Vcm-Toyota
Case study 2:
Toyota- taking out costs and adding value
Over the last 30 years, Toyota Motor Corporation has become one of the top three global car companies, alongside General Motors (US) and Ford (US). Its rise centres on twin strategies related to operations and marketing. This case study concentrates mainly on its operations successes but also touches briefly on marketing, since the two areas are interlinked. The Toyota operations strategies have been copied around the world, though rarely with the same success.
Background
In the year to end-June 2004, Toyota produced and sold over 6.5 million vehicles around the world. The company had only started car production in the 1930s. Even in the early 1950s, it was still only averaging 18,000 vehicles per annum. The increase in production and sales between 1950 and 2004 was, by any standards, remarkable – Figure 9.4 shows the recent data for 2004.
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Toyota’s strategic problem was that it was a tiny company competing against large competitors. The only way that it could survive was by finding new, flexible production methods that could be used by smaller companies. ‘The Toyota Production System originated as a means of achieving mass production efficiencies with small production volumes’ (Toyota Annual Report and Accounts 1998). Importantly, even in 2004, the major Toyota production location was Japan – from a strategy perspective, this raises important questions about how long its Japanese factories can remain low-cost centres of production.
Many of the production successes between 1950 and 1980 have been accredited to the Toyota Production System and its chief engineer during that time, Taiichi Ohno. He started experimenting to improve production in the late 1940s, but it took many years to develop the systems described below, such as kaizen and kanban, and to have them widely adopted across the company. Even in the 1990s, experimentation and change were still taking place to improve production.
Toyota- taking out costs and adding value
Over the last 30 years, Toyota Motor Corporation has become one of the top three global car companies, alongside General Motors (US) and Ford (US). Its rise centres on twin strategies related to operations and marketing. This case study concentrates mainly on its operations successes but also touches briefly on marketing, since the two areas are interlinked. The Toyota operations strategies have been copied around the world, though rarely with the same success.
Background
In the year to end-June 2004, Toyota produced and sold over 6.5 million vehicles around the world. The company had only started car production in the 1930s. Even in the early 1950s, it was still only averaging 18,000 vehicles per annum. The increase in production and sales between 1950 and 2004 was, by any standards, remarkable – Figure 9.4 shows the recent data for 2004.
[pic]
Toyota’s strategic problem was that it was a tiny company competing against large competitors. The only way that it could survive was by finding new, flexible production methods that could be used by smaller companies. ‘The Toyota Production System originated as a means of achieving mass production efficiencies with small production volumes’ (Toyota Annual Report and Accounts 1998). Importantly, even in 2004, the major Toyota production location was Japan – from a strategy perspective, this raises important questions about how long its Japanese factories can remain low-cost centres of production.
Many of the production successes between 1950 and 1980 have been accredited to the Toyota Production System and its chief engineer during that time, Taiichi Ohno. He started experimenting to improve production in the late 1940s, but it took many years to develop the systems described below, such as kaizen and kanban, and to have them widely adopted across the company. Even in the 1990s, experimentation and change were still taking place to improve production.