Introduction

Toyota is one of the world's largest automobile manufacturers, selling over 9 million models in 2006 on all five continents. A Top 10 Fortune Global 500 enterprise, Toyota ranks among the world's leading global corporations and is proud to be the most admired automaker, an achievement the company believes stems from its dedication to customer satisfaction.Toyota has been shaped by a set of values and principles that have their roots in the company's formative years in Japan. The Toyota story begins in the late 19th century, when Sakichi Toyoda invented Japans first power loom, which was to revolutionize the countrys textile industry. In January 1918, Sakichi founded the Toyoda Spinning & Weaving Company, and with the help of his son, Kiichiro Toyoda, he fulfilled his lifelong dream of building an automatic loom in 1924. Two years later, he established Toyoda Automatic Loom Works. Like his father, Kiichiro was an innovator, and during his visits to Europe and the U.S. in the 1920s, he became deeply interested in the nascent automotive industry. Making the most of the 100,000 that Sakichi Toyoda received for selling the patent rights of his automatic loom, Kiichiro laid the foundations of Toyota Motor Corporation (TMC), which was established in 1937. From looms to cars, the Toyota experience has been shaped by extending the boundaries of manufacturing

The Toyota Production System

Toyotas approach to automobile production, with its inherent quality controls, revolutionized the industry. Its just-in-time supply-chain concept has become a model for manufacturers around the world, and not just for automakers. The Toyota Production System (TPS) calls for the end product to be pulled through the system. This means the right parts reach the assembly line at the right place, just as they are needed, and with no excess. This approach represented a radical departure from conventional manufacturing systems, which require large inventories in order to push as much product as possible through production lines, regardless of actual demand. The idea of TPS, the contrary, is to produce only the products required in the precise quantities desired at a given point in time

Focus on flexibility
By basing production on demand rather than simply on capacity, Toyota manages to keep inventories, both of parts and of finished goods, to a strict minimum. But this is only one of the more obvious advantages of Toyotas unconventional approach. By focusing on smaller production lots and producing only what customers require when they require it, Toyota has developed a flexibility and responsiveness that continues to set the standard for the industry. With its Attention to continuous improvement (Kaizen), Toyota has attained die-changeover and machine-set times that are a fraction of its competitors'.Thus its capacity for reacting quickly to new market trends makes TPS an ideal system in todays rapidly changing global business environment. Just as important is ensuring quality control, and the delivery of reliable and dependable products to customers. If a problem arises at any stage of production, Toyotas automatic error detection system, called Jidoka, flags the defect and enables line employees to take the necessary steps to resolve it on the spot even if that means bringing production to a halt. By calling attention to the equipment when an error first occurs, the Toyota system makes it easier to identify the source of the problem and prevents defects from progressing to subsequent stages of production. Only a system as agile and quality-oriented as TPS could make such measures economically possible. This approach not only helps eliminate waste, which makes TPS more respectful of the environment, it also means that customers can rest assured that Toyota products will conform to the highest standards of quality, reliability and durability.

Toyota is one of the best run companies in the world. With less revenue than the Big Three automakers, its market capitalization is still larger than that of General Motors, Ford, and DaimlerChrysler combined. A big part of Toyota's success is that it applies "lean thinking" not just to products and manufacturing processes, but also to relationships with employees and customers. Indeed,

Toyota has been an early adopter of HumanSigma, Gallup's process for measuring and managing the human difference in a company's performance. Toyota finds HumanSigma compelling because the process focuses on improving employee and customer engagement, which in turn drives business outcomes and increases shareholder value. Toyota's leadership in developing quality systems extends beyond the automotive industry into manufacturing and business in general. Industries from finance to health care have begun adopting Toyota's production system. Toyota has achieved quality in its processes through decades of continuous improvement. Its mission is to generate, as quickly and efficiently as possible, products that satisfy customers.

1. History
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Toyota's founder, Sakichi Toyoda, developed the Toyoda Power Loom, which not only changed shuttles to keep the thread supply constant and the weaving process moving forward, but automatically stopped when it sensed a break in the weft. These developments in tandem were revolutionary. Not only does the machine automate the work, it also can make rudimentary judgments and affect the work flow. Furthermore, one operator can now monitor multiple machines, further increasing production and standardizing quality--two primary sources of waste.

Features
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Toyota's quality system involves seven primary features all along the supply chain. Reduce setup times by reviewing and organizing procedures and enabling employees to set up their own stations; produce in small lots to take advantage of the reduced setup time to broaden the capability to produce a variety of goods on the same line; empower employees by continual training and adding responsibilities, encouraging them to treat other employees as customers and involving the team leader as one of the workers on the line; maintain quality at the source through empowered employees who not only can detect problems as they occur but repair the problem, minimizing downtime; maintain equipment as the primary means of maintaining quality, with workers at the source monitoring machines, thus in the best position to diagnose and repair as problems occur; pull production through constant communication up and down the line, to deliver only the amount of material and work needed to keep the line flowing, minimizing inventory; and involve suppliers by training and taking responsibility to deliver their products to the main line with the same level of quality and efficiency that the main line strives for.

Jidoka
o

Jidoka, a term loosely translated as "automation with a human touch," stems from Sakichi's Power Looms and operators. As problems occur, the machine stops either at the end of a normal stage that produces a quality part or if a malfunction

occurs, preventing defective parts from being introduced into the manufacturing process. Operators can monitor several machines at once. If one machine breaks, they can either repair that machine or alert a technician while monitoring other machines, which keeps the overall process flowing smoothly.

Just-In-Time
o

With the Jidoka system in place to monitor the process, workers can make just what is needed, when it's needed--"Just-in-Time." In Toyota's production system, it uses "kanban," the method adapted from the supermarket model, successfully employed by Walmart, where replacement parts can be ordered and delivered as used rather than stocking large amounts of inventory. This reduces storage costs and allows workers to practice higher quality control by inspecting smaller batches of material and parts as they use them.

The Human Touch

o

The most important aspect of integrating Toyota's quality system is the human element. Everyone in the company is not only encouraged but expected to participate in, contribute to and help develop the process. The quest for perfection is continual and never-ending. Problems and mistakes are not punished so much as highlighted as learning opportunities, and benchmarks to show progress along the continual path to improvement. This system also drastically affects labormanagement relations. The workers dictate what they need in order to perform at peak efficiency, from raw material through procedural adjustments and equipment upgrades to skills training and professional development. Management provides assistance through supplying capital and developing, directing or providing instruction accordingly. Furthermore, more workers and supervisors collaborate on the line and develop specialized areas of expertise that pool together in problem resolution rather than adhere to a command-and-control hierarchy and arbitrary division of labor

Toyotas 10 management principles

2. Always keep the final target in mind. 3. Clearly assign tasks to yourself and others. 4. Think and speak on verified, proven information and data. 5. Take full advantage of the wisdom and experiences of others to send, gather or discuss information. 6. Share information with others in a timely fashion. 7. Always report, inform and consult in a timely manner. 8. Analyze and understand shortcomings in your capabilities in a measurable way. 9. Relentlessly strive to conduct Kaizen activities.

