The Toyota Phenomenon

The Toyota Phenomenon

How come the world's second largest automobile manufacturer grows continuously
and makes large profits whilst its biggest competitors fight for survival?
despite their
survival.

strugg-le

for

Summary

Introduction

After the Second World War, the

distribu-tion of World economic
power was totally rearranged.
Before the war, Europe and the
USA ruled the world market. The
manage-ment
of
Western
companies was based on the
"Scientific
Management"
by
Frederick Winslow Taylor (18561915) and on "Mo-dern Sociology"
by Max Weber (1864-1920). This
intellectual basis characterizes the
begin of industrialization, led to
mass production and to tremendous
productivi-ty increases.

Some of the headlines in recent

editions of the influential news
and business publica-tion The
Economist indicate that the European and American automobile
industry finds itself in deep
trouble. Here are just a few
samples:

Yet after the war, new players

appeared on the playground, whose
work was based on a philosophy,
on methods and rules unknown
before. Whilst Western mana-gers
turned to short-term thinking to
satis-fy shareholders and to endless
restructu-ring, the new actors
concentrated
on
con-tinual
improvement in the quality of products, uniformity of processes and
qualifi-cation of employees.
Toyota is one of these new players,
which
despite
the
fierce
competition due to ex-cess
production
capacity
in
the
automobi-le industry of around 25
%
outperforms
Western
competition in every aspect, in
technological
innovation,
in
customer
sa-tisfaction,
in
continuous growth and in pro-fit.
In 2004 Toyota passed Ford to
become the second largest
automobile producer. Before long,
Toyota will overtake General
Motors becoming the biggest car
compa-ny in the world probably
having no less than 15% of the
world market. Toyota will prevail.
Most others will have the choice
between shrinking or sinking.

This paper tries to shed light on

the root causes of the Toyota
Phenomenon, which for some
reason or another Western companies find so hard to understand
and much less on how to apply,

General Motors pays FIAT to

walk away

Raw nerves in Motown:

Making money remains
tough for America's big three
carmakers

Divorce Italian-style: Is
Fiat's marriage to General
Motors coming to a bloody
end?

Stuck
in
the
rough:
America's
car
gi-ants,
General Motors and Ford,
find Europe hard going

Detroit's big three in the

slow lane

The three Fs: Ford, Fiat and

Failure

The also-rans: Mitsubishi

and Mazda struggle, despite
Western partners

The End of Detroit: Shape up

or ship out

One hell of a birthday, Bill:

Ford cele-brates its 100th
anniversary, fighting for
survival

Extinction of the car giants:

Why America's car industry
is an endange-red species

In 2004, Volkswagen with its

brands VW, Skoda and Bentley lost
44 millions. Du-ring the same
period, the Volkswagen group
including also Audi, Seat and
Lamborghini lost in North America
alone
907 millions. Bernd
Pischetsrieder,
CEO
of
Volkswagen, attributes theses
problems to the econo-mic slump
in Europe resulting in a low de-

mand for cars, the fierce price

fights with huge discounts and
incentives in the US and so on. Are
these indeed the true rea-sons or is
it deliberate self deception or a
justification
for
blunt
mismanagement?
Despite the fierce competition
among the automobile producers due
to excess pro-duction capacities of
around 25 %, Toyota outperforms its
competition in every aspect,

in technological innovation, in
customer
satisfaction,
in
continuous growth and in profit. In
2004 Toyota passed Ford to become
the
second
largest
automobile pro-ducer. Before long,
Toyota will overtake General
Motors becoming the biggest car
company in the world probably
having no less than 15% of the
world market. Toyota will prevail.
Most others will have the choice
between shrinking or sinking.
Toyota will continue to focus on
patient execution of sensible, but
ambitious plans to expand their sales.
They will continue to develop a
steady stream of new models and
make
them
with
remarkable
efficiency: the-re are no takeovers,
no dramas or miracle cures, just
relentless, grinding professio-nalism
with, increasingly, an enticing dash
of design flair to boot. And when
they hit one target, they immediately
set another.

However, there is one extra

ingredient that is somewhat
mystical, if not exactly magi-cal.
There is such a strong corporate
cul-ture that every employee
knows the Toyo-ta way of doing
things. Put it down on paper and it
sounds as flaky as a typical
THE SWISS DEMING INSTITUTE
Ernst C. Glauser

-1-

mission statement. But Toyota

preaches to the converted and it
works.
Since the fifties, an uncountable
number of Western automobile
production specia-lists visited
Toyota to find out the secret behind
the success. Since they did not
have a method, they did not know
what questi-ons to ask. They
copied what they belie-ved
essential but were unable to
advance to the core of Toyotas
truly
extraordinary
company
culture even after Toyota started to
produce automobiles in the
American backyard in December
1984 in a joint ven-ture with
General Motors (New United
Motor Manufacturing NUMMI).
Even though Western Automobile
producers turned out better
products, they are still far behind
Toyota and the gap widens.
The intellectual foundation for
Toyotas success was laid from
1950 onward by W. Edwards
Deming. In June 1950, Deming
presented to the very top managers
of the Japanese industry his view
on what must happen to make
Japan successful in the world
market. Kiichiro Toyoda, the
found-er
of
Toyota
Motor
Company, was among

The Toyota Phenomenon

the
audie
nce.
The
mana
gers
listen
ed,
underst
ood
and
went
straig
ht to
work
.
They
did
not
have
a
choic
e.
In no
more
than
five
years,
Japan
flood
ed
the
world
with
produ
cts of
unpar
allele
d
qualit
y.
West
ern
econo
mies
did
not
and
still
do
not
posse
s the
mean
s to
withs
tand.

Obse
rving
the
comp

lacency
of
the
West,
Deming
formulated
his
First
Theorem:
No-body
gives a hoot
about profit.
With pro-fit,
he
meant
long-term
profit. The
West
talks
about it, but
does not do
anything
about
it.
Deming's
Second
Theorem
was: We are
being ruined
by
best
efforts, doing
the
wrong
thing.
The
following
paper
uses
the
automobile
industry as
an example
to show that
there is no
substitute for
leadership
and quality
to survive.
Fortunately,
survival
is
not
compulsory.

Automo
bile
Industry
and its
Problem
s

DaimlerChrysler

4.36

171.9

41.8

The
PSA/Peugeot Citron
3.29
61.2
14.3
Worl
3.05
38.9
9.0
ds Hyundai Automotive
TopNissan
2.97
65.8*
47.1
Ten
Honda
2.91
77.2*
46.4
Car
2.39
42.4
22.1
ManRenault
ufac
Sources: Automotive News, Company Reports, Thomson Datastream
ture
rs Figure 1:
200The Worlds
3 ten largest

automobile
manufacture
res in terms
of number of
units sold,
General Motors
sales and
Toyota market
capitalisatio
Ford
n
Volkswagen

The
ind
ust
ry
as
an
Indi
cat
or
for
Wel
far
e
and
Su
cce
ss
The
indus
try
prod
uces
nearl
y 60
milli
on
cars
and
truck
s a
year
and
empl

oys
mill
ions
of
peo
ple
aro
und
the
wor
ld.
Its
product
s
are
resp
onsi
ble
for
alm
ost
half
the
wor
ld's
oil
con
sum
ptio
n,
and
thei
r
man
ufact
ure
uses
up

nearl
y
half
the
worl
d's
annual
outpu
t of
rubbe
r,
25%
of its
glass
and
15%
of its
steel.
No
wond
er the
car
industry
acco
unts
for
about
10%
of
GDP
in
rich
count
ries.
But
the
indus
try

15

15

that
has
pione
ered
the
form
s and
weat
hered
the
storm
s of
20thcentu
ry
capit
alism
is
now
over
100
years
old
and
strug
gling
.
Aver
age
profit
marg
ins
have
decli
ned
from
20%
or
more
in its
youth
in the
1920
s to
aroun
d
10%
in the
1960
s and
less
than
5%
now,
and
some
volu
me
carm
akers
have
actua
lly
been
losin
g
mone

y.
A
cent
ury
ago
the
car
indu
stry
mor
e or
less
inve
nted
mod
ern
indu
stria
l
capi
talis
m.
The
car
start
ed
life
in
Ger
man
y,
and
earl
y
develo
pme
nt
of
the
indu
stry
beg
an
in
Fra
nce
(hen
ce
auto
mob
ile,
orig
inall
y a
Fre
nch
wor
d)
in
the
190
0s,
but
it

was
in
Amer
ica
that it
came
of
age.
Henr
y
Ford'
s
adapt
ation
for
car
maki
ng of
the
movi
ng
asse
mbly
line
he
had
seen
in
Chica
go
slaug
hterh
ouses
mark
ed the
birth
of
mass
produ
ction.
But
Mr.
Ford
appli
ed

those
techn
iques
to a
vehic
le
that
rese
mbled
a
horse
draw
n
carria
ge,
with
a
body
laid
on to
a
separ
ate
chass
is.
Mod
ern
cars
have
a
mono
coqu
e
steel
body
in
whic
h the
stren
gth is
built
into
the
pressed
steel
floor,
sides
and
roof.
It
was
invente
d by
Edwa
rd
Budd
,
taken
up by
Dodg

e
and
then
by
Citr
on
in
Eur
ope,
and
then
by
all
vol
ume
car
mak
ers.
Aro
und
the
sam
e
time
as
mod
ern
car
manufa
ctur
ing
was
bor
n in
the
mid
192
0s,
Alfred
Sloa
n's
idea
s for
run
ning
Gen
eral
Motors
pro
vide
d
the
mod
el
for
the
grea
t
corpora
tion
s

that
grew
up to
domi
nate
the
secon
d half
of the
20th
centu
ry.
GM
soon
swept
past
Ford
as
Mr.
Sloan
revol
utioni
-zed
the
youn
g car
indus
try
and
Ford
has
never
regai
ned
the
domi
nance
it
enjoy
ed in
the
infan
cy of
mass
produ
ction.
The
car
indus
try
has
been
ahead
of its
time
in
many
respe
cts.
Peter
Druc
ker, a
mana
gement
writer

who
first
made
his
name
with
a
study
of
GM
in
1945,
coine
d the
phras
e
indu
stry
of
indus
tries
. The
comp
any
was
also
the
leade
r in
plan
ned
obsol
escen
ce,
the
frequ
ent
chang
es in
desig
n that
tempted
custo
mers
to
switc
h to a
new
mode
l
every
year
or so.
It
was
the
first
to
feel
consu
mer
anger
with
the
publi

cati
on
in
the
196
0s
of
Ral
ph
Nad
er's
atta
ck
on
the
safe
-ty
reco
rd
of
the
Big
Thr
ee
Detr
oit
man
ufact
urer
s,
Un
safe
at
Any
Spe
ed.

In
the
197
0s,
as
the
oil
pric
e
qua
dru
pled
,

the
indus
try
foun
d
itself
under
attac
k
from
envir
onme
ntalis
ts
outra
ged
by its
products'
gasguzzl
ing
habit
s. It
was
also
amon
g the
first
to
come
under
caref
ul
govern
ment
scruti
ny,
from
safet
y
conc
erns
to
envir
onme
ntal
issue
s to
antitr
ust
worri
es in
the
days
when
Gene
ral
Moto
rs
had
60%
of its
dome
stic

mark
et
and
could
snuff
out
comp
etitor
s
with
a few
wellchosen
price
cuts.
But it
also
recei
ved
more
welc
ome
gover
nmen
t
attent
ions.
Whe
n
small
,
econ
omic
al
and
reliab
le
Japan
ese
cars
starte
d to
eat
into
Detro
it's
mark
et
share
, the
Amer
ican
gover
nmen
t
impo
sed
restraint
s on
those
impo
rts.
Soon
after
ward,

the
ind
ustr
y in
Eur
ope
cam
e
und
er
simi
lar
pres
sure
s.
The
car
indu
stry
also
foun
d
itsel
f at
the
cutti
ng
edge
of
capi
talis
m in
anot
her
sense.
As
mas
s
prod
ucti
on
tech
niqu
es
develo
ped
in
the
192
0s
and
193
0s,
its
wor
kers
incr
easi
ngly
push
ed
for
unio
niza

tion.
At
times,
it
seeme
d as
thoug
h the
car
factories of
the
Detroi
t area,
the
Britis
h
Midlands
or the
huge
plants
aroun
d
Paris
were
the
main
battle
groun
d of
the
class
war.
Even
today,
the
Unite
d
Auto
Work
ers
union
(UA
W)
still
domin
ates
Detroi
t,
even
though
trade
union
memb
ership
in
Ameri
ca's
privat
e
sector
as a
whole
is

well
below
10%
of the
workf
orce.

Toda
y the
motor
car is
the

epit
ome
of
mas
s
pro
duct
ion,
mas
s
mar

ketin
g and
mass
consump
tion,
with
some
of the
stron
gest

Ernst C. Glauser
-2THE SWISS DEMING
INSTITUTE

The Toyota Phenomenon

brand
s in
the
worl
d.
For
most
hous
ehold
s in
rich
count
ries,
it is
the
secon
dbigge
st
purch
ase
after
a
hous
e or
flat.
Few
other
cons
umer
good
s
indus
tries
depe
nd so
heavi
ly on
a
thrivi
ng
secon
dhand
mark
et for
their
prod
ucts.
And
yet
there
are
powe
r-ful
force
s at
work
that
could
profo
undly
chan
ge

the
ind
ustr
y.

Li
mi
ts
to
Gr
ow
th
Rig
ht
now,
thou
gh,
the
bigg
est
forc
e for
chan
ge is
the
fact
that
mos
t of
the
volu
mecar
indu
stry
is
brok
e
and
need
s
fixin
g.
The
mar
ket
in
Am
eric
a,
Eur
ope
and
Japa
n,
whe
-re
over
80%
of
the
worl
d's

cars
and
trucks
are
sold,
has
been
runni
ng out
of
growt
h.

In
Amer
ica
the
arriva
l of
Euro
pean,
Japanese
and
South
Kore
an
make
rs has
created
overc
apacit
y.
More
over,
as
Amer
ica's
own
carm
akers
const
antly
impro
ve
their
produ
ctivit
y to
catch
up on
these
new
rivals,
their
great
er
effici
ency
itself
incre
a-ses
capac

ity by
about
3% a
year.

