d mar.et-
Bahria University
Page 15
Page 15
endowment $ut rather trou*h hard wor., perseverance and discip)ine- These few words summari6e the spirit, which 5a.ichi Toyoda handed over to his son Hiichiro Toyoda %1;9B+ 1990(, the founder of Toyota Motor and director of Toyota Motor ompany, his son 5hoichiro Toyoda, Donorary hairman orp-, and on to his nephew Ei<i Toyoda %K1913(, !resident of
Toyota from 19=7 to 199B- 5pend some time with Toyota peop)e and after a time you rea)i6e there is somethin* different a$out them- The rest of the car industry raves a$out en*ines, *ear$o7es, acce)eration, fue) economy, hand)in*, ride ,ua)ity and se7y desi*n- ToyotaEs peop)e ta). a$out &The Toyota 3ay' and a$out customers- "n truth, when it is written down the Toyota creed reads much )i.e any corporate mission statement- >ut it seems to have $een a$sor$ed $y 8apanese, European and American emp)oyees a)i.e- Mr- ho thin.s that somethin* of the uni,ue Toyota cu)ture comes from the fact that the company *rew up in one p)ace, Toyota ity, 34 minutes drive from #a*oya in centra) 8apan, where the company has four assem$)y p)ants surrounded $y the factories of supp)iers- "n this provincia), ori*ina))y rura) settin*, Toyota wor.ers in the ear)y days wou)d often have sma)) p)ots of )and that they tended after their shiftMrho, who made his career in the company $y $ein* a pupi) of Mr- Ohno and $ecomin* a master of production contro), thin.s that the fact that Toyota mana*ers and their supp)iers see each other every day ma.es for a sort of hothouse cu)tureL rather )i.e 5i)icon Fa))ey in its ear)y days- 8im !ress is $oss of ToyotaEs sa)es in #orth America- De )eft Aord in frustration 39 years a*o, $ecause he did not thin. it hand)ed customer re)ations proper)y and he suspected that the upstart 8apanese company ma.in* its way in the American mar.et mi*ht do $etter- De was ri*htToyota shares a production p)ant in a)ifornia with /M- "dentica) cars come off the )ine, some $ad*ed as /M, the rest at)asG after five years, accordin* to one study $y >oston onsu)tin* /roup, the trade+ in va)ue of the Toyota was much hi*her than that of the American mode), than.s to the *reater confidence peop)e had in the Toyota dea)er and service networ.- Mr- !ress ta).s with a ,uiet, a)most re)i*ious, fervor a$out Toyota, without mentionin* cars as such- &The Toyota cu)ture is inside a)) of us- Toyota is a customerEs company,' he says- &Mrs- 8ones is our customer1 she is my $oss- Everythin* is done to ma.e Mrs- 8onesEs )ife $etter- 3e a)) wor. for Mrs- 8ones-' >ut not even the com$ination of its wor)d )eadin* manufacturin*, rapid product deve)opment and o$sess iona) devotion to customer satisfaction is enou*h to e7p)ain ToyotaEs endurin* success- There is one more in*redient that adds 6est to a)) these- Tetsuo A*ata dou$)es as *enera) mana*er of ToyotaEs Donsha p)ant in Toyota ity and as the companyEs overa))
Bahria University
Page 15
manufacturin* *uru- The ma*ic of ToyotaEs winnin* cu)ture was summed up for him $y an American friend who o$served that Toyota peop)e a)ways put themse)ves &outside the comfort 6one'G whenever they hit one tar*et, they set another, more demandin* one- That re)ent)ess pursuit of e7ce))ence certain)y e7p)ains much of what has $een happenin* to the company in recent years, at home and a$road-
-ust.In.Ti e )-it*
8ust+in+time %8"T( production or so+ca))ed )ean manufacturin*- The pioneers of these methods were Taiichi Ohno, a former Toyota e7ecutive, and 5hi*eo 5hin*o, an eminent en*ineer and consu)tant- "n his 19;9 $oo. The 5tudy of the Toyota !roduction 5ystem from an "ndustria) En*ineerin* !erspective, 5hin*o identified these $asic features of T!5G 1- "t achieves cost reductions $y e)iminatin* waste, $e it staff time, materia)s, or other resources0- "t reduces the )i.e)ihood of overproduction $y maintainin* )ow inventories %@nonstoc.@( and .eeps )a$or costs )ow $y usin* minima) manpower-
Bahria University
Page 15
3- "t reduces production cyc)e time drastica))y with innovations )i.e the 5in*)e+Minute E7chan*e of :ie %5ME:( system, which cuts downtime and ena$)es sma))+)ot productionB- "t emphasi6es that product orders shou)d *uide production decisions and processes, a practice .nown as order+$ased production-
0A1,E A22E2
