Toyota is a Japanese company founded by Sakichi Toyoda.
It first began selling cars in the US in 1957, and quickly became successful by its mission of high quality and low prices.
The company’s objective was never to be number one in sales. Toyota was focused in their offer of best quality in the market. Toyota’s vehicles were also very well known by their high resale price.
Automobile Industry in 2008
Toyota played in a very competitive enviroment. There are 4 top companies, with a share of market from 8% to 12% each. The market was estimated to value 1,9 trillion dollars which is a very high value if were taken into account the impact of the global financial crisis.
The US market was especially competitive, because of the high percentage discounts and the low interest taxes on car loans. This made lower cost production crucial in order to maintain a low price policy.
Toyota’s operations management
Toyota has been adopting some unusual practices with the intent of reducing costs, while keeping a high level of quality:
The Toyota way: Consists in long term planning, learning from problems and mistakes, developing teamwork relations among colleagues and a culture of continuous improvement.
In 2001 the Toyota Way was improved by adding 14 management principles that lead all the company towards a their goal.
Meanwhile the Toyota Production System (TPS) was developed and integrated in the Toyota Way.
TPS is based in two quality concepts: 1) Jidoka, which consists on providing machines and workers of practices to quickly detect production problems and immediately stop production until the error is fixed; and 2) just-in-time (jit), which is a practice that makes production more lean and cost efficient by decreasing the invested capital at its minimum needed. (low stocks, no unnecessary waste).
Later, Toyota developed the 5S Approach: The 5S it’s a guide made by 5 Japanese words to complement TPS and