In
Germ
any
and
Franc
e,
rigid
labor
laws
have
inhib
ited
the
closu
re of
redun
dant
old
facto
ries,
altho
ugh
Rena
ult
has
set a
good
exam
ple,
and
Ford
Euro
pe
and
GM
Euro
pe
have
been
tryin
g to
follo
w it.
In
Japan
, the
close
indus
trial
partn
ershi
ps
know
n as
keiret
su
have
prove
d too
rigid
for

som
e
man
ufac
ture
rs.
Onl
y
Toy
ota
and
Hon
da
rem
ain
in
pure
ly
Japa
nese
han
ds.
The
sma
ller
Japa
nese
pro
duc
ers
mak
e
littl
e or
no
prof
it at
hom
e
and
are
stru
ggli
ng
to
get
into
the
blac
k in
Eur
ope.
Eve
n
for
the
big
com
pani
es
Am
eric
a
pro
vide
s

the
best
hopes
for
growi
ng
profit
s.
All
the
car
comp
anies
think
that if
only
they
try
harde
r,
they
can
some
how
regai
n
growt
h at
the
expen
se of
rivals
. But
in
reality
they
are
like
Scott
Fitzg
erald'
s
boat
s
again
st the
curre
nt,
borne
back
cease
lessly
into
the
past.
Add
the
growi
ng
pensi
-on
and
healt
h-

care
bills
of
traditi
onal
producer
s
such
as
Amer
ica's
Big
Three
and
the
Euro
peans
, and
it is
easy
to see
why
the
indus
try is
feelin
g
under
siege.
Toda
y
Toyot
a
leads
a
select
band
of
volume
car
manu
factur
ers
that
make
real
profits;
the
other
s are
Nissa
n and
Hond
a.
Even
when
GM,
Ford,
the
Chrys
ler
end
of

Dai
mlerC
hrys
ler
and
Eur
ope
an
firm
s
suc
h as
Ren
ault
and
Vol
ksw
age
n
are
in
the
blac
k,
they
usu
ally
do
not
earn
mor
e
than
the
cost
of
thei
r
inve
sted
capi
tal.
But
the
worl
dwi
de
mar
ket
is a
crue
l
plac
e.
Ther
e is
capa
city
in
plac
e to
prod
uce

about
80
millio
n cars
and
other
light
vehicl
es
(pickups,
SUVs
and
so
on).
Yet
produ
ction
is

runni
ng at
barel
y 60
milli
on a
year,
so
the
facto
ries
are
only
three
quart
ers
full
in an
indus
try
wher
e
utiliz
ation
rates
need
to
top
80%
to
ensur
e
dece
nt
profit
s. It
is not
much
of a
gap,
but
the
effect
on
weak
er
carm
akers
is
painf
ully
evide
nt.
Of
cours
e,
much
of
this
exces
s
capac
ity is

bein
g
inst
alle
d in
Chi
na
and
othe
r
part
s of
the
Asi
aPaci
fic
regi
on
in
anti
cipa
tion
of
gro
wth
pros
pect
s
that
are
awe
som
e.
Accord
ing
to a
fore
cast
by
Pric
eWa
terh
ous
eCoo
pers
, the
regi
on
will
acc
ount
for
alm
ost
half
the
incr
ease
in
wor
ld
car
outp

ut
(over
18%)
that is
forec
ast by
2011.
But
too
much
of
exces
s
capac
ity
lies in
North
Amer
ica
and
Euro
pe,
wher
e too
many
produ
cers
are
produ
cing
too
many
cars
and
sellin
g
them
at too
little
profit
.
Detro
it
keeps
its
factor
ies at
full
tilt
only
by
offeri
ng
huge
disco
unts
and
other
sales
incen
tives
to
mov
e the
metal
, as

they
say
there.
Henc
e the
profit
less
prosp
erity
offere
d by
stron
g car
sales
in
recen
t
years.
The
same
is
increasingl
y true
in
Euro
pe.

The
End
of
Det
roit
Mich
eline
May
nard'
s
crispl
y
writt
en
book,
The
End
of
Detro
it:
How
the
Big
Thre
e
Lost
Their
Grip
on
the
Amer
ican
Car
Market
[1],
cooll

y
anal
yses
the
cau
ses
of
the
late
st
fall
of
Det
roit.
Ma
ny
in
the
Am
eric
an
car
indu
stry
hav
e
bee
n
slo
w to
appr
ecia
te
how
seri
ous
the
pro
ble
m
reall
y is.
The
big
thre
e
man
ufac
ture
rs
wer
e
use
d to
hard
time
s;
they
just
hop
ed
to
mak
e

more
mone
y in
boom
s than

Figu
re 2:
Cove
r of
Mich
eline
May
nard
s
book,
The
End
of
Detr
oit,
how
the
big
three
lost
their
grip
on
the
car
mark
et

they
lost
in
busts
. But
their
curre
nt
problem
s are
differ
ent.
Car
sales
are
still at
histor
ically
high
levels
; it is
just
that
Detro
it's
share
of
these
sales
has
slump
ed.
Japan
ese,
South
Korea
n and
Germ
an
model
s
(whet
her
impor
ted or
made
in the
17 car
factor
ies
that
foreig
ners
have
opene
d in
Amer
ica in
the
past
20
years)

acco
unt
for
half
of
car
sale
s,
and
are
advanc
ing
on
Detr
oit's
last
redo
ubt

the
gasguzz
ling
mini
vans
,
spor
t
utilit
y
vehi
cles
and
pick
-ups
so
belo
ved
of
subu
rban
cow
boys
.

In
196
0,
GM
alon
e
had
60
%
of
the
Am
erican
mar
ket;
toda
y it
can
cou

nt on
barel
y half
that
and
the
foreig
ners'
share
of the
lightvehic
le
mark
et is
alrea
dy
40%.
Ms
Mayn
ard
pinpo
ints
the
differ
ence
between
the
men
who
run
the
big
three
and
the
leade
rs of
succe
ssful
foreig
n car
companie
s. She
contr
asts
the
finan
cial
backgroun
d of
those
at the
top of
GM
and
Ford
with
the
car
know
ledge

of
Toyot
a's
boss,
Fujio
Cho,
who
cut
his
teeth
runni
ng
one
of the
comp
any's
first
Amer
ican
factor
ies.

But
there
is
more
to
Detro
it's
weak
ness.
The
big
three
manu
factu
rers
have
to
deal
with
the
powe
rful
Unite
d
Auto
Work
ers
Unio
n,
whic
h has
won
its
mem
bers
great
benef
its
while
empl
oyers
are
saddl
ed
with

pen
sion
and
heal
thcare
cost
s
that
top
$1,
200
per
vehi
cle.
Ms
Ma
ynar
d
con
ced
es
that
Detr
oit
is
figh
ting
bac
k,
with
a
new
emp
hasi
s on
the
qual
ity
and
attra
ctiv
enes
s of
the
pro
duct
s.
But
she
still
sees
Toy
ota
bec
omi
ng
the
biggest
car
com
pan
y in
the

world
,
overt
aking
GM,
and
proba
bly
havin
g no
less
than
15%
of the
world
mark
et, its
stated
aim.
She is
right:
Toyot
a will
preva
il.
Detro
it's
choic
e is
betwe
en
shrin
king
or
sinki
ng.

Fiat
's
Str
ugg
le
for
Sur
viv
al
The
recen
t
contr
overs
y
betw
een
GM
and
Fiat
Auto
illust
rates
the
despe
rate
strug

g-le
the
West
ern
auto
mobi
le
indus
try
finds
itself
in.
In
2000,
GM
had
boug
ht
20%
of
Fiat
Auto
for
$2.4
billio
n. In
return
, Fiat
took
a 6%
stake
in the
Amer
ican
car
giant.
At
the
time

GM
fear
ed
bein
g
left
behi
nd
in
the
mer
ger
wav
e
that
was
swe
epin
g
the
car
indu
stry.
Sinc
e
the
Dai
mle
rCh
rysl
er
mer
ger
in
199
8,
the
indu
stry

had
conso
lidate
d
rapidl
y. To
beco
me a
globa
l
force,
GM
felt it
neede
d the
exper
tise
of
foreig
n
comp
anies
to satisfy
the
differ
ing
tastes
of the
world
s car
buyer
s and
to
share
devel
opme
nt
costs.

THE SWISS DEMING

INSTITUTE
-3Ernst C. Glauser

The Toyota Phenomenon

Ma
nag
Share
em of the European Car Market in Percent
ent
Co
mp
ens
atio
n
This
issue
has
stirre
d up
much
contr
oversy
durin
g past
years.
Since
this
topic,
be1990 sides
Source:being
Association des Constructeurs Europens dAutomobiles
of
Figure 3:
gener
The
al
intere
contribution
st, is
of
also
Volkswagen,
linPSA Peugeot
ked
Citron,
to the
Renault and
perfo
Fiat to the
rman
European
ce of
car market
auto
mobil
e manufac
turers
,
it
must
be
addre
ssed
here
too.

Over
the
past
few
years
, the
salari
es of
mana
gers

in
Europe
and the US
have
gone
out
of
control. They
became so
outrage-ous,
insane and
beyond
common
peoples
imagination,
that
the
Swiss
business magazine
CASH of
February
25th, 2005,
sim-ply
called
this
development
The
New
In-sanity.
It
is
especially
shocking for
the public to
realize, that
the salaries
are
not
linked to the
quality
of
leadership
and company
performance,
which again
are directly
related to the
capability of
a company to
meet
customer
expectations.
Daniel
Vasella, both
chairman of
the board and
CEO of a
Swiss
pharmaceutic
al com-pany
was able to
multiply his
salary
ten-

GMs
great
est
rival,
Ford,
was
build
ing a
globa
l

net
wor
k.
In
Eur
ope
it
eve
ntua
lly

fold
up to
a
strato
spher
ic
level
of $
18
million
per
year,
whils
t on
the
other
hand
the
return
to the
share
holde
rs
stalle
d.
The
Hay
Grou
p, a
consu
ltancy
,
recko
ns
that a
Euro
pean
chief
execu
tive's
basic
salary
is
much
the
same
as
that
of his
counterpar
t
acros
s the
Atlan
tic.
Acco
rding
to a

acquire
d
Jagua
r,
Volv
o and
Land
Rove
r. Re-

nault
had
team
ed up
with
Nissa
n.
Daim
lerCh
rysler
woul
d go
on to
forge
allian
ces
with
Hyun
dai
of
Sout
h
Kore
a and
Mits
ubishi
of
Japan
.
Since
GM
took
a
stake
the
probl
ems
have
moun
ted.
Great
er
foreig
n
comp
etitio
n in
Italy,
Fiats
bigge
st
mark
et,
arrive
d as
govern
ment
sche
mes
to
help
Fiat
faded

awa
y.
Fiat
s
high
cost
s
and
the
lack
of
succ
ess
of
the
Pali
o
(Fia
ts
wo
rld
car
)
and
the
Stil
o, a
bigg
er
and
sup
pos
edly
mor
e
prof
itabl
e
mod
el,
pro
ved
a
drag
,
suc
king
mon
ey
fro
m
Fiat
s
succ
essf
ul
truc
k
and
tract
or
busi
ness
.
In

2002
Fiat
was
force
d to
seek
refina
ncing
in the
form
of 3
billio
n in
conve
rtible
loans
from
banks
. The
souri
ng
relati
onshi
p
with
its
Amer
ican
partn
er
was
exem
plifie
d by
GMs
refus
al to
contri
bute.
Fiat
also
sold
its
stake
in
GM
and
its
finan
cing
arm
to
raise
cash.
This
dilute
d
GMs
holdi
ng in
Fiat
to
10%,
whic
h
accor

ding
to
GM
invali
dated
the
put
optio
n.
GM
has
also
had
its
share
of
troubl
es
since

its
link
-up
wit
h
Fiat
. In
Jan
uar
y
200
0 its
shar
es
wer
e
wor
th
ove
r
$80
and
it
mad
e a
prof
it of
$5
billi
on
that
year
. Its
shar
es
now
trad
e at
aro
und
$37
and
alth
oug
h it
mad
e
$3.
6
billi
on
in
200
4,
$2.
9
billi
on
cam
e
fro
m
its
fina
nce
arm
.

GMs
bond
s are
at a
recor
d
low,
hover
ing
just
abov
e
junk
status
and it
has
been
saddl
ed
with
moun
ting
lega
cy
costs
from
its
empl
oyee
healt
hcare
and
pensi
on
plans
.
Euro
pean
and
Asia
n
prod
ucers
domi
nate
Amer
icas
luxur
y-car
mark
et
and
the
incre
asing
ly
bold
and
innov
ative
Sout
h
Koreans

are
attac
king
the
mark
et for
chea
per
cars.
On
Sund
ay,
Febru
ary
13th,
2005,
it was
decid
ed
that
GM
will
pay
Fiat
1.55
billio
n ($2
billio
n) to
cance
l
a
put
optio
n that
the
firms
had
agree
d as
part
of a
tie-up
that
was
concl
uded
in
happi
er
times
for
both
GM
and
the
Agne
lli
famil
y, the
found
ers of
the
Fiat
indus
trial

emp
ire.

recen
t
study
by a
huma
nresou
rces
consultan
cy,
Germ
an
execu
tives
are
the
best
paid
in
Euro
pe,
but
the
comp
onent
of
their
bonus
es
linke
d to
shortterm
target
s is
higher
even
than
that
of
their
count
erpart
s in
Amer
ica.
This
has
put
pay
and
perfo
rman
ce out
of
line.
In
one
case,
while
Daim
lerChrys

ler's
mark
et
value
fell
by
60%,
its
top
execu
tives'
pay
rose
by
40%.
In the
US
the
differ
ential
betwe
en the
pay of
top
execu
tives
and
their
worke
rs has
grow
n. In
1991
the
pay of
the
avera
ge
American
largecomp
any
boss
was
about
140
times
that
of the
avera
ge
worke
r; by
last
year,
it was
over

500
time
s,
and
gro
win
g.
Exe
cuti
ve
com
pens
atio
n
pack
ages
in
Japan,
whe
re
pay
scal
es
are
also
larg
ely
determ
ined
by
tradi
tion,
are
muc
h
mor
e
dow
n to
eart
h. In
Japa
n,
the
CE
Os,
on
aver
age,
get
only
17
time
s
wha
t the
wor
kers

earn.
Even
in
comp
anies
emplo
ying
up to
4000
00
peopl
e, the
salari
es of
CEOs
are
typica
lly
less
than $
1
millio
n
a
year.
Indee
d the
median
in
these
huge
comp
anies
lies
some
where
betwe
en
$300
000
and $
6000
00 a
year.
Even
when
receiv
ing
retire
ment
allow
ances,
these
CEOs
would
be
fortun
ate to
take

Ernst C. Glauser
-4THE SWISS DEMING
INSTITUTE

The Toyota Phenomenon

much
more
than
an
extra
$ 1.5
milli
on
home
with
them.
It is
belie
ved
that
this
issue
has
treme
ndous
impli
catio
ns on
empl
oyee
moti
vation,
trust
of
poten
tial
custo
mers
and
respect
paid
by
the
publi
c.
Who
want
s to
work
for or
buy a
prod
uct
from
a
comp
any
whos
e top
mana
geme
nt
demo
nstrat
es

over
and
over again
that
its
actions are
diverted
from
the
customer and
the
employees
by
selfish
greed.
Management
sets
the
standard with
respect
to
every aspect
of corporate
behavior.
Countless
examples
have shown
in the past
that
managers,
which do not
live up to
these
standards as
observed by
both
the
employees
and the public
damage and
even ruin a
company. In
any case, the
da-mage will
be a multiple
of what a
manage-ment
claims
in
excessive
compensation
.

T
o
y
o
t
a
M
o
t
o
r
C
o
r
p
o
r
a
t
i
o
n
A
n
n
Toy
ota
Mot
or
Cor
por
atio
n
The
Ulti
mat
e in
Ma
nuf
act
urin
g
Exc
elle
nce

ual
Repo
rt
2004
Fiscal
Years
ending
March
st
31
in million USD except
share data
For the Year 2004
Net Revenues
Operating Income
Net Income
Return on Investment
Per Share Data
Net Income (Basic)
Cash Dividends
Shareholders Equity
At Year-End
Total Assets
Shareholders Equity
Share Performance (March 31
Price per Share
Market Capitalisation

Figure
5:
Key figures
showing the
performance
of the Toyota
Motor
Corporation
for the year
beginning
1st April and
ending
March 31st
It
will
be
an
imp
orta
nt
mo
men
t in
indu
stria
l
hist
ory:
in
only
a
few
year
s
Toy
ota
will
topp

le
Gener
al
Motor
s
from
the
numb
er one
slot
amon
g the
world'
s
carma
kers,
as it
grows
relentl
essly
towar
ds
15%
of the
glo-

2003 vs 200
in Per

163'637
15'772
10'995
15.2 %

+11.6
+31.1
+54.7
+11.6

3.24
.43
23.24

+62.3
+25
+19

208'537
77'383

+9.4
+14.9

36.71
132'527

+47.2
+47.2

bal
marke
t. It
make
s
a
net
profit
far
bigge
r than
the
combi
ned
total
for
Detro
it's
Big

H
ir
o
s
h
i
O
k
u
d
a
,
C
h
a
ir
m
a
n
Toy
ota
is
tur
nin
g
cha
llen
ges
into
bus
ine
ss
opp
ort
unit

ie
s
by
ac
ce
le
ra
tin
g
th
e
p
ac
e
of
its
in
n
ov
ati
o
n
to
ac
hi
ev
e
n
e
w
gr
o
wt
h.

three;
its
mark
et
capit
alizat
ion
tower
s
above
them;
its
prod
uctivi
ty
has
grow
n
seven
-fold
in the
past
25
years
,
twice
as
much
as
Detro
it's
finest
,
despi
te
their
effort
s to
keep
up.
The
finan
cial
perfo
rman
ce of
Toyo
ta is
enor
mous
(Figu
re 5).
There
is the
world
car
indus
try,
and
then
there
is
Toyot

a, the
outsta
nding
phen
omeno
n.
Since
2000
the
outpu
t of
the
globa
l
indus
try
has
risen
by
about
3
millio
n vehicles
to
some
60
millio
n. Of
that
incre
ase,
half
came
from
Toyot
a
alone.
Whil
e
most
attent
ion
over
the
past
four
years
has
fo-

y.