T!5 and simi)ar 8apanese manufacturin* techni,ues distin*uish $etween activities that add va)ue to a product and those that are )o*istica) $ut add no va)ue- The primaryLeven the so)eLva)ue+ added activity in manufacturin* is the production process itse)f, where materia)s are $ein* transformed into pro*ressive)y functiona) wor. pieces- Most other activities, such as transportin* materia)s, inspectin* finished wor., and most of a)), id)e time and de)ays, add no va)ue and must $e minimi6ed- 3hen processes are e7amined for potentia) improvements and cost cuttin*, reducin* non+va)ue+added activities is often the hi*hest priority- onverse)y, processes that add the most va)ue, even if they are e7pensive, wi)) usua))y not $e compromised to achieve )ower costs at the e7pense of ,ua)ity-
Bahria University
Page 15
3ua"ity by 2esi$n
Another feature thou*ht to $e definin* in 8apanese manufacturin* is a mar.ed attention to ,ua)ity throu*hout the production process- 5pecifica))y, under the inf)uence of such )uminaries as 3Edwards :emin* and 8oseph M- 8uran, 8apanese manufacturers have sou*ht to achieve ,ua)ity $y desi*nin* it into the production process rather than simp)y tryin* to catch a)) the errors at the end- As noted, po.a+yo.es can serve this function either $y ha)tin*Mcorrectin* a fau)ty process or $y a)ertin* a wor.er to a pro$)em as it occurs- 3hi)e p)enty of traditiona), defect+monitorin* sorts of ,ua)ity contro)s are sti)) used, phi)osophies such as T!5 ho)d that the resu)ts of ,ua)ity inspections shou)d $e used to informLand improveLthe manufacturin* process, not <ust to descri$e it- This means the feed$ac. from a ,ua)ity inspection is e7pected to $e immediate and, often, to resu)t in some chan*e in the process so that the )i.e)ihood of simi)ar pro$)ems in the future is reduced-
Order.4ased Production&
A natura) and necessary e7tension of the non+stoc. *oa) is that manufacturers need specific customer information to drive their production decisions- O$tainin* this information necessitates effective mar.et researchMforecastin* and communication with customers- As much as possi$)e, production under the 8apanese system is *uided $y actua) orders, rather than anticipated demand $ased on )ess re)ia$)e information such as past sa)es- The order+$ased system is said to provide production @pu))@ from the actua) mar.et, as opposed to @push@ that stems on)y from the manufacturerEs con<ecture-
Transportation&
The Toyota !roduction 5ystem a)so reco*ni6es waste in the e7cess movement of items or materia)s- "n *enera), the more transportation re,uired, the )ess efficient the process, since movin* *oods $ac. and forth is norma))y not a va)ue+addin* procedure- Transport waste is usua))y addressed $y chan*in* the )ayout of a factory, its *eo*raphic )ocation re)ative to its customers, and so forth- 3hi)e sometimes transportation pro$)ems can $e miti*ated throu*h automation, the idea) under the 8apanese system is to minimi6e it a)to*ethermanufacturin* )ayouts are one approach to contro))in* transport wasteBahria University
Page 15
Mar5et.2ri/en Pricin$
"n contrast to the traditiona) practice of settin* prices $y mar.in* up some percenta*e over the cost of manufacturin*, the 8apanese system attempts to identify the mar.et+determined price for a *ood and then en*ineer the manufacturin* process to produce at this price profita$)y- ?nder this princip)e, increases in costs are not passed on to the consumer in the form of hi*her pricesAs a coro))ary, the on)y way for a firm to increase profita$i)ity is $y )owerin* costs1 )ower costs may a)so a))ow the company to $e profita$)e yet de)iver products at the )ow end of the pricin* spectrum, a practice centra) to the rise of the 8apanese auto manufacturers in the ?-5- mar.et-
+or5er 6"e7ibi"ity
Ma7imi6in* returns on human capita) is another *oa) of 8apanese manufacturin* practices:riven $y the theory that human time is more va)ua$)e than machine time, the 8apanese system attempts to optimi6e )a$or efficiency $y dep)oyin* wor.ers in different ways as order+$ased production re,uirements f)uctuate- The main two dimensions of this f)e7i$i)ity are s.i))s and schedu)in*-
1ean Princip"es
!recise)y define va)ue $y specific product"dentify the va)ue stream for each productMa.e the va)ue f)ow without interruptionsJet the customer pu)) va)ue from the producer!ursue perfection
Toyotas business practices differ from those of Western automobile manufacturers in a number of aspects