10. Think "outside the box", or beyond common sense and standard rules. 11. Always be mindful of protecting your safety and health.

Before there was a Toyota Way, there was the W. Edwards Deming way. If there is an enduring lesson in Toyota Motor Corp.'s recall fiasco, it is that the Japanese auto maker strayed far from the core teachings of Mr. Deming, the influential American statistician and quality-control guru. Mr. Deming's genius was applying statistics to quality control. He would painstakingly record product defects, figure out why they happened, work diligently to fix them, track how quality improved, and then keep refining the process until it was done right. It is a production model that would not have tolerated for long the spike in complaints from Toyota owners about sudden acceleration that began in 2002. Mr. Deming refined his ideas into what he called "total quality management," which later became the foundation of Toyota's now famous Toyota Production System of just-in-time manufacturing. TPS emphasizes consistently high quality, a relentless drive to eliminate waste and continuous improvement. Mr. Deming, who died in 1993, played a key role in moulding U.S. manufacturers into a powerful weapons-production machine during the Second World War. But it was in Japan that he made his mark. In the booming postwar years, U.S. manufacturers were far more interested in mass production than quality. So Mr. Deming took his ideas to warravaged Japan, where he found a receptive audience among Japanese manufacturers. Japan already had a tradition of hard work and attention to detail, and with shortages endemic, eliminating waste quickly became a national mantra. Mr. Deming spent extended stints in Japan in the 1940s and 1950s, initially working for the Allied command in Tokyo, and later as a consultant, teaching Japanese executives, managers and engineers about quality control. Even today, he's better known in Japan than in his home country. The Union of Japanese Scientists and Engineers still awards an annual Deming Prize to Japanese companies and individuals who make significant contributions to quality in manufacturing. Toyota executives might be wise to recommit themselves to those same ideals. And they could start by reading Mr. Deming's seminal 1986 book, Out of the Crisis. His 14 points of management - a handful of which are summarized here - remain as relevant today as they were when he penned them:

Get away from mass inspections by building quality into a product. Stop awarding business based solely on price, and instead focus on minimizing total costs, choosing suppliers based on quality and trust over the long term. Constantly improve production and service. Help people and machines and gadgets to do a better job. Drive out fear, so that everyone works effectively for the company. Break down barriers between departments so that people in research, design, sales, and production work as a team, enabling them to better foresee problems. Poor quality and low productivity can't be beaten with zero-defect slogans and targets because the solution lies in the system, not the work force. Remove barriers that rob hourly workers of their right to pride of workmanship by focusing on quality rather than sheer numbers. Remove barriers that rob managers and engineers of their right to pride of workmanship by abolishing objectives-based merit ratings. Toyota now acknowledges that it lost its way, focusing too much on growing big rather than building high-quality cars. Toyota unabashedly set a goal of overtaking General Motors as the world's largest vehicle manufacturer, and it succeeded. Last year, it produced nearly 10 million cars, up from 5.2 million in 2000. Over that period, Toyota added 17 new plants around the world. But when the first inkling of a problem emerged, Toyota executives apparently weren't listening or didn't hear. Mr. Deming's teachings had apparently given way to other less-helpful traits, including a reluctance of lower-level managers to deliver bad news up the command chain. The company's notorious flexibility had slipped into a reluctance to acknowledge failure. Toyota isn't alone in this. Managers everywhere could learn a thing or two, or 14, from the man who helped Japan become a global manufacturing powerhouse. The lesson of the Toyota recalls is not that Mr. Deming's Japanese model is an anachronism. It may be more relevant than ever.

Relations with Employees

To manufacture high-quality products and achieve customer satisfaction throughout the world, it is essential that TMC share the beliefs and values that it deems important with Toyota employees

throughout the world. The Toyota Way 2001 gathers and organizes the management beliefs and values that TMC has handed down since its establishment. Based on mutual trust and respect between labor and management, long-term employment stability, and communication, each Toyota employee is taking measures to enhance work-related skills and work ethic.

Gathering and Organizing Toyota's Management Beliefs and Values - The Toyota Way 2001
The Toyota Way 2001 is supported by the two main pillars of "Continuous Improvement" and "Respect for People" and can be summed up in the five key terms - challenge, kaizen, genchi genbutsu, respect, and teamwork. All Toyota employees, at every level, use these two values in their daily work.

Labor-Management Relations

Signing ceremony for Labor-Management Joint Declaration Based on Mutual Trust and Respect Mutual trust and respect between labor and management is a fundamental principle of Toyota's employee relations. Following a labor dispute in 1950, mutual trust between labor and management was adopted as the foundation of the Labor-Management Joint Declaration concluded in 1962. Also, in the Labor-Management Resolve for the 21st Century signed by labor and management representatives in 1996, mutual respect was added as a basic principle of labor-management relations. Based on this fundamental principle, Toyota has adopted the Basic Principles of Human Resources Management. Back to Top of Relations with Employees

Fundamental Stance on Human Resource Development

Toyota believes that "making things is about developing people". Thus, Toyota undertakes human resource development based on on-the-job training. Toyota also strives to create workplaces with abundant vitality while establishing and improving educational systems that focus on sharing and conveying appropriate values in accordance with the Toyota Way.
Core Training: Work Methods that Put the Toyota Way into Practice

Toyota Institute (TI) is an organization dedicated to promoting the implementation of the Toyota Way at overseas affiliates through the training of Toyota employees. The TI conducts core training at affiliates globally on work methods (problem solving and management expertise) so Toyota personnel around the world can put the shared Toyota Way into practice.
Skills Training: Passing along Technical Expertise through the GPC to Employees Hired at Overseas Sites

The Global Production Center (GPC) was created as a human resource development institution to raise the efficiency and pace of technical skills acquisition through technical training of employees hired at overseas sites. Veteran technical personnel from Toyota plants in Japan gather at the GPC to develop and create training equipment for teaching technical skills, and training methods using manuals that employ animation, video, and other techniques, drastically reducing the time necessary for skills acquisition. Overseas GPC personnel who have received "trainer's trainer" certification currently conduct training on GPC methods at the regional centers in the U.S., U.K. and Thailand.
Personnel Exchange and Training with Overseas Affiliates: ICT Program

The Intra Company Transferee (ICT) program seeks to promote the global expansion of the Toyota Way and to develop human resources by having employees of overseas affiliates spend time working in Japan. ICT members work in Japan for between six months and three years receiving on-the-job training. The goal is to develop personnel who make a greater contribution to the development of the affiliates at which they work after returning to their home countries and regions.