Fujio
Cho,
Pres
ident
W
e
i
n
t
e
n
d
t
o
r
a
i
s
e
c
o
r
p
o
r
a
t
e
v
a
l
u
e
b
y
p
u
r
s
u
i
n
g
e
v
e
n
h
i
g
h
e
r
l
e
v
e
l
s
o
f
g
r
o
w
t
h
a
n
d
e
ff
i
c
i
e
n
c

cused
on a
spect
acula
r
turnar
ound
at
Nissan,
Toyot
a has
under
gone
a
dram
atic
growt
h
spurt
all
round
the
world
.
Japan
's
indus
try
leade
r will
soon
be
maki
ng
more
cars
abroa
d
than
at
home
.
It
has
overt
aken
Ford
in
globa
l
produ
ction
terms
and is
set to
pass
Chrys
ler in
sales
to
beco
me
one
of
Amer
ica's

Big
Thr
ee.
In
an
indu
stry
stre
wn
with
bas
ket
case
s,
whe
re
hard
ly
any
volu
-me
pro
duc
er
mak
es a
real
retu
rn
on
its
capital
,
Toy
ota
is
exc
epti
onal
in
that
it
con
sisten
tly
mak
es
goo
d
retu
rns.
Toy
ota's
ebul
lient
chai
rma
n
Hiro
shi
Oku
-da
has
mad

e little
secret
that
he
wants
the
comp
any to
win
15%
of the
global
car
market,
snatch
ing
leader
ship
from
Gener
al
Motor
s.
Havin
g
reach
ed
Globa
l Ten
(10%
of the
world
marke
t) Mr
Okud
a has
his
eyes
focus
ed on
his
new
goal.
It's
just to
motivate
emplo
yees,
says
Fujio
Cho,
Toyot
a's
more
down
beat
presid
ent.
Som
ehow
news
of the
banne
rs in

our
factor
ies
leake
d
out,
he
says
dising
enuou
sly, as
if you
could
keep
such a
secret
after
it has
been
blazoned to
264'0
00
worke
rs
aroun
d the
world
.
Mark
et
capita
lizatio
n says
it all
(Figur
e 1).
Toyot
a is

wort
h
mor
e
than
the
Am
eric
an
Big
Thre
e
put
toge
ther,
and
mor
e
than
the
com
bina
tion
of
its
succ
essf
ul
Japa
nese
rivals,
Niss
an
and
Hon
da.
Last
year
(200

4)
Nissa
n may
have
outper
forme
d
Toyot
a in
terms
of
operat
ing
margi
n, but
over
the
long
haul it
has
been
the
provi
ncial
power
house
from
Aichi
prefec
ture
near
Nago
ya
that
has
consis
tently
show
n the
way.

Figure 4: Hiroshi
Okuda, chairman od
the board and Fujio
Cho, President of the
Toyota Motor
Corpration and their
policies for the future
development of the
company
THE SWISS DEMING
INSTITUTE
-5Ernst C. Glauser

The Toyota Phenomenon

Toy
ota
Pro
duc
tion
Sys
tem
TP
S
First,
of
cours
e, it
taugh
t the
mode
rn
car
indus
try
how
to
make
cars
prope
rly.
Few
had
heard
of
the
Toyo
ta
Prod
uctio
n System
(TPS
)
until
three
acade
mics
in the
car
indus
try
study
progr
amm
e run
by
Mass
achuse
tts
Instit
ute
of
Tech
nolog
y

(MI
T)
wro
te a
boo
k in
199
1
call
ed
Th
e
Ma
chin
e
that
Cha
nge
d
the
Wor
ld
[2].
It
desc
ribe
d
the
prin
cipl
es
and
prac
tice
s
behi
nd
the
jus
t-intime

man
ufac
turi
ng
syst
em
dev
elop
ed
at
Toy
ota
by
Taii
chi
Ohn
o.
He
in
turn
had
dra
wn

inspir
ation
from
W.
Edwa
rds
Demi
ng,
an
influe
ntial
statist
ician
and
qualit
ycontr
ol
exper
t who
had
playe
d a
big
part
in
devel
oping
the
rapidmanu
factur
ing
proce
sses
used
by
Amer
ica
durin
g the
secon
d
world
war.
At
the
core
of
TPS
is
elimi
natio
n of
waste
and
absol
ute
conce
ntrati
on on
consi
stent
high
qualit

y by
a
proce
ss of
conti
nuous
impro
veme
nt
(kaiz
en).
The
catch
y
justintime
aspec
t of
bringi
ng
parts
toget
her
just
as
they
are
neede
d on
the
line
is
only
the
cleare
st
manif
estati
on of
the
relent
less
drive
to
elimi
nate
muda
(wast
e)
from
the
manu
factur
ing
proce
ss.
The
world
's
motor
indus
try,
and
many
other

bran
ches
of
manufa
ctur
ing,
rush
ed
to
emb
race
and
ado
pt
the
prin
cipl
es
of
TPS
.
Toy
ota's
succ
ess
start
s
with
its
brill
iant
pro
duct
ion
engi
neer
ing,
whi
ch
puts
qual
i-ty
cont
rol
in
the
han
ds
of
the
line
wor
kers
who
hav
e
the
pow
er to
stop
the
line
or
sum
-

mon
help
the
mom
ent
somet
hing
goes
wron
g.
Walk
into a
Toyot
a
factor
y in
Japan
or
Amer
ica,
Derb
y in
Britai
n or
Valen
cienn
es in
Franc
e and
you
will
see
the
same
visual
displa
ys
tellin
g you
every
thing
that is
going
on.
You
will
also
hear
the
same
jingle
s at
the
vario
us
work
statio
ns
tellin
g you
a
mode
l is
being

chang
ed, an
opera
ti-on
has
been
comp
leted
or a
brief
halt
called.
Every
thing
is
minut
ely
synch
roniz
ed;
the
work
goes
at the
same
stead
y
caden
ce of
one
car a
minut
e
rollin
g off
the
final
asse
m-bly
line.
Each
opera
tion
along
the
way
takes
that
time.
No
one
rushe
s and
there
are
cute
slings
and
swive
ling
loade
rs to
take
the
heavy

lifti
ng
out
of
the
wor
k.
But
ther
e is
muc
h
mor
e to
the
soul
of
the
Toy
ota
machin
e
than
a
dour
,
rele
ntle
ss
purs
uit
of
perfecti
on
in
its
car
fact
orie
s.
Ano
ther
triu
mph
is
the
slic
k
pro
duct
-develo
pme
nt
proc
ess
that
can
roll
out
new
mod

els in
barel
y two
years.
As
rival
Carlo
s

Ghos
n,
chief
exec
utive
of
Nissa
n,
notes
in his
book
Shif
t
(abou
t how
he
turne
d
aroun
d the
weak
est of
Japan
's big
three
) [6],
as
soon
as
Toyo
ta
bosse
s
spot
a gap
in the
mark
et or
a
smart
new
prod
uct
from
a
rival,
they
swiftl
y
move
in
with
their
own
versi
on.
The
result
is a
bewil
derin
g
array
of
over

60
mod
els
in
Japa
n
and
load
s of
diffe
rent
version
s in
big
over
seas
mar
kets
such
as
Europe
and
Am
eric
a.
Of
cour
se,
und
er
the
skin,
thes
e
shar
e
man
y
com
mon
part
s.
Toy
ota
has
long
been
the
cha
mpi
on
of
putti
ng
old
win
e in
new
bottl
es:
over
twothird
s of

a new
vehicl
e will
contai
n the
unsee
n
parts
of a
previo
us
model
. But
TPS
alone
would
not
justif
y the
extrao
rdnina
ry
succe
ss of
the
comp
any in
the
world
marke
t.

The
"To
yot
a
Wa
y"
Many
firms
have
tried
to
install
the
Toyot
a
Produ
ction
syste
m
TPS.
They
set up
the
Kanb
an
syste
m,
which
is a
tool
for
managing

the
flow
and
produ
ction
of
mater
ials in
a
Toyot
astyle
pull
produ
ction
syste
m.
They
plug
in the
andon
,
which
is a
visual
contr
ol
devic
e in a
produ
ction
area
that
alerts
worke
rs to
defect
s,
equip
ment
abnorm
alities
or
other
probl
ems
using
signal
s such
as
lights,
audibl
e
alarm
s, etc.
Finall
y,
with
all
these
devic
es the
work
place
looks

like
a
Toy
ota
plan
t.
Yet
over
time
the
wor
kplac
e
reve
rts
to
oper
atin
g
like
it
did
befo
re.

And
this
is
exa
ctly
wha
t
man
y
Wes
tern
orga
nisa
tion
s
hav
e
exp
erie
nce
d.W
ith
the
set
up
of
TPS
, the
real
wor
k of
imp
lem
enting
TPS
has
just
beg
un.
In

the
Toyot
a
Way,
its
the
peopl
e who
bring
the
syste
m to
life
by
worki
ng,
com
muni
catin
g,
resol
ving
issues
and
growi
ng
toget
her.
The
Toyot
a
Way
encou
rages,
suppo
rts
and
in
fact
demand
s
empl
oyee
invol
veme
nt.
The
Toyot
a
Way
is
much
more
than a
set of
impro
veme
nt
and
effici
ency
techn
iques.

Its a
cultur
e
depen
ding
on
work
er
attitu
de to
reduc
e
inven
tory,
identi
fy
hidde
n
problems
and
to fix
them
with
a
sense
of urgency
,
purpo
se
and
team
work.
The
Toyot
a
Produ
ction
Syste
m can
be
copie
d, the
Toyota
Way
canno
t. It
has to
be
built,
maint
ained
and
refine
d
over
decad
es.
The
roots
of the
Toyot

a
Way
go
bac
k to
192
6,
whe
n
Saki
chi
Toy
oda
(18
67
193
0), a
brill
iant
engi
neer
,
later
refe
rred
to
as
Japa
ns
Ki
ng
of
Inve
ntor
s,
fou
nde
d
Toy
oda
Autom
atic
Loo
m
Wor
ks.
His
wor
k
ethi
cs
was
sign
ifica
ntly
influ
ence
d by
the
boo
k of

Samu
el
Smile
s,
SelfHelp
[5],
first
publis
hed in
Engla
nd in
1859.

The
book
grew
out of
the
devot
ion,
to
help
youn
g
man
in
diffic
ult
econo
mic
circu
mstanc
es by
impro
ving
thems
elves.
The
book
chron
icles
inven
tors
whos
e
natur
al
drive
and
inqui
sitive
ness
led to
great
inventi
ons
that
chang
ed the
cours
e of
humanit
y.
When
looki
ng
for
instan
ce at
the
succe
ss
and
impa
ct of

Jam
es
Wat
t,
Smi
les
con
clud
ed,
that
both
wer
e
not
the
resu
lt of
natu
ral
end
ow
men
t but
rath
er
trou
gh
hard
wor
k,
pers
ever
anc
e
and
disc
ipli
ne.
The
se
few
wor
ds
sum
mar
ize
the
spiri
t,
whi
ch
Saki
chi
Toy
oda
han
ded
over
to
his
son
Kiic
hiro
Toy
oda
(18

941952)
, the
founder of
Toyot
o
Moto
r
Com
pany,
his
son
Shoic
hiro
Toyo
da,
Hono
rary
Chair
man
and
direct
or of
Toyot
a
Moto
r
Corp.
, and
on to
his
nephe
w Eiji
Toyo
da
(*191
3),
Presi
dent
of
Toyot
a
from
1967
to
1994.

Spen
d
some
time
with
Toyo
ta
peopl
e and
after
a
time
you
realiz
e
there
is
some
thing

differ
ent
about
them.
The
rest
of
the
car
indus
try
raves
about
engin
es,
gearb
oxes,
accel
eratio
n,
fuel
econ
omy,
handl
ing,
ride
qualit
y and
sexy
desig
n.
Toyo
ta's
peopl
e talk
about
The
Toyo
ta
Way
and
about
custo
mers.
In
truth,
when
it is
writte
n
down
the
Toyota
creed
reads
much
like
any
corpo
rate
mission
state
ment.
But it

see
ms
to
hav
e
bee
n
abs
orbe
d by
Japa
nese
,
Eur
ope
an
and
Am
erica
n
emp
loye
es
alik
e.
Mr.
Cho
thin
ks
that
som
ethi
ng
of
the
uniq
ue
Toy
ota
cult
ure
com
es
fro
m
the
fact
that
the
com
pan
y
gre
w
up
in
one
plac
e,
Toy
ota
City,
30
min

utes
drive
from
Nago
ya in
centra
l
Japan,
where
the
comp
any
has
four
assem
bly
plants
surrou
nded
by the
factor
ies of
suppli
ers. In
this
provi
ncial,
origin
ally
rural
settin
g,
Toyot
a
worke
rs in
the
early
days
would
often
have
small
plots
of
land
that
they
tende
d
after
their
shift.

Mr.
Cho,
who
made
his
caree
r in
the
company
by
being

a
pupil
of
Mr.
Ohno
and
beco
ming
a
maste
r of
produ
ction
contr
ol,
think
s that
the
fact
that
Toyot
a
mana
gers
and
their
suppl
iers
see
each
other
every
day
make
s for
a sort
of
hotho
use
cultur
e
rather
like
Silico
n
Valle
y in
its
early
days.

Jim
Pres
s is
boss
of
Toy
ota's
sale
s in
Nor
-th
Am
eric
a.
He
left
For
d in
frus
trati
on
35
year
s
ago,
bec
ause
he
did
not
thin
k it
han
dled
cust
ome
r
relat
ions
pro
perl
y
and
he
suspec
ted
that

the
upsta
rt
Japan
ese
comp
a-ny
maki
ng its
way
in the
Amer
ican
mark
et
might
do
better
. He
was
right.
Toyot
a
share
s
a
produ
ction
plant
in
California
with
GM.
Identi
cal
cars
come
off
the
line,
some
badge
d as
GM,
the
rest
as
Toyo-

Ernst C. Glauser
-6THE SWISS DEMING
INSTITUTE

The Toyota Phenomenon

tas:
after
five
years,
accor
ding
to
one
study by
Bosto
n
Cons
ulting
Grou
p, the
trade-in
value
of the
Toyot
a was
much
highe
r than
that
of the
Amer
ican
mode
l,
thank
s to
the
great
er
confi
dence
peopl
e had
in the
Toyot
a
deale
r and
servic
e
netw
ork.

