An inside look at how it’s reinventing the auto industry.
“Good thing means good products.” The slogan of Toyota’s Takaoka assembly plant.
a) Diversification - Toyota not only rounded out its product lines in the US, with sport-utility vehicles, trucks, and a hit minivan, but it also has seized the psychological advantage in the market with the Prius and eco-friendly gasoline-electric car. b) Location redesign - Toyota created an integrated, flexible, global manufacturing system. They redesign the plants around the world. Plants from Indonesia and Argentina will be designed both customize car for local market and to shift production quickly satisfy any surges in demand from market worldwide. Its South Africa plant to meet a need in Europe. Toyota can save about $1 billion normally needed to build a new factory. c) Cost cutting and redesign chop out billions in expenses. That kept margins strong and free up cash to develop new models and technologies, such as Prius, to invest in global manufacturing, and to invade market such as Europe and China. d) Increasing the range of target customer - Toyota doesn’t always get it right. Its early attempts at youth market, minivans, and big trucks all disappointed. It remains dependent on the US business for some 70% of earnings. e) However, Toyota is vigorously attacking the youth market with 14,500 Scion xB impact. Since Scion’s US launch in California, Toyota sold nearly 7,700 of them, 30% better than forecast. Scion is evidence that Toyota’s growing cash cushion gives it the means to revamp it lackluster design. f) Building new facilities - Toyota building an $800 million plant in San Antonio, Tex., that allows it to more than double its Tundra output, to some 250,000 trucks a year by 2006, with rigs powerful and roomy enough to go head to head with Detroit’s biggest models. g) Design – Initially, Toyotas were designed with Japanese consumers in mind and then export. Some worked; some flopped. They recognized that buyers want to feel like they have some level of style. For example, Yaris, was designed by a Greek, and then imported successfully to Japan because of its “European look”. The re-design of Solara sports coupe is getting high grades, too.
a) Speed - The combination of speed and flexibility is world class. Some of Toyota plants are able to make as many as eight different models one same production line, instead of six separate car models as normal. b) Facilities - In Takaoka plant, car doors flow by on a conveyor belt that descends to floor level and drops off the right door in the correct color for each vehicle. This efficiency means the workers can build a car in just 20 hours. c) Joint Program - Toyota lunched a joint program with its suppliers to radically cut the number of steps needed to make a car and car parts. This saved $2.6 billion out of its $113 billion in manufacturing costs without any plants closure or layoffs. They expected to cut an additional 2 billion out of its base in the same year. d) Financial Scheme - CCC21 (Construction of Cost Competitiveness for 21st Century) – taps into the company’s strengths across the board to build cars more efficiency. It’s also turning many operations inside out. e) Set Target - With CCC21, Toyota set a bold target of slashing prices on all key components for new models by 30%, which meant working with suppliers and Toyota’s own staff to ferret out excess. f) In implementing CCC21, no detail is too small. For example, they managed to cut the number of parts in the handles to five from 34, which helped cut procurement cost by 40%. As a plus, the change slashed the time needed for installation by 75%. g) CCC21 make Toyota getting far more out of suppliers; and make its workers vastly more productive.
a) Improvement - Toyota always moved steadily forward, they created the doctrine of Kaizen (continuous...