Promoting TQM Globally to Improve the Quality of Products and Services

TQM Convention "Kaizen Case Study Presentation" Total Quality Management (TQM) is an activity in which every employee participates in order to: (1) Ensure customer-first work practices, (2) Learn the principles of quality control and (3) Refine corporate strength through actions. TQM Promotion Division is currently engaged in promoting resolution, providing every employee working in Toyota's global organization with ideas for self-directed action to improve product and service quality, motivate people and revitalize the corporate structure and applying the philosophies of "Customer First," "Continuous Kaizen" and "Total Participation." Specific activities include a MAST*1 Training Course for newly promoted managers, a JKK*2 Training Course and an SQC Seminar that offers goal-setting and problem-solving techniques for both administrative and engineering staff. Particularly, QC circles are being proactively expanded in 44 overseas affiliates, and over 100,000 employees, or about 15,000 QC circles are engaged in improvement of immediate problems. At the same time, the TQM Promotion Division is engaging in communications initiatives and other activities designed to help raise the quality of products and services. During the Month of Quality, November 2009, the 44th TQM Convention was attended by some 4,600 people from group companies and dealers. At the convention, President Akio Toyoda spoke about his commitment to "Customer First," and attendees' comments were such as "I learned how to go back to basics." In May 2010, at a seminar for the Toyota Group's newly appointed board of directors, the themes were Quality and Human Resources and there was an active exchange of opinions. In July 2010, the 6th Ji Kotei-Kanketsu Exhibition and the 24th SQC Kaizen Presentations were held for the benefit of all employees, and both events reminded participants of the importance of TQM. *1 MAST: Management-quality Advancement System by Toyota-group *2 JKK: Ji Kotei-Kanketsu Built-in quality with ownership

What Diversity Means to Toyota

For global companies engaged in business around the world, it is important to promote a diverse range of human resources activities while raising the skills of each individual employee. To create an energetic corporate culture, it is essential to follow a strategy of cultivating a workforce that encompasses a diverse range of individuals. The focus of respect for diversity varies in different countries and regions; nevertheless, Toyota strives to be a company with a working environment that promotes personal development while respecting diversity of values and ideas among its employees.
Women: Initiatives to Help Balance Work with Childcare, Support Career Development, and Reform the Workplace Environment and Attitudes

"Sodatete Net" Website (Intranet) Toyota launched its Diversity Project 2002 to promote gender diversity. Since then, Toyota has undertaken initiatives that help women balance work with childcare and support their career development, while building a culture that enables women to make the most of their skills. The company intranet, Sodatete Net, addresses some of the concerns and difficulties that female employees face in the workplace, introduces successful working women as role models, and so on. This plays a key role in promoting mutual understanding between female employees and their workplaces. Toyota has also introduced various support systems to help balance work with childcare, in order to develop a more family-friendly work environment for both men and women.

Increasing Employment Opportunities for Disabled People

A handcart modified for ease of use by wheelchair-utilizing employees Established to increase employment opportunities for people with disabilities - within Toyota and among society in general - Toyota Loops Corporation started operation in FY2009 and has applied for authorization as a special - purpose subsidiary. The company name "Loops" represents Toyota's desire to bring more people "inside the loop," linking disabled people more closely with society and with workplace communities. The corporate symbol includes the Japanese syllable "Wa," which can refer to three Japanese characters signifying "comfort," "the circle of joy" and "amusing talk." These three principles encapsulate the company's goal to create an organization that employees, family members and local communities can all be proud of. Toyota Loops responds to Toyota's internal printing and bookbinding needs and handles mail, including postal collection, delivery and sorting. The headquarters building was constructed after intensive research into exemplary existing facilities and thorough preparatory work to achieve a universal design that includes "All 5" barrier-free architecture with themes of "accessibility," "hospitality" and "information." Further, inheriting Toyota's DNA, Toyota Loops have worked on activities to make proposals of creative ingenuity for more human-friendly workplaces and a smoother workflow. The company began to host site tours and had approximately 400 visitors during the six-month period following the building's completion. To help support and encourage local initiatives, Toyota Loops formed the "Heartful Net Chubu" in January 2010, joining with businesses and institutions in the Chubu area to help promote the employment of disabled individuals. Some 20 organizations attended the first meeting in April. In FY2009, the company hired 28 severely disabled and mentally disabled people, and Toyota hired 18 people during the annual recruitment period, and 10 people for its year-round recruitment. As of the end of June 2010, the employment ratio was 2.07% when the special purpose subsidiary is included (1.98% for Toyota only).
Job Placement Program for Over-sixties

Following the 1991 introduction of the Internal Re-employment Program for Retired Professionals, an Optional Re-employment Application System was launched in 2001 that outplaces applicants to external affiliates and other sites, providing a framework for helping over-sixties to continue working, at either an external or internal workplace. Programs were

modified to their present state according to the revised Law on Stabilization of Employment of Older Persons that came into effect in FY2006, to expand re-employment opportunities. A review was started at the same time to refine policies on shortening work hours, in response to growing diversity in job preferences and so on.
Employment of Fixed-term Contract Employees

Toyota, where non-fulltime employees (including short-term employees, seconded employees of other companies, temporary employees and fixed-term contract employees) work, is doing all it can as a private business, particularly in the case of fixed-term contract, to ensure stable employment. Recruitment must be balanced with contract renewals and the fulfillment of other obligations. As part of a program Toyota has developed to revitalize and energize its workforce, a limited-contract employee who has worked for Toyota for at least six months and has a recommendation from the workplace will be eligible to take an examination for regular employment as a full-time employee. Examinations are offered during the second and third years of contract employment.

Ensuring One of Toyota's Most Important Corporate Activities Employee Safety and Health
Ensuring employee safety and health is one of Toyota's most important corporate activities. Toyota believes fundamentally that "safety is essential for sustaining and developing the company, and that placing safety first is everyone's responsibility, from senior executives to every employee at the workplace." Towards this end Toyota seeks the development of lively workplace environments that promote good physical and mental health. Back to Top of Relations with Employees

Incorporation of Occupational Safety and Health Management

Toyota has been promoting Occupational Safety and Health Management System (OSHMS) as safety and health promotion activities.
The Problem

Toyotas Information Systems Methodology (ISM) and Information Systems Project Methodology (ISPM) embody Toyota principles but they have not been institutionalised to the same degree as processes used in other parts of the business. In 2007, they introduced the IBM Rational Unified Process (RUP) to manage Business and Software Architecture and application development. RUP in fact resembles the Toyota Production System in many ways, with its focus on quality and team interaction and its architecture-centric approach.

Toyota work closely with IBM Global Services to ensure that the Kaizen principle of continuous improvement is applied to the management of its information systems. The implementation of the Rational Unified Process in any organisation is challenging and the time before it begins to produce positive results varies significantly, but is frequently measured in years rather than months. Working with IBM, Toyota tailored RUP to suit the environment (a prerequisite of any RUP adoption programme), but were having difficulties in institutionalising the process due to limited experience and skills. The implementation of RUP was further complicated by the need for it to operate within the boundaries of ISM and ISPM which in effect provided the interface to Toyota methods and the organisation in general. Part of Toyotas philosophy is the concept of the Extended Enterprise wherein they develop long term relationships with suppliers specifically targeted at mutual innovation. Whereas this was an integral part of all business and manufacturing operations, it was immature within information systems. This was a weakness, given a policy that it is better to buy something of proven quality than to risk developing something new. Toyotas first production pilot of RUP was the new Vehicle Management System which 1Tech had been engaged to implement some 12 months into the project (See Case Study Toyota decides to replace business-critical systems with open source business applications). At the time of 1Techs engagement the project was well behind schedule and over budget.