Mr.
Press
talks
with
a
quiet,
almo
st
religious
,
fervo
r
about

Toy
ota,
wit
hou
t
men
tion
ing
cars
as
suc
h.
Th
e
Toy
ota
cult
ure
is
insi
de
all
of
us.
Toy
ota
is a
cust
ome
r's
com
pan
y,
he
says
.
Mr
s
Jon
es
is
our
custo
mer
;
she
is
my
bos
s.
Eve
ryth
ing
is
don
e to
mak
e
Mrs
.
Jon
es's
life
bett

er.
We
all
work
for
Mrs.
Jones
.
But
not
even
the
comb
inatio
n of
its
world
leadi
ng
manu
factur
ing,
rapid
produ
ct develop
ment
and
obses
sional
devot
ion to
custo
mer
satisf
actio
n is
enou
gh to
expla
in
Toyot
a's
endur
ing
succe
ss.
There
is one
more
ingre
dient
that
adds
zest
to all
these.
Tetsu
o
Agata
doubl
es as
gener

al
mana
ger of
Toyot
a's
Hons
ha
plant
in
Toyot
a
City
and
as the
comp
any's
overa
ll
manu
facturing
guru.
The
magi
c of
Toyot
a's
winni
ng
cultur
e was
sum
med
up
for
him
by an
American
friend
who
obser
ved
that
Toyot
a
peopl
e
alway
s put
thems
elves
outsi
de the
comf
ort
zone
:
when
ever
they
hit
one
target,
they

set
anot
her,
mor
e
dem
andi
ng
one.
Tha
t
rele
ntle
ss
purs
uit
of
exc
elle
nce
certainl
y
expl
ains
muc
h of
wha
t
has
bee
n
happeni
ng
to
the
com
pan
y in
rece
nt
year
s, at
hom
e
and
abro
ad.

T
h
e
s
t
r
a
i
n
o

f
g
o
i
n
g
g
l
o
b
a
l
Life
starte
d
chang
ing
for
Toyot
a
when
the
econo
mic
bubbl
e
burst
in
Japan
at the
start
of the
1990s
. First
it had
to
work
hard
to
impro
ve its
comp
etitiv
eness
as the
yen
stren
gthen
ed.
Mr.
Okud
a,
presi
dent
in the
mid1990s
,
launc

hed a
progr
am of
costcutting
to
make
the
comp
any's
expor
ts
competiti
ve
even
at a
yen
level
of
only
95 to
the
dollar
.
When
costs
fell
and
the
yen
subseque
ntly
weak
ened,
Toyot
a
reape
d a
doubl
e
rewar
d.
But
the
comp
any
also
had
to
face
up to
a car
mark
et at
home
that
slum
ped
from
nearly 6
millio
n

sale
s a
year
to
just
over
4
million.
And
Toy
ota
has
had
to
resp
ond
to
rene
wed
com
petit
ion
in
its
dom
esti
c
mar
-ket,
afte
r an
aggr
essi
ve
pus
h by
Hon
da
and
the
revi
val
of
Niss
an.
One
reac
tion
by
Mr.
Cho
to
toug
h
com
petit
ion
at
hom
e
has
bee
n a
furt
her

round
of
cost
cuts
that
have
helped
Toyot
a rebuild
mark
et
share
in
Japan
from
38%
in the
mid1990s
to
44.6
%
last
year,
helpe
d
partly
by
windf
all
sales
after

the
impl
osion
of
Mits
ubish
i
Moto
rs.
But
Euro
pean
impor
ts of
Volks
wage
ns,
BM
Ws
and
Merc
edes
cars
have
mopp
ed up
7%
of the
Japan
ese
mark
et,
mostl
y for
premi
um
mode
ls,
and
force
d
Toyot
a to
introdu
ce its
luxur
y
Lexu
s
brand
into
Japan
.

Until
now,
cars
that
Amer
icans
and
Europeans
have

kno
wn
as
Lex
uses
hav
e
bee
n
sold
as
plai
n
old
Toy
otas
in
Jap
an.
No
w
Mr.
Cho
has
deci
ded,
as
part
of a
wid
er
reor
gani
zati
on
of
Toy
ota'
s
dist
ribu
tion
networ
k,
to
sell
thes
e
vehi
cles
sep
arat
ely
wit
h
the
Lex
us
bad
ge
and
sup
port
fro
m
thei

r
own
upmark
et
retail
outlet
s.
One
of
Toyot
a's
stren
gths
has
been
its
army
of
privat
ely
owne
d car
deale
rs,
long
organ
ized
into
five
comp
eting
chann
els,
each
one
more
or
less
speci
alizin
g in
different
parts
of the
range
. The
multi
plicit
y of
distri
butio
n
chann
els
arose
simpl
y
becau
-se of
the
rapid
growt
h of
the
Japan

ese
market
and
Toyot
a
sales
from
the
1970s
onwards
. But
in
Febru
ary
2003
Toyot
a
administer
ed
what
was
called
the
Valen
tine's
Day
shock
.
It
strea
mline
d the
numb
er of
channels
down
to
four,
inclu
ding
a new
one
aimed
at the
youn
g
peopl
e
turne
d off
by
mains
tream
Toyot
a's
staid
imag
e. (It
is having
to go
even
furthe

r in
Am
eric
a
with
a
sepa
rate
subbran
d
call
ed
Scio
n to
app
eal
to
you
ng
con
sum
ers.)
Lik
e all
car
com
pani
es
Toy
ota
in
Japa
n
has
had
to
get
use
d to
a
frag
men
tatio
n of
the
mar
ket,
whi
ch
mea
ns
ther
e
are
no
long
er
hug
e
runs
of a
few
best
selli
ng
mod

els.
The
boss
of the
Tsuts
umi
plant,
wher
e the
firm's
trend
y
Prius
hybri
d cars
are
made,
recall
s the
good
old
days
when
all
they
had
to do
was
churn
out
half a
millio
n
Camr
ys
and
Coro
nas.
Toda
y's
lines
have
been
adapt
ed
and
made
flexib
le so
that
no
fewer
than
eight
differ
ent
mode
ls can
be
manu
factured
simul
taneo
usly.
The
Prius


despit
e its
revol
ution
ary
engin
e
still
has to
share
an
asse
mbly
line
in the
Tsuts
umi
plant
with
sever
al
conve
ntion
al
mode
ls.

See
ds
of
suc
ces
s
Maki
ng all
these
chang
es at
home
is
relatively
easy
comp
ared
with
Toyot
a's
biggest
challe
nge,
now
that it
has
set
itself
the
goal
of
maki
ng
more
cars

outs
ide
Japan
than
at
hom
e.
Apa
rt
fro
m
seek
ing
to
swit
ch
pro
duct
ion
to
exp
orts,
Toy
ota
also
chas
ed
gro
wth
outs
ide
Japa
n by
buil
ding
thre
e
mor
e
plan
ts in
Nor
th
Am
eric
a
and
two
in
Eur
ope,
start
ing
with
Der
by
in
Brit
ain,
foll
owe
d by
Vale
ncie
nne

s in
the
north
of
Franc
e.
Betw
een
1993
and
2003,
overs
eas

prod
uctio
n
more
than
doubl
ed to
2
milli
on
units,
while
in
Japan
it
decli
ned
from
3.5
milli
on to
3
milli
on
befor
e
recov
ering
in the
later
years
to its
old
level,
boost
ed by
exports;
about
half
of
dome
stic
prod
uctio
n is
expor
ted.
This
globa
lizati
on
proce
ss has
transf
orme
d the
size
and
shape
of
Toyot
a. In
1980
Toyo-

ta
had
11
fact
orie
s in
nine
cou
ntri
es;
in
199
0 it
had
20
in
14
cou
ntri
es;
toda
y it
has
46
plan
ts in
26
cou
ntri
es.
In
addi
tion,
it
has
desi
gn
cent
res
in
Cali
forn
ia
and
in
Fra
nce
on
the
Ct
e
d'A
zur,
and
engi
neer
ing
centers
in
the
Detr
oit
area
and
in

Belgi
um
and
Thail
and.
Altho
ugh
Japan
remai
ns its
bigge
st
single
mark
et,
sales
toppe
d 2
millio
n in
North
Amer
ica
for
the
first
time
last
year,
and
in
Euro
pe
Toyot
a is
passi
ng
throu
gh
the 1
millio
n
mark,
with
5% of
the
mark
et,
after
a
long
perio
d of
slow
growt
h.
The
openi
ng of
plants
in
Turke
y and
Franc
e and
the
in-

trodu
ction
of the
Euro
peandesig
ned
Ya-ris
small
car
have
done
much
to
make
Toyotas
more
appea
ling
to
Euro
peans
,
while
in
Amer
ica its
entry
(not
witho
ut a
few
hitches)
into
the
enor
mous
mark
et for
pickup
truck
s and
sportutility
vehic
les
has
been
respo
nsible
for its
stead
y
marc
h to
beyo
nd
10%
of the
mark
et. It
is
now
brea-

thin
g
righ
t
dow
n
the
nec
k of
Chr
ysle
r.
Mr.
Cho
ack
now
ledg
es
that
suc
h
inte
rnation
al
gro
wth
and
glob
aliz
atio
n is
the
biggest
cha
nge
hap
peni
ng
to
the
com
pan
y.
He
sees
his
grea
test
chal
leng
e as
mai
ntai
ning
Toy
ota's
high
stan
dard
s in
suc
h
areas

as
qualit
y
while
it
grow
s so
fast
acros
s the
globe
. For
Toyot
a has
only
recen
tly
starte
d to
transf
orm
the
way
it is
run to
make
itself
a
truly
globa
l
comp
any
rather
than a
big
expor
ter
with
a
string
of
overseas
plants
. Its
topheavy
allJapan
ese
board
has
been
drasti
cally
slim
med
and
five
nonJapan
ese
execu
tives,
inclu
ding

Mr.
Press,
have
been
made
mana
ging
office
rs,
whic
h
mean
s that
they
sit on
the
execu
tive
com
mitte
e in
Toky
o, but
are
also
left
free
to run
their
overs
eas
opera
tions
on a
daytoday
basis
witho
ut
deferr
ing to
head
office
. For
Toyot
a,
that
is a
big
step

awa
y
fro
m
cent
raliz
ed
rule
by
Toy
ota
City
.
Ano
ther
leap
has
bee
n
the
crea
tion
of a
Toy
ota
Insti
tute,
not
just
for
trai
ning
Japa
nese
man
ager
s,
but
also
for
dev
elop
ing
gro
ups
of
exe
cuti

ves
from
all
over
the
world
. The
centr
e is
expre
ssly
mode
led
on
the
Croto
nville
Centr
e that
has
playe
d
such
a big
part
in the
succe
ss of
Gene
ral
Electric.
By
havin
g
squad
s of
mana
gers
moving
throu
gh
devel
opme
nt
cours
es,
head

THE SWISS DEMING

INSTITUTE
-7Ernst C. Glauser

The Toyota Phenomenon

office
can
keep
tabs
on
the
poten
tial of
its
peopl
e,
whils
t
ensur
ing
that
they
are
thorough
ly
steep
ed in
Toyot
a's
way
of
doing
thing
s,
whet
her it
be in
manu
factur
ing,
retailin
g,
purch
asing
and
so on.

But
globa
lizati
on
and
the
rapid
grow
th of
prod
uctio
n
now
in
place
s
such
as
Chin
a is

also straining
the learning
process
further down
the hierarchy.
Toyota has a
flying squad
of
line
workers who
move around
the world to
train locals at
new factories
or move in to
help out when
there is a
model change
going
on.
These
line
supervisors
train
local
workers.
Toyota
has
also
made
astute use of
joint-ventures
to ease the
strain
of
manning overseas
operations:
apart from its
original one
with GM in
California,
Toyota
now
has
another
with a local
company
in
Turkey, with
PSA Peugeot
Citron in the
Czech
Republic and
in
China,
which is the
fastest-

Figu
re 6:
Toyot
a
Prius
expan
ding
part
of
Toyot
a, in
line
with
the
count
ry's
rapid
motor
izatio
n.
Toyot
a
recko
ns
that it
will
learn
much
about
purch
asing
more
effecti
vely
in
Europ
e
from
its
Frenc
h
partne
r in
the
new
jointventu

, a four door
limousine
with a 1.5
liter
four
cylinder
internalcombustion
engine with
58 hp and an
electric
motor with
41 hp and a
nickel-metalhybrid
battery. The
car
was
launched in
December
1997
and
replaced by
a new model
in
Spring
2003
re,
whi
ch is
prep
arin
g to
unv
eil a
bud
get
car
for
the
Eur
opea
n
mar
ket
at
the
begi
nnin
g of
Mar
ch
200
5 at
the
Gen
eva
Mot
or
Sho
w.

But
the
com
pan
y is
find
ing

there
are
limits
to the
numb
er of
Japan
ese
mana
gers
and
forem
en
who
are
prepa
red to
work
as
expatriate
s,
either
on a
temp
orary
or
perm
anent
basis.
So it
has
opene
d a
Glob
al
Produ
c-tion
Centr
e in a
forme
r

produ
ction
area
in
Toyot
a
City.
Here,
on a
given
day
you
can
see
Filipi
no
and
Chine
se
work
ers
being
taugh
t how
to
asse
mble
Toyot
a
cars.
To
get
round
obvio
us
langu
age
barrie
rs the
instru
ction
make
s
heavy
use
of
video
recordi
ngs
and
interactive
DVD
s, a
sort
of
auto
mate
d,
virtua
l
versi
on of
watch
ing

how
Nell
y
doe
s it.

Th
e
be
st
ge
ts
be
tte
r
Per
hap
s
the
best
sing
le
exa
mpl
e of
Toy
ota
man
ager
s'
aver
sion
to
taki
ng it
easy
in
the
com
fort
zon
e is
bac
k
whe
re it
start
ed
in
the
mys
terie
s of
the
TPS
.
Mr.
Aga
ta,
one
of
the
firm
's
man

ufact
uring
exper
ts,
regar
ds his
job as
incul
catin
g the
virtue
s of
the
TPS
in a
youn
ger
gener
ation.
But
he
has
conclude
d that
the
comp
any
has to
raise
its
game.
We
have
alway
s
proce
eded
by
stead
y
impro
veme
nt,
he
says.
But
now
we
need
to
make
step
chang
es as
well
to
keep
ahead
.
That
mean
s
findin
g
radic

ally
differ
ent
ways
of
manu
factur
ing
thing
s like
bump
ers or
doors
,
reduc
ing
the
numb
er of

part
s,
and
dev
elop
ing
new
mac
hine
s to
for
m
part
s
mor
e
eco
no
mic
ally.
As
GM'
s
bon
ds
sink
tow
ards
junk
stat
us,
and
as
Japa
nese
car
mak
ers
stea
dily
over
haul
Am
eric
a's
Big
Thr
ee,
it
mus
t be
a
chil
ling
thou
ght
that
Detr
oit's
nem
esis
is
wor
-

king
on
ways
to
impro
ve its
perfo
rman
ce.
No
wond
er
one
GM
plann
er
muse
d
privately
that
the
only
way
to
stop
Toyot
a
woul
d be
the
busin
ess
equiv
alent
of
germ
warfa
-re,
findin
g a
pois
on
pill
or
soci
al
virus
that
could
be
infiltr
ated
into
the
comp
any
to
destr
oy its
cultur
e.

What
else
could
stop

Toyo
ta?
Soon
it
will
have
the
scale
to
outgu
n
GM.
A
techn
ological
revol
ution
will
not
threat
en it,
since
Toyo
ta is
leadi
ng
the
way
with
hybri
d
electrics
en
route
to
fullscale
fuelcell
electr
ic
cars.
Toyot
a
spend
s
regul
arly
aroun
d4%
of its
reven
ue on
resear
ch
and
devel
opme
nt
R&D
. In
2004,
the
expen

ditu
re
on
R&
D
amo
unte
d to
$
6.5
billi
onr,
whi
ch
is
3.94
%
of
this
year
s
total
reve
nue
of $
165
billi
on.
This
effo
rt
was
spe
nt
on
R&
D of
anti
cipa
tory,
adv
anc
ed
and
envi
ron
men
tal
tech
nologi
es
with
a
cent
ral
focu
s on
the
dev
elop
men
t of
a

fuel
cell
batter
y and
the
impa
ct of
expan
ding
new
mode
ls to
prom
ote
Toyot
as
stren
gth in
a
comp
etitiv
e
globa
l
mark
et for
the
future
.
Consu
mer
prefer
ence
for
exciti
ng
desig
ns?
Toyot
a has
show
n that
it can
play
that
game
also:
there
is a
stylis
h
edgin
ess in
recent
model
s such
as the
Prius,
Yaris,
the
new
Avens
is and
even
its

vener
able
Land
Cruiser
SUV.
At
least
the
man
from
GM
put
his
finger
on the
key to
Toyot
a's
succe
ss.
Pro-

vide
d its
cult
ure
can
be
sust
aine
d as
it
goe
s
fro
m
bein
g an
inte
rnat
iona
l
Jap
ane
se
com
pan
y to
a
glo
bal
one,
then
Toy
ota'
s
futu
re
see
ms
sec
ure.