Operations are strict)y *overned $y a sustaina$)e $usiness po)icy, which is passed on from one *eneration to the other and not $y short+term decision ma.in* or $y the attitudes of chan*in* mana*ement teams and varia$)e customer tastes /rowth comes from the inside out and not throu*h mer*ers and ac,uisitions, in other words, *rowth throu*h continua) improvement of products and services and not throu*h continued restructurin*-
!roduction is contro))ed $y customer demand %&pu))' system( not $y production capacity %&push' system(-
Nua)ified emp)oyees are attracted with the possi$i)ity to participate in the company2s strivin* to meet and e7ceed customer e7pectations with products of unpara))e)ed ,ua)ity and not with compensation schemes- Toyota emp)oyees wor. for a winner- 3ho wants to wor. for an emp)oyer, whose products have to $e forced onto the customers with discounts and incentivesO 3ho wants to wor. for a )ooserO
#o unions are admitted which force $oth mana*ement and emp)oyees to defend their own interests and $y so doin* distract from the shared responsi$i)ity to satisfy customers-
Aor more than 94 years, Toyota e7perienced an e7traordinary history of continuous *rowth without ma<or )ayoffs
>ase your mana*ement decisions on a )on*+term phi)osophy, even at the e7pense of 5hort+term financia) *oa)sBahria University
Page 15
reate continuous process f)ow to $rin* pro$)ems to the surface>ui)d a cu)ture of stoppin* to fi7 pro$)ems, to *et the ,ua)ity ri*ht the first time5tandardised tas.s are the foundation for continuous improvement and emp)oyee Empowerment-
?se visua) contro) so no pro$)ems are hidden?se on)y a re)ia$)e, thorou*h)y tested techno)o*y that serves your peop)e and !rocesses-
/row )eaders who thorou*h)y understand the wor., )ive the phi)osophy, and teach it to others-
:eve)op e7ceptiona) peop)e and teams who fo))ow your company2s phi)osophyRespect your e7tended networ. of partners and supp)iers $y cha))en*in* them and he)pin* them improve-
/o and see for yourse)f to thorou*h)y understand the situation %*enchi *en$utsu(Ma.e decisions s)ow)y $y consensus, thorou*h)y considerin* a)) options1 imp)ement decisions rapid)y-
>ecome a )earnin* or*anisation throu*h re)ent)ess ref)ection %hansei( and continuous "mprovement %.ai6en(
Conc"usion
Bahria University
Page 15
As one of the )eadin* automo$i)e manufacturers in the wor)d, Toyota ran.s within the top three wor)dwide- :ue to their uni,ue $usiness mode), they are now havin* a mar.et share of 1BC in the first four months of this year- That is an astonishin* 0-3C <ump from the previous yearAccordin* to Autodata-com, the Toyota sa)es3e have determined that their $usiness mode) is an "nte*rated Jow ostO :ifferentiated ity $ased automa.er ran.s fourth in ?nited 5tates
5trate*y- "t invo)ves findin* the )owest operationa) cost a)on* with a uni,ue niche or strate*y that separates them from the competition- Toyota2s new statementO Movin* AorwardO Ref)ects their p)ans and e7pectations for the future- This inc)udes the .nown and the un.nown factors that a $usiness must face- "n 0444, Toyota )aunched a new cost effective strate*y ca))ed 01 % onstruction of ost ompetitiveness for the 01st century(, for Jow ost operationa) e7penses3ith this aspect Toyota p)ans to advance such initiatives *)o$a))y, $ased on its po)icy of purchasin* the wor)d2s $est parts at the )owest cost with the shortest )ead times-
8e!erences
www.toyota.co.uk http://www.enotes.com/biz-encyc ope!ia/"apanese-manu#acturingtechni$ues%e iminating-waste http://www.strategosinc.com/"ust&in&time.htm http://en.wikipe!ia.org/wiki/'he&'oyota&(ay http://www.springer ink.com/content/#)*+*,+$,-),.*1+/
Bahria University
Page 15
http://www+.toyota.co."p/en/vision/pro!uction&system/in!e-.htm http://www.1///ventures.com/business&gui!e/cs&e##iciency&toyota&ps.htm http://www.vorne.com/ earning-center/tps.htm http://www.swmas.co.uk/in#o/in!e-.php/'oyota-Pro!uction-0ystem1 http://www.toyo an!.com/history.htm http://www.toyota-europe.com/e-perience/the&company/in!e-.asphttp://homepages.ius.e!u/2345'46/'oyota7+/Pro"ect.htm http://www+.toyota.co."p/en/vision/in!e-.htm http://wape!ia.mobi/en/'he&'oyota&(ay http://www.toyota.co."p/en/csr/princip e/po icy.htm http://www.toyota.co."p/en/environment/communication/g ossary/g ossary&/+ .htm
Bahria University
Page 15