The Solution

1Tech's own Open Source Integration Methodology (1TechOSIM) is based on RUP and it soon became clear to Toyota that compared to their own implementation, the method was mature and was additionally backed up by the skills of the 1Tech team. 1Tech were therefore asked to extend their engagement to mentor and train Toyota staff in the efficient use of RUP. 1Tech identified the lack of methods to manage IS supplier engagement and the introduction of third party components and proposed the adoption of the Evolutionary Process for Integrating COTS-based Systems (EPIC), a methodology defined by the Software Engineering Institute and generally considered to represent best practice. Following a review of the current status of the ISM and ISPM methodologies with the resident IBM Global Services team, 1Tech were asked to integrate all of the information systems processes so that boundaries and interfaces were clearly defined and the whole could operate as a single, seamless entity, accessible to all information systems personnel.

The Result

1Tech worked with project and programme management to reconstruct the critical vehicle management system project, replacing the existing function-driven approach with one that was risk driven and architecture-centric according to RUP principles. This resulted in the identification of elements which represented the highest risk and focused on the need to eliminate these risks early so that the effects they might have on project timescales could be mitigated. The number of elements with high architectural risk was significant due to the number of interfaces to legacy systems which were needed. The development of instances of each

commenced immediately and the risks were either eliminated or, where major problems occurred, the need to focus and reschedule effort on their resolution was identified. 1Tech analysed the use of the four information systems methodologies (ISM, IDSPM, RUP and EPIC) and produced a process architecture which integrated them into effectively a single process. The integrated processes, along with guidelines, templates and other supporting materials, were defined and published by 1Tech as a web site for Toyotas intranet using IBM Rational Method Composer, allowing each member of the information systems community, whether acting in a project, support or management role, to instantly see how they were expected to interact with their colleagues and the processes they should follow. 1Tech developed custom training material and trained all information systems staff, including senior management, via modular courses aimed at transferring skills appropriate to the needs of each individual. This was supplemented by on-the-job coaching, a technique which is itself a core Toyota philosophy. Training customisation and delivery, and process analysis, tailoring and integration, were completed within 3 months.

How Toyota became most Innovative car Company

This weekend's New York Times Magazine featured a great cover story on Toyota, which explained how the Japanese company has become the acknowledged leader in the global automobile industry.

At a time when Ford and GM are downsizing and rightsizing, the incredible Toyota engineering team continues to get things right. The latest product is the Toyota Tundra, a new full-size truck designed with Red State America in mind. With Toyota, small incremental innovations snowball over

time into huge improvements in productivity, efficiency and output. By the end of 2007, Toyota could pass GM as the world's largest car company. Already, the company's stock market capitalization is $240 billion - higher than that of GM, Ford, Daimler Chrysler, Honda and Nissan combined. If Toyota were a baseball team, surmises Jon Gertner of the New York Times, it would be the type of team that wins 150 out of 162 games. Anyway, if you're looking for some Japanese management buzzwords to inject into your cocktail conversations, the article explains concepts like kaizen ("continuous improvement") and genchi genbutsu ("what customers want in a car or truck and how any current versions come up short"). What's cool is that Toyota engineering and design teams actually make archaeological visits to truck graveyards in Michigan, where they examine the rusting hulks of old trucks: "With so many retired trucks in one place, they also gained a better sense of how trucks had evolved over the past 30 years - becoming larger, more various, more luxurious - and where they might go next." (In addition to this great quote about evolution, the article highlights the importance of Toyota's DNA -- both topics, of course, that relate directly to the Endless Innovation blog!)

Toyota to Introduce New Management System Streamlined Board, New Managing Officers Aimed at Faster Decision-making Tokyo TOYOTA MOTOR CORPORATION (TMC) announced today that following this year's general shareholders meeting in June it plans to introduce a new management system that features, among other enhancements, a streamlined board of directors and the new position of non-board managing officer. With global competition growing evermore severe, the new management system is aimed at boosting TMC's competitiveness as the company strives toward objectives outlined in its 2010 Global Vision announced in April 2002. This system is meant to make the most of TMC's traditional strengths of placing at its management core people capable of understanding and putting into practice TMC's corporate principles and of practicing hands-on decision-making (genchi genbutsu*). It is also aimed at accelerating managerial processes by streamlining the number of board members and at speeding up operations by making the decision-making structure less vertical. At the same time, the system hopes to strengthen corporate auditing efforts by increasing the number of outside corporate auditors. With the implementation of this new system, TMC targets further growth and development as a global company.

Highlights of new management system Streamlined board of directors The new board of directors will consist of 20-30 members of senior managing director rank or higher. Each will be appointed for a one-year term. Non-board managing officers

Such officers (under a performance-based system) will number about 30-40 persons, each in charge of daily operations in specific fields/divisions, and include non-Japanese and younger appointees, as well as executives resident at TMC's overseas affiliates, whose numbers will be increased. Each will be appointed for a one-year term. Less-vertical decision-making Matters concerning daily operations in specific fields/divisions will be settled at no higher than the level of senior managing director; senior managing directors, as the highest authorities in their areas of supervision, will participate in overall management of the company while overseeing "on-site" decision-making related to their fields of operations. Improved auditing Outside corporate auditors will be increasedout of a total of seven corporate auditors, four will come from outside the company. *Going to an issue's source to understand the actual situation, build consensus and expediently achieve one's goal

Toyota's Management Challenge

The automaker needs a revamped control system to manage the reliability of its products, as Peter Drucker would surely recommend
By Rick Wartzman

Management

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To the dismay of its growing chorus of critics, Toyota Motor (TM) continued to insist this week that its electronic throttle control isn't to blame for any unintended acceleration in its cars. But what the company has readily concededand what Peter Drucker would have surely seen as the key to its hoped-for resurgenceis that it needs to get a much better handle on another type of control system: that by which the entire enterprise manages the reliability of its products. "We are fundamentally overhauling Toyota's quality assurance processfrom vehicle planning and design to manufacturing, sales, and service," Shinichi Sasaki, an executive vice-president, told a Senate committee. Given the pleasure that some lawmakers and news outlets seem to be taking in Toyota's fall, it would be easy to dismiss Sasaki's comments as empty rhetoric or to overlook them altogether. At the same time, Toyota hasn't done itself any favors with some of its behavior. The company's now-infamous "safety wins" presentationin which it boasted of having saved $100 million by averting a full-blown recall of 50,000 sedanshas only helped fuel the tar-and-feather-them attitude that many have adopted. Yet the steps that Sasaki outlinedand that have been echoed by others, including Toyota President Akio Toyodaare anything but hollow or trivial. For they get right to the heart of a question that Drucker thought every company needs to rigorously address: What set of "controls" will provide the utmost "control"? "The synonyms for controls are measurement and information," Drucker wrote in his 1973 book Management: Tasks, Responsibilities, Practices. "The synonym for control is direction. Controls deal with facts, that is, with events of the past. Control deals with expectations, that is, with the future. Controls are analytical, concerned with what was and is. Control is normative and concerned with what ought to be."
Manager Control