W
hy
th
e
fut
ur
e
is
hy
bri
d
Toy
ota
beg
an
dev
elop
men
t of
a
new
car
for

the
21st
centu
ry,
whic
h
event
ually
turned
into
the
Prius,
as
early
as in
Septe
mber
1993.
The
goal
was
to
devel
op a
small,
but
never
theles
s
spaci
ous
car
with
a fuel
economy
better
than
47.5
miles
per
gallo
n
(4.95
liter
per
100
kilom
eter).
The
desig
n
effort
s led
to the
world
's
first
massprodu
ced
petrol
electr
ic

hybri
d car,
powe
red
by
both
an
intern
alcomb
ustio
n
engin
e and
an
electr
ic
motor
. The
secon
dgener
ation
Prius,
launc
hed
in
2003,
won
some
of the
indus
try's
most
presti
gious
awar
ds
it has
just
been
name
d
Euro
pean
Car
of the
Year
2005

and
gener
ated a
buzz
out of
all
propo
rtion
to the
car's
preva
lence
on
the
roads
.

The
succ
ess
of
the
Priu
s
has
take
n
Toy
ota
by
surp
rise.
The
aver
age
wait
at
Am
eric
an
deal
ersh
ips
is
curr
entl
y six
mon
ths,
even
thou
gh
the
com
pan
y
incr
ease
d its
sale
s
targ
et
for
Nort
h
Am
eric
a
fro
m
its
initi
al
estimat
e of
36,0
00
unit
s to
47,0

00 for
2004.

To
meet
dema
nd,
Toyot
a
anno
unced
anoth
er
incre
ase in
Augu
st,
sayin
g it
woul
d
push
mont
hly
globa
l
produ
ction
up
next
year
by
50%
to
15,00
0
cars,
and
doubl
e its
allot
ment
for
Amer
ica to
100,0
00
units.
Whil
e that
numb
er is
still
only
onequart
er of
last
year's
sales
for
Amer
ica's
most

popular
Toyot
a

mod
el,
the
Ca

mry,
it
show
s

Ernst C. Glauser
-8THE SWISS DEMING
INSTITUTE

The Toyota Phenomenon

that
cons
umer
s are
willi
ng to
pay a
prem
i-um
for
clean
,
envir
onme
ntally
frien
dly
cars
as
long
as
there
is no
need
to
comprom
ise
on
perfo
rman
ce.
Japan
exper
iment
ed
with
the
comb
inatio
n of a
comb
ustio
n
engin
e and
an
electr
ic
motor
since
the
sixtie
s.
The
Germ
an car
manu
factur
ers
did
not
think
this

to
be a
seri
ous
alter
nati
ve
and
thus
did
not
pay
atte
ntio
n,
eve
n
after
the
first
editi
on
of
the
Priu
s
ente
red
the
mar
ket
in
199
7.
Exp
erts
are
now
con
vinc
ed
that
igno
ring
this
develo
pme
nt in
auto
moti
ve
tech
nolo
gy
can
be
com
pare
d to
the
Wo
rst
Poss
ible
Acc

ident
in the
nucle
ar
field.
GM
Chair
man
and
CEO
Rick
Wago
ner
now
openl
y admits
that
at
prese
nt
hybri
ds are
the
best
possi
ble
contri
butio
n of
indivi
dual
transportat
ion to
the
prote
ction
of the
envir
onment.
GM
Vice
Chair
man
Bob
Lutz
confe
s-ses
at the
Detro
it
Moto
r
Show
2005
that
Weste
rn
manu
factur
ers
miss
ed the

train
and
every
body
prese
nt
agree
d.

Other
carm
akers
are
scurr
ying
to
catch
up.
Besid
es
this
year's
new
Ford
Esca
pe
and
Hond
a
Acco
rd
hybri
ds,
Toyo
ta
will
add
two
sport
utilit
y
vehic
les
(SU
Vs)
to its
hybri
d
lineup
early
next
year.
Daim
lerCh
rysler
recen
tly
anno
unced
that it
will
introd
uce a
Merc

edes
hybr
id
with
in
the
next
five
year
s,
and
Pors
che
is
cons
ideri
ng a
hybr
id
vers
ion
of
its
Cay
enn
e
SU
V.
Eve
n
Gen
eral
Mot
ors,
one
of
the
stro
nges
t
prop
one
nts
of
hydr
oge
n
fuel
-cell
cars
, has
jum
ped
on
the
hybr
id
ban
dwa
gon
with
two
pick
-up
truc

ks, a
sedan
and
sever
al
SUVs
to
follo
w.
The
US
indus
try
anno
unced
that it
will
launc
h at
least
two
dozen
gasoli
neelectr
ic
hybri
d cars
withi
n
next
five
years
or so.
But
until
these
cars
are
ready,
Toyota and
Hond
a will
conti
nue
to
make
the
deals
in the
show
room
s.

Ingr
edi
ent
s of
Toy
ota
s
Suc
ces
s

There
are
many
books
that
provi
de
insig
ht
into
the
tools
and
meth
ods
of
Toyot
as
Producti
on
Syste
m
(TPS)
. One
of the
most
recent
and
also
the
most
exten
sive
book
was
writte
n by
Jeffre
y K.
Liker,
Profe
ssor
of Industri
al and
Oper
ations
Engin
eerin
g at
the
Univ
ersity
of
Michi
gan
in
Ann
Arbor
,
USA
[4].
Ann
Arbor

also
host
s
the
Toy
ota
Tec
hnica
l
Cen
ter
(TT
C),
whe
re
sign
ifica
nt
portion
s of
the
Ca
mry
and
Ava
lon
seda
ns
and
Sien
na
mini
vans
for
the
U.S.
mar
ket
are
desi
gne
d
and
engi
neer
ed.
Gar
y
Con
vis,
Man
agin
g
Offi
cer
of
Toy
ota
and
Pres
iden

t of
Toyot
a
Moto
r
Manu
fac-

turin
g in
Kent
ucky,
USA,
descr
ibes
his
perso
nal
exper
ience
in the
fore
word
of
this
book
as
follo
ws:
"Whe
n I
joine
d
Toyot
a
after
18
years
in the
U.S.
auto
mobil
e
busin
ess, I
didnt
know
exact
ly
what
to
expec
t. But
I was
hopef
ul. I
knew
that I
wasn
t
comf
ortab
le
with
the
direct
ion
that
Amer
ican
auto
mobile

man
ufac
turi
ng
was
taki
ng,
and
I
felt
Toy
ota
mig
ht
be
diff
eren
t. In
no
time
at
all I
noti
ced
a
fun
dam
enta
l
diff
eren
ce
betwee
n
Toy
ota
and
my
prev
ious
emp
loye
rs.
At a
Toy
ota/
GM
join
t
vent
ure
pla
nt
in
Fremon
t,
Cali
forn
ia,
call
ed
NU
MM
I
(Ne

w
Unite
d
Moto
r
Manu
factu
ring),
I
witne
s-sed
the
transf
orma
tion
of a
workf
orce
from
one
of the
worst
in the
Gene
ral
Moto
rs
syste
m to
one
of the
best
manu
factu
ring
facilit
y in
the
Unite
d
State
s.

Thro
ugh
his
resea
rch,
Liker
identi
fies
fourteen
princ
iples
of the
Toyot
a
Way,
whic
h he
divid
ed
into
the
follo
wing

four
secti
ons.
He
does
not
com
ment
on
whet
her
the
analogy
to
Demi
ngs
famo
us
fourt
een
point
s of
mana
geme
nt is
intent
ional
or
accid
ental.
Long
Term
Philo
soph
y

Toyot
a is
about
longterm
thinki
ng.
The
focus
from
the
very
top of
the
comp
any is
to
add
value
to
custo
mers
and
societ
y.
This
drive
s
a
long-

term
appr
oac
h to
buil
ding
a
lear
ning
orga
niza
tion,
one
that
can
ada
pt to
cha
nges
in
the
envi
ron
men
t
and
surv
i-ve
as a
prod
ucti
ve
orga
niza
tion.
Wit
hout
this
foun
dati
on,
non
e of
the
inve
stm
ents
Toy
ota
mak
es
in
cont
inuo
us
imp
rove
men
t
and
lear
ning
wou
ld
be
poss
ible.

T
h
e
Ri
g
ht
Pr
o
ce
ss
W
ill
Pr
o
d
u
ce
th
e
Ri
g
ht
R
es
ul
ts

Toyot
a is a
proce
ssorien
ted
comp
any.
They
have
learn
ed
throu
gh
exper
ience
what
proce
sses
work,
begin
ning
with
the
ideal
of
onepiece
flow.
Flow
is the
key
to
achie
ving
best
qualit
y at
the
lowe
st
cost

with
high
safet
y and
mora
le. At
Toyo
ta
this
proce
ss
focus
is
built
into
the
comp
anys
DNA
, and
mana
gers
belie
ve in
their
heart
s that
using
the
right
proce
ss
will
lead
to the
result
s
they
desir
e.
Ad
d
Val
ue
to
the
Or
ga
niz
ati
on
by
De
vel
opi
ng
Yo
ur
Pe
opl
e
an
d
Par
tne
rs

The
Toyot

a
Way
incl
udes
a set
of
tool
s
that
are
desi
gne
d to
sup
port
peo
ple
cont
inuo
usly
imp
rovi
ng
and
cont
inuo
usly
develo
ping
.
For
exa
mpl
e,
onepiec
e
flow
is a
very
dem
andi
ng
proc
ess
that
quic
kly
surface
s
prob
lem
s
that
dem
and
fast
solu
tion
s, or
else
prod
ucti
on

will
stop.
This
suits
Toyot
as
empl
oyee
devel
opme
nt
goals
per-

fectly
becau
se it
gives
peopl
e the
sense
of
urgen
cy
neede
d to
confr
ont
busin
ess
problems
. The
view
of
mana
geme
nt at
Toyot
a is
that
they
build
peopl
e, not
just
cars.
C
o
nt
in
u
o
u
sl
y
S
ol
vi
n
g
R
o
ot
Pr
o
bl
e
m
s
D
ri
v
e
s
O
rg
a
ni
za

t
i
o
n
a
l
L
e
a
r
n
i
n
g

The
hig
hest
leve
l of
the
Toy
ota
Wa
y is
organ
izat
ion
al
lear
nin
g.
Ide
ntif
yin
g
root
cau
-ses
of
pro
ble
ms
and
pre
ven
ting
the
m
fro
m
occ
urri
ng
is
the
foc
us
of
Toy
ota
s
con
tinuo
us
lear
nin

g
syste
m.
Toug
h
analy
sis,
reflecti
on
and
com
muni
catio
n of
lesso
ns
learned
are
centr
al to
impr
ovem
ent
as is
the
disci
pline
to
stand
ardiz
e the
bestknow
n
practi
ces.
D
if
f
e
r
e
n
c
e
s
b
e
t
w
e
e
n
t
h
e
J
a
p
a
n
e
s
e

a
n
d
W
e
s
t
e
r
B
u
si
n
e
s
s
P
r
a
c
ti
c
e
s

t
l
y
g
o
v
e
r
n
e
d
b
y
a

Toyo
tas
busin
ess
pract
ices
differ
from
those of
West
ern
auto
mobi
le
manu
factu
rers
in a
num
ber
of
aspec
ts:

O
p
e
r
a
ti
o
n
s
a
r
e
s
t
r
i
c

s
u
s
t
a
i
n
a
b
l
e
b
u
s
i
n
e
s
s
p
o
l
i
c
y
,
w
h
i
c
h
i
s
p
a
s
s
e
d
o
n

f
r
o
m
o
n
e
g
e
n
e
r
a
ti
o
n
t
o
t
h
e
o
t
h
e
r
a
n
d
n
o
t
b
y
s
h
o
r
t
t
e
r
m
d
e
c
i
s
i
o
n
m
a
k
i
n
g
o
r
b
y
t
h

e
a
tt
it
u
d
e
s
o
f
c
h
a
n
g
i
n
g
m
a
n
a
g
e
m
e
n
t
t
e
a
m
s
a
n
d
v
a
r
i
a
b
l
e
c
u
s
t
o
m
e
r
t
a
s
t
e
s
.

G
r
o
w
t
h

c
o
m
e
s
f
r
o
m
t
h
e
i
n
s
i
d
e
o
u
t
a
n
d
n
o
t
t
h
r
o
u
g
h
m
e
r
g
e
r
s
a
n
d
a
c
q
u
i
s
i
t
i
o
n

s
,
i
n
o
t
h
e
r
w
o
r
d
s
,
g
r
o
w
t
h
t
h
r
o
u
g
h
c
o
n
ti
n
u
a
l
i
m
p
r
o
v
e
m
e
n
t
o
f
p
r
o
d
u
c
t
s
a
n
d
s
e
r
v

i
c
e
s
a
n
d
n
o
t
t
h
r
o
u
g
h
c
o
n
ti
n
u
e
d
r
e
s
t
r
u
c
t
u
r
i
n
g
.

s
t
o
m
e
r

P
r
o
d
u
c
ti
o
n
i
s
c
o
n
t
r
o
ll
e
d
b
y
c
u

p
r
o
d
u
c
t
i
o
n

d
e
m
a
n
d
(

p
u
l
l

s
y
s
t
e
m
)
n
o
t
b
y

c
a
p
a
c
i
t
y
(

u
s
h

s
y
s
t
e
m
).

Q
u
a
li
f
i
e
d
e
m
p
l
o
y
e
e
s
a
r
e
a
tt
r
a
c
t
e
d
w
it
h
t
h
e
p
o
s
s
i
b
il
it
y
t
o
p
a
r
ti
c
i
p
a
t
e

i
n
t
h
e
c
o
m
p
a
n
y

s
s
t
r
i
v
i
n
g
t
o
m
e
e
t
a
n
d
e
x
c
e
e
d
c
u
s
t
o
m
e
r
e
x
p
e
c
t
a
ti
o
n
s
w
it
h
p
r
o
d
u
c
t
s

o
f
u
n
p
a
r
a
l
l
e
l
e
d
q
u
a
l
i
t
y
a
n
d
n
o
t
w
i
t
h
c
o
m
p
e
n
s
a
t
i
o
n
s
c
h
e
m
e
s
.
T
o
y
o
t
a

e
m
p
l
o
y
e
e
s
w
o
r
k
f
o
r
a
w
i
n
n
e
r.
W
h
o
w
a
n
t
s
t
o
w
o
r
k
f
o
r
a
n
e
m
p
l
o
y
e
r,
w
h
o
s
e
p
r
o
d
u
c
t
s
h
a

v
e
t
o
b
e
f
o
r
c
e
d
o
n
t
o
t
h
e
c
u
s
t
o
m
e
r
s
w
it
h
d
i
s
c
o
u
n
t
s
a
n
d
i
n
c
e
n
ti
v
e
s
?
W
h
o
w
a
n
t
s
t
o
w
o

r
k
f
o
r
a
l
o
o
s
e
r
?
N
o
u
n
i
o
n
s
a
r
e
a
d
m
i
t
t
e
d
w
h
i
c
h
f
o
r
c
e
b
o
t
h
m
a
n
a
g
e

m
e
n
t
a
n
d
e
m
p
l
o
y
e
e
s
t
o
d
e
f
e
n
d
t
h
e
i
r
o
w
n
i
n
t
e
r
e
s
t
s
a
n
d
b
y
s
o
d
o
i
n
g
d
i
s
t
r
a
c
t
f
r
o
m

t
h
e
s
h
a
r
e
d
r
e
s
p
o
n
s
i
b
il
it
y
t
o
s
a
ti
s
f
y
c
u
s
t
o
m
e
r
s
.

a
n

F
o
r
m
o
r
e
t
h

e
x
t
r
a
o
r
d
i

5
0
y
e
a
r
s
,
T
o
y
o
t
a
e
x
p
e
r
i
e
n
c
e
d
a
n

THE SWISS DEMING

INSTITUTE
-9Ernst C. Glauser

n
a
r
y
h
i
s
t
o
r
y
o
f
c
o
n
ti
n
u
o
u
s
g
r
o
w
t
h
w
it
h
o
u
t
m
a
j
o
r
l
a
y
o
ff
s

The Toyota Phenomenon

d
e
s
p
i
t
e
t
h
e
u
p
s
a
n
d
d
o
w
n
s
o
f
n
a
t
i
o
n
a
l
a
n
d
g
l
o
b
a
l
e
c
o
n
o
m
i
e

s
.

a
few
.

