INTRODUCTION

Toyota Motor Corporation, a Japanese automotive

manufacturer headquartered in Toyota, Aichi, Japan, was founded by
Kiichiro Toyoda in 193 as a spino! from his father"s company
Toyota #ndustries$ %hi&e sti&& a department of Toyota #ndustries, it
created its 'rst product, the Type A (n)ine, in 193* and in 193+ its
'rst passen)er car, the Toyota AA$
#n the year ,-1,, Toyota was considered by the .#CA as the
wor&d"s 'rst automobi&e manufacturer to produce more than 1-
mi&&ion vehic&es a year, and in ,-13 accordin) to company data$
#n the year ,-13, Toyota was the &ar)est &isted company in
Japan by mar/et capita&i0ation and revenue$ As of this year, Toyota
is the 1*
th
&ar)est company in the wor&d by revenue$
Toyota Production System
Toyota has deve&oped an inte)rated approach to production which
mana)es the 1comp&ete e&imination of a&& waste1 in the most
e2cient manner whi&e ensurin) a hea&thy and safe wor/
environment$
The Toyota 3roduction 4ystem is bui&t on two main princip&es$ The
'rst is the 5Just6in6time5 production which focuses on the productivity
improvement$ 3roducin) qua&ity products e2cient&y throu)h the
comp&ete e&imination of waste, inconsistencies, and unreasonab&e
requirement on the production &ine$ #n each process produces on&y
1what is needed, when it is needed and in the amount needed71 The
second is the concept of 5Jido/a5 which refers to the abi&ity to stop
production &ines, by man or machine, in the event of prob&ems such
as equipment ma&function, qua&ity issues or &ate wor/$ Jido/a he&ps
prevent the passin) of defects, he&ps identify and correct prob&em
areas and ma/es it possib&e to bui&d qua&ity at the production
process$
Problems
There appear to be two root causes for Toyota"s qua&ity
prob&ems8 an out)rowth of mana)ement"s ambitions for rapid
)rowth and the resu&t of the increasin) comp&e9ity of the company"s
products$
#n 199:, ;iroshi ./uda"s appointment as the company"s new
president moved Toyota"s drive for )rowth into hi)h )ear$ ./uda,
/nown for his a))ressive e!orts to rema/e Toyota, desi)ned an
ambitious )&oba& )rowth strate)y /nown as <,--: =ision>$ #ts )oa& is
the rapid increase of Toyota"s )&oba& mar/et share from $3? in
199: to 1-? over the ne9t decade$ Toyota as we&& set a new tar)et
of 1:? by ,-1- but made di2cu&t because of the )&oba& 'nancia&
me&tdown$
The other root cause, the increasin) comp&e9ity of the company"s
products made it increasin)&y sophisticated both in terms of how the
products are desi)ned and manufactured$ @ecause of the
competitive pressure of producin) the best and comfortab&e cars,
the cha&&en)e for Toyota was intense$ @etween ,--- and ,--,
Toyota"s Aorth American sa&es increased from 1$ mi&&ion units to ,$9
mi&&ion units, and the company"s o!erin)s )rew from 1B to 3-
mode&s$
The combination of rapid )rowth and increased product
comp&e9ity has had maCor imp&ications for Toyota"s supp&ier
mana)ement system and its overa&& performance$ As much as
)rowth and comp&e9ity were at the root of Toyota"s recent qua&ity
prob&ems, any thorou)h ana&ysis wou&d a&so need to ac/now&ed)e
the ro&e of the company"s centra&i0ed mana)ement structure
because Toyota"s information and decision ma/in) has been hi)h&y
centra&i0ed$ The resu&tD Top mana)ement in Japan has been &ess
sensitive to the e9pectations of re)u&ators, cu&ture and po&itics in
overseas mar/ets, and consequent&y, they have been s&ower to
respond to &oca& prob&ems$