Drucker explained that to give a manager proper control, controls must satisfy a number of criteria, including several that Toyota seems to be zeroing in on. For example, the company has pledged to increase its collection of consumer complaints and to then respond to them more quickly than in the past by deploying "SWAT teams" of technicians. It has also vowed to give its executives in the U.S. and other regions across the globe a greater voice in safety-related decisions. Until now, such authority has resided largely in Japan. Drucker, having stressed the need for controls "to be timely," would undoubtedly have favored these moves. But what may be most crucial here is the way that Toyota is positioning itself to meet another one of his specifications: "Controls," Drucker wrote, "must be operational. They must be focused on action." In a day-to-day context, Drucker added, "this means that controlswhether reports, studies, or figuresmust always reach the person who is capable of taking controlling action. Whether they should reach anyone else, and especially someone higher up, is debatable. But their prime addressee is the manager or professional who can take action by virtue of his position in the flow

of work. This further means that the measurement must be in a form that is suitable for the recipient and tailored to his needs."

Toyota as number one: continuous improvement key to success.

Amidst growing fears that General Motors, the world's largest car manufacturer, will go bust, Toyota Motor Company is rapidly expanding and on course to surpass GM in production this year. Toyota consistently outperforms competitors in quality, productivity, cost reduction, sales growth, and market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . Toyota sold 7.4 million vehicles worldwide in 2005, 30 percent more than in 2001. Its phenomenal success is attributable to the Toyota Production System, a corporate culture that fosters learning, and Science Statistical Quality Control. The Toyota Production System In comparison with American and European automakers, Toyota was late developing new markets. More than 70 percent of its production remains domestic, although the Japanese market accounts for only 32 percent of the company's global passenger car sales. This is going to change, however. Toyota is aggressively adding production capacity in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Asia. It is, for example, building a new plant in San Antonio, Texas San Antonio redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. , which will boost its production capacity by 200,000 units. Even more impressive is the planned production growth in Asia--a total of half a million units in China and Thailand by 2007.

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A pillar of Toyota's success is the Toyota Production System (TPS (1) (Transactions Per Second) The number of transactions processed within one second. TPS is a better rating for the performance of

hardware and software than the common MHz and GHz rating of the computer. ). Toyota's high-quality production is customer focused. This means that no one should manufacture a product or provide a service until someone downstream asks for it. This so-called pull production prevents overproduction and inventory build-up. TPS was introduced by Taiichi Ono (1912-90) after World War II. Ford and GM relied on mass production. But in the postwar era the situation in Japan was entirely different from that in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . American automakers could exploit economies of scale and large production lines with big equipment to churn out cars at low cost. In contrast, Toyota had to operate with limited resources in a small market in a country recovering from the ashes of war. Ono concluded that mass production was not applicable to Toyota. So he introduced flexible production lines and operations with short lead times. Toyota does not make cars in batches. Instead, different car models are assembled one after another on the same line. So personnel must be flexible and machinery tools easy to change. In his book Toyota Production System (Productivity Press, 1988) Ono writes: "All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes." Toyota first ventured overseas when it formed a joint venture with GM in the 1980s. Toyota took over a truck plant in Fremont, California For the unincorporated community in Yolo County, California, see . Fremont (IPA: /frimnt/) is a city in California that was incorporated on January 23, 1956, from the merger of five smaller communities: , that had been closed by GM. The Japanese automaker introduced TPS. When the factory reopened, it surpassed all of GM's American plants in quality and productivity. Noteworthy was that Toyota achieved this with almost the same unionized work force GM had employed. Toyota succeeded in building bonds of trust with employees. Even when the plant was running far below capacity, no workers were laid off. Toyota has developed a corporate culture in which employees learn better and faster and receive a more comprehensive education than their competitors. It is a truly learning organization that continuously improves not only its work but also its management processes. GM has introduced its own Toyota-like production system with all the tools and methods, but failed to foster a culture rooted in a capacity to learn and improve. Back in the '80s GM lost a golden opportunity in the Golden State, where Toyota had carried out a virtual case study in TPS implementation and how to nurture such a culture. Science Statistical Quality Control In recent years, Toyota has adopted a new quality control principle. It expands the scope of quality control from the production line on the lower stream to include development and design on the upper stream. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"

put differently , it includes marketing, sales and corporate support functions. Accordingly, the concept of quality was reoriented from product quality to business process quality. The new method, called Science Statistical Quality Control (Science SQC SQC Statistical Quality Control SQC Singapore Quality Class SQC Software Quality Control SQC Sediment Quality Criteria SQC Scottish Qualifications Certificate (record of student's academic achievements) SQC Surface Quality Control ), is the brainchild brainchild n. An original idea or plan attributed to a person or group.

brainchild Noun Informal an idea or plan produced by creative thought Noun 1. of Kakuro Amasaka, a professor at Aoyama Gakuin in Tokyo and the former head of Toyota's Total Quality Management Promotion Division. Science SQC is a method to identify cause-and-effect correlations between seemingly unrelated facts. It effectively utilizes the experience and know-how scattered across different levels, divisions and people within Toyota and its group suppliers. [ILLUSTRATION OMITTED] Amasaka describes the method in his book Science SQC, New Quality Control Principle (Springer-Verlag Tokyo 2004). The book not only gives the theoretical background of Science SQC but also demonstrates its effectiveness using practical examples. It recounts in detail success stories from product development using Science SQC, such as determining the cause of an oil leak, which led to a change in the design of the oil seal oil seal or shaft seal In machines, a device that prevents the passage of fluids along a rotating shaft. Seals are necessary when a shaft extends from a housing (enclosure) containing oil, such as a pump or a gearbox. . Science SQC does not focus on design and manufacturing only. Recently Amasaka has applied the method to improving conditions for older workers at plants. Science SQC is also applicable to other companies and industries. Amasaka is promoting the method through the Amasaka Forum, whose participants study ways other manufacturers can adapt the method.

It remains to be seen whether overseas companies can avail themselves of SQC. If TPS is any example, perhaps they can't.