Co
mp
ens Ho
ati w
on
sch mu
em ch
es do
in
Ge
lin
e rm
wit an
h s
trai
nin like
g, the
exp car
eri
s
enc
e the
and y
res are
po
nsi dri
bili vin
ty g?
acr
oss Since
all 1968,
the J.D.
ran Power
ks and
fro Associa
m tes has
top been
to conduct
ing
bot
quality
to
and
m
custom
inst
er saead
tisfacti
of
on
sky
researc
roc
h based
ket
on
ing
survey
sal
reari
sponses
es
from
unr
million
es
of
late
consum
d
ers
to
worldco
wide.
mp We do
an not rely
y on
per "expert
for opinion
ma ", says
nce J.D.
for Power.

Our
prod
uct
and
serv
ice
rank
ings
in
no
way
refle
ct
the
opin
ions
or
pref
eren
ces
of
the
firm
,
and
we
do
not
revie
w,
judg
e or
test
prod
ucts
and
serv
ices
ours
elve
s.
We
repr
esen
t the
voic
e of
the
cust
ome
r by
trans
latin
g
surv
ey
resp
onse
s
into
infor
mation
that
com

pa one of
nie the
s large-st,
wo most
rld compre
wi hensive
de historic
use al
to custoim- mer
pro satisfact
ve ion
qu databas
alit es
in
y existenc
an e,
d which
cus includes
to feedbac
me k
on
r virtuall
sati y
all
sfa aspects
cti of the
on, shoppin
as g,
we buying,
ll and proas duct
to and
hel service
p owners
co hip
nsu experie
me nce.
rs Up to
ma now,
ke J.D.
bet Power
ter and
dec Associa
isi tes has
ons conduct
. ed three
J.D studies
. on the
Po satisfac
we -tion of
r Germa
an n
car
d owners.
As Studies
soc similar
iat to those
es of J.D.
has Power
de are
vel conduct
op ed all
ed over
an the
d world
ma by
int marketi
ain ng and
s consum

er
orga
niza
tion
s.

69-Merce
des AKlass
e

1-Toy
ota
77--VW
Cor
Golf
olla
84--VW
2-Passat
Toy
ota 101--VW
Av
Polo
en
sis
3-Ho
nd
a
Jaz
z
4-Toy
ota
RA
V4
5-Pe
uge
ot
607

110--Fiat
Multipla
111--Kia
Carnival
112-Citroen
Berlingo
113--Fiat
Doblo
114-Chry
sler
PT
Cruis
er

6--Mitsubishi
115--Fiat
Galant Brava
7-Toy
ota
Jar
is

116-Merc
edes
MKlas
se

8-Sa 117-ab Chrysler

9-3 Voyager/
Grand
9-Voyager
Ma
zda
118--Fiat
626
Seicento
10-119-MitsubishiMerc
Carisma edes
VKlas
se
26-Mercedes
E-Klasse
25BM
W
3er
30Au
di
A4
40VW
Bor
a
39Op
el
Ast
ra
42-Mercedes
C-Klasse

the Ten Most Satisfactory Makes

the Ten Best Sold German Cars
the Ten Least Satisfactory Makes
65

70

The
result
s are
alway
s
more
or
less
the
same.
Year
after
year,
Toyot
a
ranks
first
in
reliab
ility
and
custo
mer
satisf
actio
n
with
a
signif

icant
lead
over
other
Japanese manufacturers
leaving
all
others
far
behind. Over
decades
of
consistent
performance
Toyota
accumulated
an immense
capital in

75

80

85

90

German car
owners
as
expressed by
the
Customer
Satisfaction
Index CSI.
Shown are
the ten most
satisfactory
makes, the
ten best sold
German cars
and the ten
least
satisfactory
makes out of
119
classified
models.

Customer Satisfaction Index CSI

Figu
re 7:
Extr
act
from
the
JD
Pow
er
Repo
rt
2004
on
the
satisf
actio
n of
the
terms
of
publi
c
trust
motiv
ating
custo
mers
to
return
and
to
take
their
friend
s
along
.
Toyot
a
does
not
need
to
offer
huge
discount
s and
other
sales
incen
tives
to
mov
e the
metal
.
The
result
imme
diatel
y
show

s up
und
er
the
bott
om
line.
Eve
n
thou
gh
Toy
ota
is
not
yet
the
bigg
est
pro
duc
er
of
cars
, its
mar
ket
capi
taliz
atio
n
stan
ds
high
abo
ve
all
othe
rs as
sho
wn
in
Fig
ure
10.
Toy

ota
ranks
highe
st in
every
of the
three
studie
s
cond
ucted
with
Germ
an
custo
mers
in
2002,
2003
and
2004.
In the
2004study

Toyot
a
mode
ls are
at the
top in
three
out of
seven
newvehic
le
segm
ents.
Two
other
Japanes
e
manu
factur
ers,
Hond
a and
Mazd
a,
along
with
Porsc
he
and
Peug
eot,
each
have
topranki
ng
mode
ls in
one
segm
ent.

The
topranke
d
mode
ls in
each
of
the
seven
segm
ents
are:

Smal
l
Car:
Hond
a
Jazz

u
M

e
d

o
t

o
y

n
s

r
o
l
l
a

U
p

e
r

i
s

E
x

/
L

V
:

C
a
r
:

M
a
z

P
e

d
a

u
g

m
a

7
S
p
o
r

S
U
V
:

t
s

T
o

The
study
analy
ses
custo
mer
satisf
actio
n
based
on
respo
nses
enco
mpas
sing
77 attribut
es
group
ed
into
four
key
meas
ures
(the
impor
tance
of
each
meas
ure is
show
n as a
perce
ntage
):
qualit
y and
reliab
ility
(30%
);
vehic
le
appea
l
(25%
),
whic
h
inclu-

Ernst C. Glauser
- 10 THE SWISS DEMING

INSTITUTE

The Toyota Phenomenon

M
er
ce
1
de
sBe
T
nz
o
y
12--Opel
o
t
13-a
Dai
hats
2
u
14--Ford
M
15-a
Rena
z
ult
d
a
16-Hyun
3
dai
-S
17-u
Suzuki
b
a
18--Seat
r
u
19-Citro
4
n
2
H
1
o
n
d
V
a
o
l
5
k
-s
B
w
M
a
W
g
e
6-n
Mits
ubis
20--Kia
hi
7
-V
o
lv
o

22-Peu
geot

8A
ud
i

24--Mini

9
S
k
o
d
a

23-Smart

2
5
-A
lf
a
R
o
m
e
o
26--Fiat

1
0Ni
ss
a
n
11--

27-Chry
sler
28-Dae
woo

65
70
75
80
85
90

who
rated
their
exper
ience
s
Customer
Satisfaction
Index
CSI
with
their
Figure
8:
veExtract from
hicles
the
JD
, their
Power
deale
Report 2004
rs
on
the
and
satisfaction
the
of
the
cost
German car
of
owners
as
owexpressed by
nersh
the
ip
Customer
after
Satisfaction
two
Index CSI.
years.
Shown is the
In
ranking of
total,
the
28
28
brands
as
brand
considered
s and
by the study.
119
Especially
mode
emphasized
ls are
is
the
inclu
bandwidth of
ded
the
CSIin the
values
of
study.
each

manufacture
rs models.

J.D.
Powe
r and
Asso
ciate
s
cond
ucts
CSI
studi
es
throu
ghou
t the
worl
d. In
some
mark
ets,
like
the
Unite
d
State
s, the
study
is
prim

arily focused
on
dealer
service satisfaction.
The results
of the JD
Power
Report 2004
give raise to
some
comments:
Mi
rr
or
fo
r
V
W
s
ec
o
n
o
mi
c
pr
o
bl
e
m
s

The
VW
Golf,
Germanys by
most popular
car, stands on
place 77 of
119 classified
makes.
In
2003 the car
ranked 100th
of
115
classified and
in 2002 82nd
of 132 classified.
The
introduction
of the brand
new Golf V
turned out to
be a disaster.
Potential
customers
could only be
enticed to by
the car with
discounts and
incentives
unknown
before. The
statistics of
the
reliability
of
automobiles
as established
by the Swiss

Drive
rs
Asso
ciatio
n
TCS
2004
(Figu
re 9)
show
s,
that
the
reliab
ility
of
VW
auto
mobil
es
conti
nuou
sly
deteri
orate
d
since
about
1990.
With
popul
ar
cars
as
bad
as the
VW
Golf
it
does
not
surpri
se
that
the
mark
et
capit
alisat
ion of
VW
is but
a
small
fracti
on
(8.9
%) of
Toyot
as
worth
.
W
h
a
t
h

appened
with
Mercede
s Benz?

The products
of
this
producer are
ranked 24th
(Mercedes SClass), 26th
(Mercedes EClass), 33rd
(Mercedes
CLK), 42nd
(Mer-cedes
C-Class),
69th
(Mercedes AClass), 78th
(Mercedes
SLK), 108th
(Mercedes
Vaneo), 116th
(Mercedes
M-Class) and
fi-nally as the
red light on
the list 119th
(Mer-cedes
V-Class). No
other
automobile
pro-ducer has
products
which vary so
much
in
customer
satisfaction,
say quality.
Unifor-mity
is
an
important
aspect
of
quality. From
this
viewpoint
Mercedes is
indeed
the
worst of all.
Since
the
foundation of
MercedesBenz on June
acti
des
on
perfo
(23
rman
%);
ce,
and
desig
own,
ners
comf
hip
ort
cost
and
s
fea(22
tures;
%),
servic
whi
e
ch
satisf

28,
1926,
the
cars
with
the
threepointed
star
on
their
hood
s
beca
me
objec
ts of
pride
for
their
wellto-do
owne
rs
and
all
those
that
want
ed to
look
alike.
The
mega
loma
nia of
Merc
edesBenz
gamb
les
with
the
trust
of a
large
client
ele
that
was
built
inclu
des
fuel
consu
mptio
n,
insur
ance
and
costs
of
service/r
epairs

. The
top
four
brand
s in
the
overa
ll
ranki
ng
are
Japan
ese.
Toyot
a scores
84.4
point
s out
of a
possi
ble
100,
placing
it
signif
icantl
y
ahead
of
Mazd
a,
Suba-

ru
and
Hon
da,
whi
ch
scor
e
81.
6,
81.
5,
and
81.
1,
resp
ecti
vely
.
Ger
man
man
ufac
ture
rs
BM
W,
Aud
i,
Mer
ced
esBen
z
and,
for
the
first
tim
e
Ope
l,
perf
orm
abo
ve
the
ind
ustr
y
aver
age.
The
200
4
Ger
man
y
CSI
stud
y is
bas
ed
on
the

respo
nses
of
24,48
3
vehic
le
owne
rs

up
over
deca
des.
Not
long
ago,
Merc
edes
was
top in
presti
-ge
and a
symb
ol for
qualit
y and
reliab

ility.
The
mo
men
t a
cust
ome
r of
a
Mer
ced
es
receiv
ed a
new
car,
he
had
to

order
the
next
one,
when
he
wante
d to
have
it
deliv
ered
when
when
turnin
g the
old
one
in.
Dis-

THE SWISS DEMING

INSTITUTE
- 11 Ernst C. Glauser

The Toyota Phenomenon

Toyota

Audi

BMW

Mercedes

VW

100

VW
90

Mercedes
80

Audi
BMW

70

Toyota

60

Subaru

50

J-2000

J-1999

J-1995J-1996J-1997J-1998

J-1994

J-1992J-1993

J-1991

J-1986J-1987J-1988

J-1989
J-1990

J-1985

J-1983J-1984

At the beginning of the 1990s a study

showed that Toyota made the Lexus with
the same number of man-hours that Mercedes had to spend on warranty alone.
The film showed how German companies
are shunting the previous world champion exporter into a siding with sloppy work,
expensive procedures and poor customer
relations ".
The film closes with a little song that says
a lot about the present situation in Europe
in general and in Germany in particular.

40
J-1982

Number

of Breakdowns per Year and 1000 Vehicles

Subaru

Good night Germany, only a single

2000,
ARD
(Association
of the
star
is shining,
Are you
in Broadthe decacasting
Corporation
of Germany) screened
dency
too?
a remarkable documentary film with the titWithout
you, how
will our
great indule The
Fairy-Tale
of Made
in Germany".
strial
nation
ever
find
salvation
The preview of this documentary hadfrom
the
the chaos that surrounds you.
following comment:

Source: Breakdown Statistics of the Swiss Drivers Association TCS 2004

Figure 9: Extract from the breakdown statistics of the Swiss Drivers Association TCS
2004. The study only considers cars with more than four years of age. Shown are the
results for Subaru, Toyota, BMW, Audi, Mercedes and VW over the period 1982-2000
counts and other sales incentives were out
of discussion.
Since Jrgen E. Schrempp founded his
Welt AG in 1998 to satisfy his ambition
to become one of the key players in the
automobile industry, not one year passed
without a fire somewhere in his diverse
conglomerate (Mercedes-Benz, Chrysler,
Maybach, smart, Mitsubishi Fuso and

ducts and the development and the launching of innovative, attractive and reliable
cars.
The statistics of the reliability of automobiles as established by the Swiss Drivers
Association 2004 TCS (Figure 9) shows
that the reliability of the Mercedes cars deteriorated after the launching of the Mercedes C-Class in 1985 and worsened dra-

others). He had to act as a fire-fighter in-

matically since then.

The song describes a gloomy vision of

Germanys future. When this film was aired
on ARD, nobody was yet willing to accept
that this depressing scenario could ever
become reality.

stead of looking after the quality of the pro-

On Wednesday evening, 9th February,

In the meantime, Germanys unemployed

Market Capitalisation of the Ten Largest Automobile Manufacturers

Market Capitalisation
160.0

Number of Units Sold

10000

Good night Germany, when will you

understand that industrial perfection
requires a new direction.
(liberally
Benjamin.)
translated from the Lyric of Nick

workforce rose to 5.2 million (March 2nd,

2005). All sorts of countermeasures are
being discussed, most of them merely administrative in nature. Yet nobody is wil-

8000
7000

100.0

6000

80.0

5000

60.0

4000
3000

40.0

2000
46.4

Honda

1000
0

ling to openly admit that the film The FairyTale of Made in Germany" revealed the root
of the problem.
Obviously, the situation has to aggravate
even further for decision makers to overcome their complacency and become active.