Why is Toyota successful? (The Toyota Production System)

Toyota is known for its reliable cars among the general public, but it has also been known in management and leadership circles for its unusual use of people. While most companies tend to make employee policies around the idea that people are lazy and expensive, at Toyota, labor strife is rare and people are an integral part of the quality process. The companys only strike was in 1950, and resulted in a commitment to mutual trust. Many credit Toyotas success to aspects of the Toyota Production System, established by Tachi Ohno and Shigeo Shingo from the late 1950s through 1970 (when it gained the name). It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects. The system is used worldwide, but is only one of the reasons for Toyotas success. Jidoka is not letting a defect go from one machine to the next, particularly in automated machinery; essentially, it adds the ability to detect unacceptable quality during the process of production rather than waiting until the end, when it may be hidden. The name itself is a Japanese pun on the term automation, adding the character for a person into the middle. Jidoka was actually implemented by the Toyoda power looms before Toyota was created. Jidoka both reduces costs and increases reliability. Just-in-time production is the principle of having parts ready just as they are needed, rather than maintaining inventories across an assembly plant and in warehouses. Most writers tend to focus on the cost savings from having less capital tied up in inventory under this system, but there is another advantage: engineering changes (to increase reliability or functionality, or to cut cost) can take effect much more quickly, since stockpiles of parts do not need to be cleared out; and problems with individual parts can be detected much more quickly since they are used closer to the time they are made. The system was partly a result of Ohno and Shingo's observations of American production. They looked at Ford with an objective eye, and saw problems with Ford's treatment of people as machines at best, and enemies at worst. (Ford, at that time, had a hired army complete with spies which would invade workers' homes to make sure they were living as good Christians, and beat them if they were suspected of union sympathies or were caught in the wrong place at the wrong time.) Quite aside from the humanitarian issues which were perhaps inevitable in a company founded by a man idolized by Adolph Hitler, Ford did not use the knowledge or expertise of its workers. Toyota would lead the world in that regard. Ohno and Shingo also read the works of American and Japanese management experts, including Ishikawa, Deming, and Juran. They were impressed by the statistical quality control and quality circle approaches. Years before Pehr Gyllenhammar was to turn Volvo around, using similar techniques, Toyota organized around team development and cellular manufacturing. Using people as people, rather than ornery machines, also allowed for more flexibility than Ford's more

automated approach would allow. This was to make rapid changes easier, also helping quality and increasing responsiveness to competitors. Those who are interested in the original work of Taiichi Ohno and Shigeo Shingo may be interested in Ohno's work, Toyota Production System.

Note
The following sections are also found in the history page.

Toyota success today

Toyota participates in community activities, sponsoring educational and cultural programs as well as research. Today, Toyota is the world's second or third largest manufacturer of automobiles in both unit sales and in net sales, and the #1 seller of retail vehicles in the US. In the United States, Toyota has roughly double the sales of Honda, and has replaced Chrysler Group as the #3 seller. It produces over 5.5 million vehicles per year, equivalent to one every six seconds. It is worth noting that, while German automakers tend to use symbols and numbers, and Americans tend to throw away names frequently, Toyota sticks by a name as long as a car is successful, and doesn't toss names onto cars that don't fit them. The Land Cruiser started in 1950; the Corolla in 1966; the Celica in 1970; the Camry in 1983; the 4Runner in 1984. Notable "dropped" names include the Corona (with its tendency to die from severe rust), Cressida (dropped for the introduction of Lexus in the US), unpopular pickups (T100, HiLux, Compact Pickup), and minivans (Van, Previa).

Toyota Motor Corporation today

In April 2002, Toyota adopted the 2010 Global Vision, a vision for meeting mobility needs in a way that respects our earth and all people. It is made of long-term policies centered on the basic theme of 'innovation into the future.' Four key themes based on trends seen as developing from 2020 to around 2030 are:

Toward a recycle-oriented society Toward the age of IT and ubiquitous networks Toward a mature society (the decline of nationalism and war and the rise of respectful exchange of ideas) Toward motorization on a global scale (societies with little private transport gaining more)

These are linked to the pursuit of a new global image for Toyota with four key components: kind to the earth, comfort of life, excitement for the world, and respect for all people. The

encompassing motto of "innovation into the future" is "working with passion and dedication to create a prosperous society."

Who runs Toyota now?

As of May 2005:

Hiroshi Okuda, Chairman. Born in 1933 - about the same time as Toyota itself - Hiroshi Okuda has been a member of the Board of Toyota Motor Corporation since 1982, and has been the Chairman of the Board since 1999. Mr. Okuda was the president of Toyota from 1995 to 1999, and is also a director of KDDI Corporation. Hiroshi Okuda joined Toyota in 1955, at about the time of the company's entrance to the United States market. He mainly worked in Toyota's international operations, and oversaw preparation of manufacturing plants in North America. He graduated from Hitostubashi University with a degree in business, and has a black belt in judo. Fujio Cho, President. Born in 1937 - not long after Toyota itself - Fujio Cho helped to speed Toyota's decision-making but cutting the number of board members in half, appointing three non-Japanese managing officers, and generally streamlining the management structure. He graduated from the University of Tokyo in 1960 and became a production specialist, mentored by none other than Taiichi Ohno. He opened the first Toyota-owned factory in America in 1988. He is a third dan in kendo. It is worth noting the martial arts experience of the two top Toyota leaders. Martial arts require discipline, patience, and study; American leaders tend to be lawyers and accountants with experience in obfuscation.

Toyota and the environment

Toyota is fairly well known for having the best-designed hybrid-electric car, the Prius, which former Chrysler engineer Evan Boberg claimed in 2004 was the only car that actually saved fuel because of its hybrid design rather than coincidental features (such as lighter weight, efficient tires, and such). But Toyota's commitment goes much further. Their Australian unit's Earth Charter notes four principles:

Contribution towards a prosperous 21st century o Aim for growth that is in harmony with the environment, and to challenge achievement of zero emissions throughout all areas of business activities and set as a challenge the achievement of zero emissions throughout all areas of business activity. Pursuit of environmental technologies o Pursue all possible environmental technologies, developing and establishing new technologies to enable the environment and economy to coexist harmoniously. Voluntary actions o Develop a voluntary improvement plan, not only based on thorough preventative measures and compliance laws, but one that addresses environmental issues on the global, national and regional scales, and promotes continuous implementation. Working in co-operation with society.

Build close and cooperative relationships with a spectrum of individuals and organisations involved in environmental preservation including governments, local municipalities as well as with related companies and industries.

No environmental statement is meaningful unless it is actually followed - which is one reason why many are so angry at Ford, which made many brash promises, yet continued to push gas mileage downwards and fought even the slightest changes in Federal fuel economy requirements in the US. In Australia, and probably elsewhere in the world, Toyota has a balanced scorecard which notes specific outcomes and measures of environmental action, and uses a plan-do-checkact cycle to carry them out. Used extensively in Six Sigma, 5 Whys aids teams in identifying the root-cause of problems. Following, I introduce "5 Whys" and show you how to starting solving those tough problems.

5 Whys
Invented in the 1930's by Toyota Founder Kiichiro Toyoda's father Sakichi and made popular in the 1970s by the Toyota Production System, the 5 Whys strategy involves looking at any problem and asking: "Why?" and "What caused this problem?" Six Sigma, a Quality Management System (QMS), uses "5 Whys" in the Analyze phase of the Six Sigma Define, Measure, Analyze, Improve, Control (DMAIC) methodology. The idea is simple. By asking the question "Why" you can separate the symptoms from the causes of a problem. This is critical as symptoms often mask the causes of problems. As with effective Incident Classification, basing actions on symptoms is worst possible practice 5 Whys offers some real benefits at any maturity level:

Simplicity. It is easy to use and requires no advanced mathematics or tools. Effectiveness. It truly helps to quickly separate symptoms from causes and identify the root cause of a problem. Comprehensiveness. It aids in determining the relationships between various problem causes. Flexibility. It works well alone and when combined with other quality improvement and troubleshooting techniques. Engaging. By its very nature, it fosters and produces teamwork and teaming within and without the organization. Inexpensive. It is a guided, team-focused exercise. There are no additional costs.