W. Edwards Deming and

Toyota

Renault

22.1

47.1

Nissan

9.0

HyundaiAutomotive

14.3

41.8

DaimlerChrysler

PSA/PeugeotCitron

12.2

Volkswagen

24.8

Ford

0.0

Toyota

23.3

20.0

Number of Units Sold in Thousands

120.0

136.4

9000

General Motors

Market Capitalisation in Billion USD

140.0

Figure 10: Market Capitalisation and number of cars sold of the worlds ten largest
automobile manufacturers as a mirror for the quality and reliability of their cars
Ernst C. Glauser

- 12 -

THE SWISS DEMING INSTITUTE

The Toyota Phenomenon

D
e
m
i
n
g
i
n
t
h
e
e
y
e
s
o
f
h
i
s
c
o
n
t
e
m
p
o
r
a
r
i
e
s
At
the
1991
Demi
ng
Prize
cere
mony

,
key
personalities
of
the
Japanese
industry used
the following
words
to
recognize the
contribution
of
W.
Edwards
Deming to the
recovery of
Japan
after
World War II.

Shoichiro
Toyoda,
Honorary
Chairman
and director
of
Toyota
Motor Corp.:
There is not
a day I don't
think about
what Dr. Deming meant
to
us.
Deming
is
the core of
our
management.

Koji
Kobayashi,
chairman
emeritus of
NEC:
Deming
made a great
contribution
to
the
recovery of
Japan's
economy
after the to-tal
war.
We
needed
his
authority. He
fasci-nated
the Japanese
people.
Yoji
Akao,
engineering
professor at
Tema-gawa
University:
Hes
the
person who
introduced
quality
control after
the
devastation of the

war
and
who
was
the
star-

Design
and
Redesign

Suppliers of
Materials and
Equipment

Tests of Processes,
Machines, Methods
and Costs

D
Figure 11:
The
revolutionar
y new view
of looking at
production
as a system
and not a
sequence of
unrelated
mechanical
processes
was the basis
for
the
success
of
Japanese
products on
the
world
market.

The

De
mi
ng
Ma
na
ge
me
nt
Ph
ilo
so
ph
y
Fro
m
195
0
onw
ard,
De
min
g

Distribution

Production, Assembly, Inspection

ting
point
of
the
whol
e
devel
opme
nt of
qualit
y
contr
ol in
Japan
.
Japan
owes
a
great
deal
to
him.

Rese

Consu
Receipt and
Test of
Materials

Cons

explai
ned to
top
mana
geme
nt in
qualit
y and
produ
ctivity
semin
ars
his
qualit
y
philos
ophy.

The
impa
ct of
these
semin
ars on
the

course of
world
wide
econo
my
canno
t be
overesti
mate
d.
Their
influe
nce
devel
oped
to
one
out of
the
10
most
signif
icant
turnin
g
point
s
(His
torys
Hidd
en
Turni
ng
Point
s) in
huma
n
histor
y
durin
g the
past
two
millenni
ums.
Apost
le
Paul,
who
carrie
d
Christiani
ty to
the
Roma
n
Empi
re,
was
the
first,
Demi

ng
the
last.
This
asse
ssm
ent
was
mad
e by
Dan
iel
J.
Boo
rstin
,
Hist
oria
n,
Puli
tzer
Priz
ewin
ning
jour
nali
st,
Dire
ctor
of
the
US
Libr
ary
of
Con
gres
s
fro
m
197
5
unti
l
198
7.
The
sam
e
opin
ion
is
expr
esse
d by
Joh
n O.
Whi
tney
,
Prof
esso
r at
the

Colu
mbia
Univ
ersity
Graduate
Scho
ol of
Busin
ess
and
the
Harv
ard
Busin
ess
Scho
ol.Ba
ck to
Conte
nts

The
Sys
tem
s
Vie
w
Demi
ng
taught
the
Japan
ese
that
produ
c-tion
is a
syste
m and
not a
seque
nce of
unrelate
d
mech
anical
proce
sses.
The
Japan
e-se
had
knowl
edge,
great
knowl
edge,
but it
was
in bits
and
pieces

,
uncoo
rdinat
ed.
This
flow
diagra
m
(Figur
e 11)
direct
ed
their
know
-ledge
and
effort
s into
a
syste
m of
produ
ction,
geare
d to
the
marke
t
namel
y,
predic
-

tion
of
nee
ds
of
cust
ome
rs.
The
who
le
wor
ld
kno
ws
abo
ut
the
resu
lts.
Sup
plie
s
com
e in
fro
m
vari
ous
sour
ces
e.g.
A,
B,
C
and
D.
The
y go
thro
ugh
vari
ous
stag
es.
The
y
com
e
out
as a
pro
duct
,
whi
ch
mig
ht
be
sem
ifinis
hed.
The
pro
duct

is different
from
what
went
in.
The
produ
ct
goes
into
distri
butio
n, it
goes
to
one
or
more
custo
mers.
Cons
umer
resear
ch
tries
to
discover
what
impro
veme
nt or
innov
ation
in
produ
ct or
servic
e
might
help
the
custo
-mer
in the
future
and
will
entice
him
to
buy.
That
may
call
for
differ
ent
input
s,
desig
n or
redesi
gn of
produ

ct or
servic
e.

s
,

Ever
ybod
y
know
s
what
a
syste
m is
but
nobo
dy
can
defin
e it.

e
a
c
h

1)

A
s
y
s
t
e
m
i
s
a
w
h
o
l
e
c
o
n
s
i
s
ti
n
g
o
f
t
w
o
o
r
m
o
r
e
e
l
e
m
e
n
t

o
f
w
h
i
c
h
c
a
n
d
e
t
e
r
m
i
n
e
t
h
e
b
e
h
a
v
i
o
r
o
f
t
h
e
w
h
o
l
e
.

2) H
o

w
o
n
e
e
l
e
m
e
n
t
i
n
f
l
u
e
n
c
e
s
t
h
e
b
e
h
a
v
i
o
r
o
f
t
h
e
w
h
o
l
e
d
e
p
e
n
d
s
a
l
s
o
o
n
w
h
a
t
o
t

h
e
r
e
l
e
m
e
n
t
s
a
r
e
d
o
i
n
g
.
3) N
o
m
a
tt
e
r
w
h
i
c
h
w
a
y
e
l
e
m
e
n
t
s
a
r
e
g
r
o
u
p
e
d
,
e
v
e
r
y
g
r
o
u

p is a
whol
i e,
n whic
f h
l cann
u ot be
e split
n into
c differ
e ent
s parts
witho
t ut
h losin
e g its
defin
b ing
e prope
h rties.
a
v
i
o
r
o
f
t
h
e
w
h
o
l
e
.
The
se
thre
e
defi
niti
ons
are
incl
ude
d in
the
foll
owi
ng
stat
eme
nt:
The
syst
em

One
of
the
best
know
n
syste
ms
and
also
the
most
comp
lex is
the
huma
n
body.
Syste
ms
cann
ot be
under
stood
throu
gh
analy
sis,
e.g.
by
separ
ating
the
parts
and

looki
ng at
the
parts
separ
ately,
a
meth
od
whic
h
serve
d
man
so
well
over
centu
ries.
It can
be
rigor
ously
prove
d that
impro
vement
of the
parts
will
not
impro
ve the
behavio
r of
the
whol
e,
since
the
behav
ior of
a
syste
m is
not
the
sum
of the
behav
ior of
its
parts
but
the
produ
ct of
its
intera
ctions
.

Syste

ms
can
onl
y be
und
erst
ood
thro
ugh
synt
hesi
s,
whe
re
synt
hesi
s is
the
exa
ct
opp
osit
e of
anal
ysis
,
e.g.
by
loo
kin
g at
a
syst
em
as a
part
of a
larg
er
syst
em
not
as
som
ethi
ng
whi
ch
can
be
divi
ded
into
separa
te
part
s.
Syst
ems
scie
ntist
s
are
con
vinc

ed
that
the
step
from
the
analy
tic
think
ing
to the
systems
think
ing
mean
s a
total
chan
ge of
imag
ery
comp
arabl
e to
the
chan
ge of
the
imag
e
from
the
worl
d
being
plane
to
being
globe
.
Japan
prove
d
from
1950
onwa
rd
that
this
totall
y
new
view,
the
syste
ms
view,
can
have
treme
ndou
s
impli
catio

ns.
Base
d on
the
syste
ms
view
of
produ
ction,
late
Dr.
Shige
ru
Mizu
no
and
Dr.
Yoji
Akao
devel
oped
a
meth
od
called
Quali
ty
Funct
ion
Depl
oyme
nt
(QFD
).
QFD
links
the
needs
of the
custo
mer
(end

user
)
with
design
,
dev
elop
men
t,
engi
neer
ing,
man
ufac
turi
ng,
and
serv
ice
func
tion
s. It
help
s organi
zati
ons
seek
out
both
spo
ken
and
unspo
ken
nee
ds,
tran
slat
e

these
into
actio
ns
and
desig
ns,
and
focus
vario
us
busin
ess
functi
ons
towar
d
achie
ving
this
com
mon
goal.
The
same
syste
ms
view
led
Dr.
Genic
hi
Tagu
chi to
the
devel
opme
nt of
the
"Tagu
-

THE SWISS DEMING

INSTITUTE
- 13 Ernst C. Glauser

The Toyota Phenomenon

e
w
impr e
ove r

quali
ty

c
o
s
t
d
e
c
r
e
a
s
e
s
b
e
c
a
u
s
e

d
e
l
a
y
s
,
s
n
a
g
s
,
b
e
t
t
e
r

o
f

l
e
s
s

m
a
c
h
i
n
e
t
i
m
e

f
e
w
e
r
m
i
s
t
a
k
e
s
,

wit
h
bet
ter
qu
alit
y
an
d
lo
we
r
pri
ce

stay
in
busi
ness

u
s
e

o
f

r
e
w
o
r
k
,

cap
tur
e
the
ma
rke
t

p
r
o
v
i
d
e
j
o
b
s
a
n
d

m
o
r
e
materials
j
o
b
s
pr
od
uct
ivit
y Figur
im
e 12:
pr
ov The
es Dem

a
n
d

ing

Chain

Reacti
on
shows
the
concl
usive
conse
quenc
es of
qualit
y
impro
vemen
t
measu
res
for
the lasting
succe
ss of a
comp
any.

chi
loss
functi
on"
or
"qual
ity
loss
functi
on".
The
loss
functi
on
estim
ates
the
social
loss
produ
ced
by a
devia
tion
or variabili
ty of
any
desig
n
para
meter
from
the
ideal
or
target
value
. The
great

er
the
devi
ation
fro
m
targ
et,
the
grea
ter
is
the
loss.
Tag
uchi
devi
sed
a
spec
ial
met
hod
olog
y,
now
call
ed
the
Ta
guc
hi
met
hod
olog
y,
to
arri
ve
at
desi
gns
whi
ch
pro
duc
e
min
imu
m
loss
to
the
cust
ome
r. In
an
auto
mob
ile,
every
defe
ct

mean
s
a
loss
to the
owne
r. The
extra
ordin
ary
depen
dabili
ty of
Japan
ese
produ
cts is
attrib
uted
to the
syste
matic
appli
catio
n of
this
conce
pt to
all
phase
s of
desig
n,
produ
ction
and
maint
enanc
e.
Taiic
hi
Ohno
also
had
the
syste
ms
view
in
mind,
when
he
scree
ned
the
entire
produ
c-tion
proce
ss at
Toyot
a to
elimi
nate
as far
as

feasib
le all
the
activi
ties
whic
h did
not
add
to the
value
of the
produ
ct as
exper
ienced
by
the
custo
mer.
He
identi
fied 8
categori
es of
such
activi
ties
or
waste
:

1) O
v
e
r
p
r
o
d
u
c
ti
o
n
2) W
a
it
i
n
g
3)

U
n
n
e
c
e
s
s
a
r
y
tr
a
n
s

p
o 4)
r
t
o
r
c
o
n
v
e
y
a
n
c
e

O
v
e
r
p
r
o
c
e
s
s
i
n
g
o
r
i
n
c
o
r
r
e
c
t
p
r
o
c
e
s
s
i
n
g

5) E
x
c
e
s
s
i
n
v
e
n
t
o
r
y
6) U
n
n
e
c
e
s
s
a
r
y

m
o
v
e
m
e
n
t
7) D
e
f
e
c
t
s
a
n
d
8) U
n
u
s
e
d
e
m
p
l
o
y
e
e
c
r
e
a
ti
v
it
y
.
Over
30
years
of
inten
sive
plann
ing
and
exper
iment
ing
to
impr
ove
prod
uctio
n, the
Toyo
ta
Prod
uctio
n
Syste
m
TPS,

evol
ved,
whi
ch
allo
wed
the
pro
duct
ion
of
man
y
differe
nt
mo
dels
in
sma
ll
qua
ntiti
es
wit
h
unpara
llele
d
effi
cien
cy.
The
inve
ntor
of
TPS
him
self
des
crib
es
the
syst
em
in
his
boo
k,
"To
yota
Pro
duct
ion
Syst
em,
Bey
ond
Lar
geScal
e
Pro
duct

ion
[3].
TPS
is the
next
majo
r
evolu
tion
in
effici
ent
busin
ess
proce
sses
after
the
mass
prod
uction
syste
m
inven
ted
by
Henr
y
Ford
and it
has
been
docu
ment
ed,
analy
zed
and
expor
-ted
to
comp
anies
acros
s
indus
tries
throu
ghout
the
worl
d.

The
De
min
g
Cha
in
Rea
ctio
n

Demi
ng
expla
ined
to his
audie
nce
the
chain
of
actio
ns
and
its
conse
quen
ces
know
n
today
under
the
name
of
the
De
ming
Chai
n
React
ion.
Quali
ty
impro
veme
nt
leads
to
cost
decre
a-ses
and
impro
ved
produ
ctivit
y, it
captu
res
the
mark
et,
keeps
the
comp
any
in
busin
ess
and
provi
des
jobs
and

mor
e
jobs
.
It is
inter
esti
ng
to
note
,
that
De
min
g
stres
-ses
the
soci
al
func
tion
of a
com
pan
y
and
not
the
inter
est
of
the
shar
ehol
ders
.
Jobs
acti
vate
the
crea
tive
pote
ntial
of
hum
an
bein
gs,
gen
erat
e
inco
me
and
prov
ide
welfare
not
just
for
a
few,
but

for
every
body.
Une
mplo
ymen
t is a
waste
,
a
terrib
le
waste
,
whic
h no
natio
n
shoul
d
tolera
te.
Think
of
what
the
5.2
millio
n
unem
ploye
d
Germ
ans
could
do for
the
natio
n.

Quali
ty
can
alwa
ys be
impr
oved
and
improve
ment
can
only
come
throu
gh
huma
n
ingen
uity
comb
ined
with
actio
n
mana
ged
by

comp
etent
and
respo
nsibl
e
mana
gers,
whic
h
focus
on
custo
mer
satisf
actio
n and
the
welfa
re of
the
empl
oyees
inste
ad of
their
own
bank
acco
unt.
Demi
ng
prom
ised
his
audie
nce
that
whenever
Japan
will
provi
de
the
worl
d
mark
et
with
prod
ucts
of
unpar
allele
d
qualit
y, within
five
years
manu
factu
rers
the
worl

d
ove
r
wou
ld
be
tre
mbl
ing
and
wou
ld
begi
n to
scre
am
for
prot
ecti
on.

Demi
ng
later
was
told
by top
mana
geme
nt that
at the
begin
ning
he
was
the
only
man
in
Japan
who
believ
ed it.
Finall
y,
after
all,
Demi
ng
was
wron
g.
Japan
ese
indust
ry accompl
ished
this
goal
withi
n only
four
years.