Often the answer to the one "why" uncovers another reason and generates another "why." It often takes five "whys" to arrive at the root-cause of the problem. You will probably find that you ask more or less than 5 "whys" in practice.

How to Use the 5 Whys

1. Assemble a team of people knowledgeable about the failing Configuration Item (CI). Include IT and non-IT personnel where appropriate. For example, trying to diagnose the root cause of a failed Change Management process should probably involve Customers as well as IT. 2. On a flip chart, presentation board, or even paper write out a description of what you know about the problem. Try to document the Problem and describe it as completely as possible. Refine the definition with the team. Come to an agreement on the definition of the Problem at hand. 3. Have the team members ask "Why" the Problem as described could occur, and write the answer down underneath the Problem description. 4. If the answer provided from 3 (above) does not solve the Problem, you must repeat steps 3 and 4 until you do. 5. If the answer provided from 3 (above) seems likely to solve the Problem, make sure the team agrees and attempt a resolution using the answer.

Here is an example (of course, this is an example, and is for illustration purposes only): Problem Description: Customers are unhappy because Changes are causing outages. Q: Why do the Changes cause outages? A: Because many Customer changes are marked "Urgent" and we don't get the chance to fully test the Change and use Change Management procedures. Q: Why are the Changes marked "Urgent?" A: Because the Customer cannot get the signature of the VP since the VP travels often. Marking the Request for Change (RFC) as Urgent bypasses the VP signature requirement. Q: Why does the form require approval from the VP? A: So that the VP is aware of pending Changes. Q: Is there some other way the VP can get this information? A: The Change Schedule (CS) shows this information. So, the real problem is that an RFC does not truly require the signature of the VP, and the signature requirement is really just a method of informing the VP about Changes. Using the 5 Whys the team discovered that because the form required a VP signature, and it was difficult to get the signature, the Customer would mark the RFC as Urgent, thus not requiring the VP signature. Since the CS provides the same information and value to the VP, the RFC form and process could change. By removing the VP signature requirement, which is only there as an

information exchange, the RFC could proceed normally with full testing and Change Management process activities. The 5 Whys can help you uncover root causes quickly. However, making a single mistake in any question or answer can produce false or misleading results. For example, if you routinely come up with "because the CIO wants it that way" then there really is no resolution to the problem, and the situation must remain the same. Perhaps this is good, or for a purpose that you do not understand. If the root-cause is something outside of your control, all you can do it report it and move on. It is important to recognize those situations that the team cannot fix.

Mastering the 5 Whys

It is critical to base proposed root causes (answer to the "why" questions) on direct observation and not "armchair" speculation or deduction. If you cannot see or observe "why" firsthand then you are only guessing. One common problem those using 5 Whys report is to fall back on guesswork. Obviously guessing is counterproductive. Masters of the technique enforce precision by asking the 5 Whys again for each proposed root-cause -- only this time asking why the team thinks the proposed root-cause is correct. To validate those potential root causes that are under your control, you can apply the following validations to your answers or root causes. Ask the following questions for every possible rootcause you identify at all levels of the 5 Whys:

Is there any proof (something you can measure or observe) to support this root-cause determination? Is there any history or knowledge to indicate that the possible root-case could actually produce such a Problem? Is there anything "underneath" the possible root-cause that could be a more probable root cause? Is there anything that this possible root-cause requires in order to produce the Problem? Are there any other causes that could possibly produce the same Problem?

If you add these validating questions and results to the description of the problem and your questions and answers, you will produce a much clearer indication of the Problem and you may identify other possible solutions. If you diagram this process, you will end up with a tree of factors leading up to the problem. Even if you do not come to a resolution, the understanding of the issue or problem is greatly enhanced, often providing direction for further diagnosis. [Using Ishikawa (cause-and-effect or "fishbone") diagrams makes the 5 Whys especially effective.

SWOT Analysis Toyota

Strengths.

New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of very focused segmentation, targeting and positioning in a number of countries.

In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality. The company makes a large range of vehicles for both private customers and commercial organizations, from the small Yaris to large trucks. The company uses marketing techniques to identify and satisfy customer needs. Its brand is a household name. The company also maximizes profit through efficient manufacturing approaches (e.g. Total Quality Management).

Weaknesses

Being big has its own problems. The World market for cars is in a condition of over supply and so car manufacturers need to make sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed to fluctuating economic and political conditions those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. Movements in exchange rates could see the already narrow margins in the car market being reduced. The company needs to keep producing cars in order to retain its operational efficiency. Car plants represent a huge investment in expensive fixed costs, as well as the high costs of training and retaining labour. So if the car market experiences a down turn, the company could see over capapacity. If on the other hand the car market experiences an upturn, then the company may miss out on potential sales due to under capacity i.e. it takes time to accommodate. This is a typical problem with high volume car manufacturing.

Opportunities.

Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid R&D. Toyota is to target the 'urban youth' market. The company has launched its new Aygo, which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at their rear! The narrow segment is notorious for it narrow margins and difficulties for branding.

Threats.

Product recalls are always a problem for vehicle manufacturers. In 2005 the company had to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension systems. Toyota did not g ive details of how much the recall would cost. The majority of affected vehicles were sold in the US, while the rest were sold in Japan, Europe and Australia. As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car market. Competition is increasing almost daily, with new entrants coming into the market from China, South Korea and new plants in Eastern Europe. The company is also exposed to any movement in the price of raw materials such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe also experience slow downs. These economic factors are potential threats for Toyota.

Thanks to the dedication and hard work of indivduals who make up the Toyota family, Toyota has become the forth biggest automaker in North Amercia. Here you will find some of the many figures behind that fact

Has Toyota Lost Its Continuous Improvement Mojo?

Exactly one year ago yesterday (on 2/24/10), Akio Toyoda, CEO and grandson of Toyotas founder, testified before U.S. Congress about the companys recalls. As in a crime scene investigation, yesterday senior management attempted to tie a yellow ribbon around this painful one year period by having employees reflect upon the problems that the company has experienced. ( source: New York Times) In addition, during this past week, division and department heads have been conducting 10-15 minute sessions with employees, hoping to reestablish their connection with the philosophy of management that Toyota developed, known as Kaizen or continuous improvement. Here is the irony of ironies. Yesterday, Toyota also announced two recalls of 2.1 million vehicles to fix problems pertaining to floor mats that could interfere with their accelerator pedals. These recalls are another chink in Toyotas armor. According to the New York Times, the worlds number one automaker has recalled more than 14 million vehicles since 2009. Thursdays recall covers 769,000 sport utility vehicles and 20,000 Lexus sedans, and added approximately 1.4 million vehicles to its November 2009 recall, which the company describes as being related to floor mat entrapment. If top management at Toyota is truly committed to the continuous improvement philosophy, why did it take them 16 months to determine thatin addition the millions of vehicles that were recalled in November 2009there are potentially 1.4 million additional vehicles that have the identical problem? The Board of Directors of Toyota is in denial. Despite the fact that Toyota has recently implemented mega-recalls to fix a variety of mechanical and electronic problems, top management still disavows any responsibility for structural defects. According to the Wall Street Journal, company officials dont believe that Toyotas core production system or engineering

processes are in need of a fundamental overhaul. Akio Toyoda, CEO, said it all in a press conference last year: Believe me, Toyota car is safety. Furthermore, despite the fact that managements missteps have tarnished Toyota, a brand name once synonymous with the word quality, the consequences incurred by the management team have been minor: a mere 20% pay cut for three months this past summer. Tellingly, the usual suspectssenior management in Toyota City, Japan are still running the corporation. No significant heads have rolled. Toyotas recalls are not just a bump in the road; rather, they manifest the fact that something is rotten in the state of Toyota. There are multiple root causes of Toyotas problems, many of which stem from a decade-old, misguided mission, namely, to increase market share and reduce costs. The good news for Toyota is that both of these goals were achieved. Specifically, Toyotas worldwide production more than doubled between 1985 and 2008, from approximately 4 million vehicles to 8.9 million vehicles sold in 2008. The bad news is that, in the process of growing the company, management appears to have abandoned the continuous improvement philosophy that made it great. Its importance to the corporation is manifested by the fact that yesterday, continuous improvement was the main topic of the 10-15 minute conversation between department heads and their team members. Also, known as Total Quality Management (TQM), or Kaizen, the DNA of Toyota was a rigorous system, one that necessitated intensive training between teachers and students.

Unfortunately, in the rush to grow, the company had to add-on many new employees and suppliers. Regrettably, these new hires and vendors were not adequately trained in the methods of TQM. Toyota was consequently unable to replicate its DNA. The term kaizen is simply a slogan, unless employees have been thoroughly trained to use the many tools and techniques that this philosophy of management employs. So, at this point, the philosophy of continuous improvement within Toyota simply represents just another management exhortation. As the quality guru Deming stated years ago, slogans are meaningless proclamations, unless that are backed-up with methods for achievement. Shingo Research Prize recipient for 2009 In Toyota Culture, Toyota authorities Jeffrey Liker and Michael Hoseus reveal how Toyota selects, develops, and motivates its people to become committed to building high-quality productsand how you can do the same for your company. Toyota Culture examines the human systems that Toyota has put in place to instill its founding principles of trust, mutual prosperity, and excellence in its plants, dealerships, and offices around the world. Beginning with a look at the evolution of the Toyota culture and why its people are the heart and soul of the Toyota Way, the authors explain the company's four-stage process for building and keeping quality people: Attract, Develop, Engage, and Inspire. Drawing upon numerous

examples from Liker's decades of research as well as Hoseus' insider access as a Toyota manager, Toyota Culture gives you the tools you need to:

Find competent, able, and willing employees Start training and socializing your people as you hire them Establish and communicate key business performance indicators at every level of your organization Train your people to solve problems and continuously improve processes in their daily work Develop leaders who live and teach your company's philosophy Reward top performance-and offer help to those who are struggling

Fascinating vignettes of Toyota's innovative culture highlight the nuances of translating and recreating a people-centric culture in factories and offices across the globe. These exclusive, behind-the-scenes details are just what your company needs to successfully learn from Toyota Culture. "A must-read for plant managers and lean thinkers alike. The book delves deep into the business practices that took Toyota Motor Corp. from its meager beginnings in 1930 to, as Liker puts it, 'the world's best manufacturer' ... [it] explores how Toyota selects, develops, and motivates its people to drive excellence throughout the production process." --Industry Week magazine The Toyota company-wide culture is the key ingredient in its success as the global leader in operational excellence. To help your company become the Toyota of your industry, leading Toyota authorities Jeffrey Liker and Michael Hoseus give you the inside scoop on creating and maintaining a people-centric culture that sustains consistent growth, innovation, profitability, and excellence. Drawing upon their unprecedented access to Toyota executives, managers, and factories across the globe, the authors show how you can build a culture of continuous improvement by:

Attracting, developing, and engaging exceptional people Encouraging problem solving at all levels of your organization Making management accountable to employees Inspiring your people to be committed to the company, family, and community Turning your HR department into the arbitrators of fair and consistent daily practices Using a top-down and bottom-up planning process to involve everyone in achieving breakthrough goals
Lean Culture: The Toyota Culture of Continuous Improvement
July 1, 2004

As I conduct Lean assessments at organizations that have made attempts to implement Lean Manufacturing, I consistently observe similar results. The company has sometimes received assistance from an outside source either in some form of training or Kaizen event. There is a

Lean cell here and some form of a pull system there. Some attempts have been made at a 5S implementation with a couple of tool boards in place and a few documents posted that no one looks at. Changeover time at some equipment has been reduced, and there is some form of a TPM program with a preventive maintenance schedule that is not up to date. In truth, however, such companies are not truly implementing lean. This failure to implement the Toyota Production System (TPS) or Lean Manufacturing is a result of managements inab ility to create a true Lean culture. TPS or Lean has been around for a few decades: the concepts and tools are not new. Companies embrace the Lean tools but do not understand how they work together as a system. They will adopt a few of the Lean tools but always fail to recognize the most powerful principle that Toyota recognized decades ago: a continuous improvement culture is needed to sustain Lean. At Toyota everyone within the organization, from executives to shop floor workers, is challenged to use their initiative and creativity to experiment and learn. We often hear labor advocates criticize assembly line work as being oppressive and claim that menial labor robs workers of their mental faculties. However, this could not be further from the truth with respect to lean. When Toyota sets up assembly lines, it selects only the best and brightest workers, and challenges them to grow in their jobs by constantly solving problems. All areas of the organization (including sales, engineering, service, accounting, human resources, etc.) are staffed with carefully selected individuals, and the company gives them directives to improve their processes and increase customer satisfaction. Toyota invests time and money into their employees and has become the model for a true learning organization. The importance of teams and teamwork is a way of life: team building training is required, and it is put to practice daily. This investment in its employees far exceeds that of the typical organization that focuses on making parts and counting quarterly dollars. So, what can companies learn from Toyota? The most important lesson is to develop a continuous improvement culture and stick with it. Organizations have a tendency to jump around from program to program based on the latest buzzword. It is difficult to build a learning organization when the program changes from month to month. Companies must start their Lean culture transformation with a philosophy of continuous improvement. The change must start from the top, and this may require an executive leadership shakeup. Everyone from the bottom up must be involved in the transformation. This includes training in Lean principles, team building, and problem solving. Use middle managers as change agents to drive the transformation. To truly understand the power of a continuous improvement culture, we again look to Toyota. Toyota employees generate over one million process improvement ideas annually. The more astounding number is the fact that 90% of those ideas are implemented. There is no secret to why this occurs. Toyota executives have created a culture that encourages and rewards this behavior. Whether you are beginning or continuing your Lean journey, the transformation to a continuous improvement culture is vital to your success.