Oth
er
Ele
me
nts
of
the
De
min
g
Phil
oso
phy
Muc
h
more
could

be
said
about
the
Deming
mana
geme
nt
philo
soph
y and
its
influen
ce on
the
succe
ss of
Japa
nese
products
in the
worl
d
mark
et.
Kno
wn
the
worl
d
over
are
the
PlanDoStudyAct
(PDS
A)
Cycl
e for
conti
nual
impr
oveme
nt,
the
14
Point
s for
mana
geme
nt
and
the
Syste
m of
Profo
und
Kno

wle
dge
(So
PK)
.
The
SoP
K is
co
mpr
ised
of
the
four
maj
or
part
s:
1) A
p
p
r
e
c
i
a
t
i
o
n
o
f
a
S
y
s
t
e
m
2) T
h
e
o
r
y
o
f

(
r
i
g
h
t
b
a
c
k
t
o
w
h
e
r
e
it
a
ll
s
t
a
r
t
e
d
w
it
h
S
h
e
w
h
a
r
t
s
b
r
e
a
k
t
h
r
o
u
g
h
)

V
a
3) T
r
h
i
e
a
o
t
r
i
y
o
o
n
f
K

n
o
w
l
e
d
g
e
(
h
o
w

h
a
t

d
o
w
e
k
n
o
w
t
h
i
n
g
s
,
h
o
w

a
n
d

d
o
w
e
l
e
a
r
n
t
h
i
n
g
s
,
h
o
w
d
o
w
e
i
m
p
r
o
v
e
t

l
e
a
r
n
i
n
g

k
n
o
w
l
e
d
g
e
?
)
a
n
d
4) U
n
d
e
r
s
t
a
n
d
i
n
g
o
f
P
s
y
c
h
o
l
o
g
y
(
t

h
e
u
n
d
e
r
s
t
a
n
d
i
n
g
o
f
p
e
o
p
l
e
a
n
d
t
h
e
w
a
y
t
h
a
t
t
h
e
y
i
n
t
e
r
a
c
t
w
it
h
a
ll
t
h
a
t
s
u
r
r
o
u

n
d
s
t
h
e
m
)
.
This
a
very
huma
n
philo
soph
y.

Fir
st
the
Em
plo
ye
e,
the
n
the
Pr
od
uct
Demi
ng
advo
cates
that
man
stand
s at
the
centr
e of
every
activi
ty, be
it as
an
indiv
idual,
the
team
or
the
organ
izatio
n.
His
creativity

, his
vig
or,
his
ener
gy
can
not
be
replac
ed
by
any
thin
g
else
.
The
mor
e an
org
aniz
atio
n is
cap
able
of
activa
ting
the
co
mpl
ete
me
ntal
an
phy
sica
l
pot
enti
al
of
its
em
plo
yee
s,
the
mor
e
success
ful
it
will
be.
De
min
g
exp
ress

ed
his
view
on
the
uniqu
e
value
of
man
in the
form
of
the
follo
wing
quote
s:

I
f
y
o
u
d
e
s
t
r
o
y
t
h
e
p
e
o
p
l
e
o
f
a
c
o
m
p
a
n
y
,
y
o
u
d
o
n

o
t
h
a
v
e
m
u
c
h
l
e
f
t
.

M
o
n
e
t
a
r
y
r
e
w
a
r
d
s
a
r
e
n
o
t
a
s
u
b
s
t
i
t
u

t
e
f
o
r
i
n
t
r
i
n
s
i
c
m
o
t
i
v
a
t
i
o
n
.

A
l
l
a
n
y
o
n
e
a
s
k
s
f
o
r

Ernst C. Glauser
- 14 THE SWISS DEMING
INSTITUTE

i
s
a
c
h
a
n
c
e
t
o
w
o
r
k
w
i
t
h
p
r
i
d
e
.

T
h
e
r
e
w
i
l
l
b
e
q
u
a
l
i
t
y
o
f
w
o
r
k
l
i
f
e

The Toyota Phenomenon

n
w
h
e
n
p
e
o
p
l
e
t
a
k
e
p
r
i
d
e
i
n
w
h
a
t
t
h
e
y
d
o
.

P
e
o
p
l
e
a
r
e
e
n
t
i
t
l
e
d
t
o
j
o
y
i

w
o
r
k
.

c
o
m
p
a
n
y
c
a
n
n
o
t
b
u
y
i
t
s
w
a
y
t
o

T
h
e
t
r
a
n
s
f
o
r
m
a
t
i
o
n

q
u
a
l
i
t
y

c
a
n
o
n
l
y
b
e
a
c
c
o
m
p
l
i
s
h
e
d
b
y
m
a
n
.

T
h
e
r
e
i
s
n
o
s
u
b
s
t
i
t
u
t
e
f
o

r
k
n
o
w
l
e
d
g
e
.

W
h
e
n
e
v
e
r
t
h
e
r
e
i
s
f
e
a
r
,
y
o
u
w
i
l
l
g
e
t
w
r
o
n
g
f
i
g
u
r
e

s
.

I
n
n
o
v
a
t
i
o
n
c
o
m
e
s
f
r
o
m
p
e
o
p
l
e
w
h
o
t
a
k
e
j
o
y
i
n
t
h
e
i
r
w
o

r
k
.

I
f
s
o
m
e
o
n
e
c
a
n
m
a
k
e
a
c
o
n
t
r
i
b
u
t
i
o
n
t
o
t
h
e
c
o
m
p
a
n
y
,
h
e
f
e
e
l
s
i
m

p
o
r
t
a
n
t
.

Toyo
ta
demo
nstrat
es
throu
gh
actio
ns,
not
only
by
word
s,
that
the
convi
ction
s behind
these
quote
s are
impl
emen
ted.
This
short
extra
ct
from
the
com
mem
orativ
e
speec
h by
Dr.
Shoic
hiro
Toyo
da,
Hono
ra-ry
Chair
man
of
Toyot
a
Moto
r
Corp.

, on
the
occ
asio
n of
bein
g
awa
rded
the
hon
orar
y
doct
orat
e by
the
Asi
an
Insti
tute
of
Tec
hnolo
gy
in
Aug
ust
200
3
sum
mar
izes
the
values
and
beli
eves
Toy
ota
Mot
or
Cor
p. is
base
d
upo
n.
W
e at
Toy
ota
hav
e
lon
g
che
rish
ed
the
ide
a
that

"mak
ing
thing
s"
requi
res
"develop
ing
huma
n
capa
bility.
"
Since
it
takes
huma
n
being
s to
make
thing
s,
natur
ally
you
woul
d
have
to
build
huma
n
capa
bility
befor
e
you'd
start
maki
ng
prod
ucts.

I
belie
ve
that
the
same
thing
appli
es
also
to
build
ing
servi
ces,
build
ing
socie
ty,
and

build
ing
natio
ns. I
have
long
been
convince
d
that
the
capa
bility
for
maki
ng
thing
s is
the
moti
vatin
g
force
for
the
develop
ment
of
indus
try,
the
econ
omy,
and
techn
olog
y,
and
const
itutes
the
foun
dation
for
any
natio
n's
grow
th.
I can
cite
three
reaso
ns
why
it is
impo
rtant
for
us to
focus

on
mak
ing
thin
gs.

Fir
st,
buil
din
g of
pro
duc
ts is
a
gre
at
sou
r-ce
of
add
ed
val
ue
for
the
eco
no
my
and
soci
ety.
The
bul
k of
hu
ma
n
end
eav
ors
in
eco
no
mic
fiel
ds
are
rev
olvi
ng
aro
und
use
-ful
add
ed
val
ues,
pri
mar
ily
in
the
for
m

of
maki
ng
thing
s.
Seco
nd,
capa
bility
for
maki
ng
thing
s induces
and
supp
orts
techn
ologi
cal
progress
.
Toda
y,
many
Japa
nese
argue
for
devot
ing
ever
more
effort
s to
devel
oping
sophi
sticat
ed
kinds
of
funda
ment
al
technolog
y. In
many
insta
nces,
howe
ver,
this
woul
d
tend
to
gener
ate
disre
gard
and

inattent
ion
towa
rd
the
capa
bility
for
making
thing
s,
name
ly,
devel
opme
nt
engin
ee-

rin
g
and
ma
nuf
act
uri
ng
tec
hno
log
y.
And
I
per
son
ally
hav
e
gra
ve
con
cer
ns
abo
ut
this
tren
d.
To
begi
n
with
,
tech
nol
ogy
can
not
adv
ance
on
a
bro
ad
scal
e if
you
isol
ate
basi
c
tech
nol
ogy
fro
m
app
lied
tech
nol
ogy.

These
two
aspec
ts of
techn
ology
must
be
present
to
work
with
each
other,
to
stimu
late
each
other,
and
to be
fused
into
amal
gam
on
occas
ions,
while
excha
nging
their
respect
ive
needs
and
seeds
betw
een
them,
for
ultim
ate
adva
ncem
ent in
both.
Third
,
maki
ng
thing
s is
impo
rtant
beca
u-se
it
bring
s
excite
ment
and

joy to
the
people
invol
ved.
Hum
an
being
s are
instin
ctively
capa
ble of
perce
iving
beaut
y in
products
of
high
quali
ty
and
high
perfo
rmanc
e.
You
must
not
forge
t that
the
act of
maki
ng
thing
s
bring
s joy
to
your
heart
and
such
an
act is
enjoy
able
in
itself.
To
exercise
your
mind,
exert
your
limbs
, and
spen
d
your

time
, all
for
the
pur
pos
e of
mak
ing
new
thin
gs,
repr
ese
nt a
pro
cess
that
you
can
find
grat
ifyi
ng;
and
whe
n
fina
lly
the
pro
duct
is
com
plet
e at
the
end
of
you
r
men
tal
and
phy
sica
l
exer
cise
,
you
will
be
nat
ural
ly
fille
d
with
a
sens
e of
joy
and
fulfill
men

t.

Addit
ional
ly, I
woul
d like
to
say
that
building
prod
ucts
does
build
peop
le, or
help
peop
le
grow.
The
issue
we
have
to
deal
with
is
how
to
devel
op
good
peop
le for
maki
ng
good
prod
ucts.
We
have
to
prep
a-re
peop
le
and
help
peop
le
devel
op
them
selve
s
throu
gh
the
accu
mula
tion
of
expe-

rienc
e by
perfo
rmin
g
roun
d
and
roun
d of
work
day
after
day.
In
other
word
s, we
are
build
ing
hum
an
bein
gs by
goin
g
throu
gh
the
proc
ess
of
build
ing
prod
ucts;
and
skilfu
l
peop
le
thus
devel
oped
can
then
rise
up to
yet
great
er
prod
uctbuild
ing
chall
enge
s.
This
is a
conti
nuou
s
proc
ess

of
buil
din
g
hu
ma
n
cap
abil
ity
thro
ugh
OJ
T,
or
onthejob
trai
nin
g.
Wh
at
is
imp
ort
ant
her
e is
the
fact
that
buil
din
g
hu
ma
n
bei
ngs
me
ans
mor
e
tha
n
just
letti
ng
the
m
acq
uire
nec
ess
ary
skil
ls,
kno
whow
, or
tec

hniq
ues.
When
we
say
we
"buil
d
peopl
e" at
Toyot
a, it
does
n't
just
mean
that
we
have
peopl
e
skilfu
l
enou
gh to
build
highquali
ty
products
on a
timel
y
basis.
It
also
mean
s that
our
peopl
e will
have
a
stron
g
sense
of respons
ibilit
y so
that
they
abide
by
rules
for
safet
y and
hono
r
agree
ment
s
made

amon
g
team
mem
bers
for
joint
work
; and
it
also
mean
s that
every
mem
ber
of the
Toyot
a
orga
nizati
on is
stron
gly
motiv
ated
to
im-

pro
ve
one
self
to
asp
ire
for
eve
r
hig
her
skil
l
leve
ls.
Let
me
cite
an
exa
mpl
e:
We
at
Toy
ota
hav
e
alw
ays
bee
n
very
atte
ntiv
e to
wha
t we
call
"Fo
ur
S's.
"
The
four
S's
her
e
stan
d
for
sifting
,
sort
ing,
and
spic
k
and
spa
n.

Thoroug
h
attent
ion to
them
helps
us
identi
fy
glitch
es on
shop
floor
s and
visua
lize
troubles
cause
d by
overb
urden
ing,
nonvalue
addin
g
activi
ty
and
uneve
nness
.
We
have
made
a full
use
of
ideas
and
experienc
es of
our
peopl
e
direct
ly
enga
ged
in
prod
uctio
n so
that
we
can
elimi
nate
problem
s
arisi

ng
out of
disre
gard
of the
4-S's
in
every
part
of
our
manu
factu
ring
oper
ations;
and
as a
result
, we
have
been
able
to
build
and
refine
the
Toyot
a
Prod
uctio
n
Syste
m,
inclu
ding
the
"justintime"
syste
m
whic
h
many
of
you
may
be
famil
iar
with.
This
type
of
down
-toearth
appr
oach
es in
manu
factu
ring

hav
e
help
ed
us
con
stan
tly
imp
rov
e
our
sens
itivi
ty
to
suc
h
fact
ors
as
safe
ty,
qua
lity,
effic
ienc
y,
and
cost
s,
and
are
inhe
rite
d
fro
m
gen
erat
ion
to
gen
eration
as
the
DN
A,
as it
wer
e, of
Toy
ota.

Glo
bal
co
mp
etiti
on
is
gro
win
g
incr
easi

n-gly
fierc
e,
and
we
are
right
in
the
midd
le of
it.
For
Toyot
a to
main
tain
and
impr
ove
its
comp
etitiv
e
capa
bility
as a
busin
ess
entity
, it is
cruci
ally
impo
rtant
that
we
find
suita
ble
ways
to
pass
on
our
"man
agement
philo
soph
y"
firml
y
roote
d in
the
idea
of
maki
ng
thing
s, to
later
gene
ratio
ns of
Toyot

a
work
ers
and
also
to
share
our
philosop
hy
with
Toyot
a's
local
mem
bers
outside
Japa
n.
As
part
of the
sourc
e of
Toyot
a's
comp
etitiven
ess,
we
have

sele
cted
and
arr
ang
ed
sets
of
fun
dam
enta
l
beli
efs
and
app
roache
s. In
othe
r
wor
ds,
sets
of
valu
es
and
cod
es
of
con
duct

that
will
have
to be
share
d by
all
mem
bers
of
Glob
al
Toyot
a, in
the
form
of the
"Toyo
ta
Way"
for
worl
dwide
appli
catio
n.

Ref
ere
nce
s

THE SWISS DEMING

INSTITUTE
- 15 Ernst C. Glauser

The Toyota Phenomenon

[1] Micheline Maynard, The End of Detroit: How the Big Three Lost Their Grip
on the American Car Market,
Doubleday, a division of Random House,
Inc. October 2003
[2] James P. Womack, Daniel T. Jones, Da-niel
Roos, "The Machine That Changed the
World : The Story of Lean Production",
Rawson Associates, a division of McMillan Publishing Company, 1990
[3] Taiichi Ohno, "Toyota Production Sy-stem,
Beyond
Large-Scale
Production",
Productivity Press, Portland, Oregon,
English Translation 1988

[4] Jeffrey K. Liker, "The Toyota Way, 14

Management Principles from the World's
Greatest Manufacturer", McGraw-Hill,
2004
[5] Samuel Smiles, Self-Help, in England
erstmals im Jahre 1895 verffentlicht,
Neu-ausgabe durch Oxford University
Press, Oxford, 2002
[6] Carlos Ghosn, "Shift: Inside Nissan's
Historic Revival", Bantam Dell Pub
Group, 2004

CH-8126 Zumikon, 1st April 2005

THE SWISS DEMING INSTITUTE

P.O. Box 71, Langwisstrasse 22

CH-8126 Zumikon

Telephone: +41 44 918 11 19

Telefax: +41 44 918 11 70

E-Mail: info@deming.ch
Internet: http://www.deming.ch
Ernst C. Glauser

- 16 -

THE SWISS DEMING INSTITUTE