International Management. Toyota Way

THE FUTURE OF INTERNATIONAL  
MANAGEMENT

Individuals searching for careers in the field of international management will find numerous opportunities available to them. The field is becoming a specialty of its own. Virtually every management textbook being used in business curricula today has at least one chapter devoted entirely to international management. Colleges and universities are offering degrees ranging from associates to Ph.D.s in the field. As more and more companies enter the international business arena, the number of management opportunities will grow.

 

Toyota Corporation: Basic Information about the company. Corporate culture & Management strategies.

Basic Information

Web-page: www.toyota.co.jp

Foundation Date: 1937

Country: Japan

Trade-economic history:

1. 1933 is the first year of development as service centre Toyota Automatic Loom Works, Ltd.
2. The highest position among car-producers due to the economized rate of petroleum;
3. Toyota Brand produces more than 5,5 millions of cars. It means that each 6 seconds the plant produces new car.

Corporate Culture

The Toyota Way is a set of principles and behaviors that underlie the Toyota Motor Corporation's managerial approach and production system. Toyota first summed up its philosophy, values and manufacturing ideals in 2001, calling it “The Toyota Way 2001.” It consists of principles in two key areas: continuous improvement, and respect for people.

The fundamental reason for Toyota's success in the global marketplace lies in its corporate philosophy – the set of rules and attitudes that govern the use of its resources.

Toyota have successfully penetrated global markets and established a world-wide presence by virtue of its productivity. The company's approach to both product development and distribution is very consumer-friendly and market-driven. Toyota's philosophy of empowering its workers is the centerpiece of a human resources management system that fosters creativity, continuous improvement, and innovation by encouraging employee participation and that likewise engenders high levels of employee loyalty. Knowing that a workplace with high morale and job satisfaction is more likely to produce reliable, high-quality products at affordable prices, Toyota have institutionalized many successful workforce practices. Toyota has done so not only in its own plants but also in supplier plants that were experiencing problems.1

Although many car manufacturers have earned a reputation for building high-quality cars, they have been unable to overcome Toyota's advantages in human resource management, supplier networks and distribution systems in the highly competitive car market. Much of Toyota's success in the world markets is attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.

14 Toyota Way Principles

Section I: Long-Term Philosophy

Principle1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

■ Have a philosophical sense of purpose that supersedes any short-term decision making. Work, grow, and align the whole organization toward a common purpose that is bigger than making money. Understand your place in the history of the company and work to bring the company to the next level. Your philosophical mission is the foundation for all the other principles.

■ Generate value for the customer, society, and the economy—it is yourstarting point. Evaluate every function in the company in terms of its ability to achieve this.

■ Be responsible. Strive to decide your own fate. Act with self-reliance and trust in your own abilities. Accept responsibility for your conduct and maintain and improve the skills that enable you to produce added value.

Section II: The Right Process Will Produce the Right Results

Principle2. Create a continuous process flow to bring problems to the surface.

■ Redesign work processes to achieve high value-added, continuous flow. Strive to cut back to zero the amount of time that any work project is sitting idle or waiting for someone to work on it.

■ Create flow to move material and information fast as well as to link processes and people together so that problems surface right away.

■ Make flow evident throughout your organizational culture. It is the key to a true continuous improvement process and to developing people.

Principle 3. Use “pull”  systems to avoid overproduction.

■ Provide your down line customers in the production process with what they want, when they want it, and in the amount they want. Material replenishment initiated by consumption is the basic principle of just-in-time.

■ Minimize your work in process and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away.

■ Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory.

Principle4. Level out the workload (heijunka). (Work like the tortoise, not the hare.)

■ Eliminating waste is just one-third of the equation for making lean successful. Eliminating overburden to people and equipment and eliminating unevenness in the production schedule are just as important—yet generally not understood at companies attempting to implement lean

principles.

■ Work to level out the workload of all manufacturing and service processes as an alternative to the stop/start approach of working on projects in batches that is typical at most companies.

Principle5. Build a culture of stopping to fix problems, to get quality right the first time.

■ Quality for the customer drives your value proposition.

■ Use all the modern quality assurance methods available.

■ Build into your equipment the capability of detecting problems and stopping itself. Develop a visual system to alert team or project leaders that a machine or process needs assistance. Jidoka (machines with human intelligence) is the foundation for “building in” quality.

■ Build into your organization support systems to quickly solve problems and put in place countermeasures.

■ Build into your culture the philosophy of stopping or slowing down to get quality right the first time to enhance productivity in the long run.

Principle6. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.

■ Use stable, repeatable methods everywhere to maintain the predictability, regular timing, and regular output of your processes. It is the foundation for flow and pull.

■ Capture the accumulated learning about a process up to a point in time by standardizing today’s best practices. Allow creative and individual expression to improve upon the standard; then incorporate it into the new standard so that when a person moves on you can hand off the learning to the next person.

Principle7. Use visual control so no problems are hidden.

■ Use simple visual indicators to help people determine immediately whether they are in a standard condition or deviating from it.

■ Avoid using a computer screen when it moves the worker’s focus away from the workplace.

■ Design simple visual systems at the place where the work is done, to support flow and pull.

■ Reduce your reports to one piece of paper whenever possible, even for your most important financial decisions.

Principle8. Use only reliable, thoroughly tested technology that serves your people and processes.

■ Use technology to support people, not to replace people. Often it is the best to work out a process manually before adding technology to support the process.

■ New technology is often unreliable and difficult to standardize and therefore endangers “flow.” A proven process that works generally takes precedence over new and untested technology.

■ Conduct actual tests before adopting new technology in business processes, manufacturing systems, or products.

■ Reject or modify technologies that conflict with your culture or that might disrupt stability, reliability, and predictability.

■ Nevertheless, encourage your people to consider new technologies when looking into new approaches to work. Quickly implement a thoroughly considered technology if it has been proven in trials and it can improve flow in your processes.

Section III: Add Value to the Organization by Developing Your People

Principle9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

■ Grow leaders from within, rather than buying them from outside the organization.

■ Do not view the leader’s job as simply accomplishing tasks and having good people skills. Leaders must be role models of the company’s philosophy and way of doing business.

■ A good leader must understand the daily work in great detail so he or she can be the best teacher of your company’s philosophy.

Principle10. Develop exceptional people and teams who follow your company’s philosophy.

■ Create a strong, stable culture in which company values and beliefs are widely shared and lived out over a period of many years.

■ Train exceptional individuals and teams to work within the corporate philosophy to achieve exceptional results. Work very hard to reinforce the culture continually.

■ Use cross-functional teams to improve quality and productivity and enhance flow by solving difficult technical problems. Empowerment occurs when people use the company’s tools to improve the company.

■ Make an ongoing effort to teach individuals how to work together as teams toward common goals. Teamwork is something that has to be learned.

Principle11. Respect your extended network of partners and suppliers by challenging them and helping them improve.

■ Have respect for your partners and suppliers and treat them as an extension of your business.

■ Challenge your outside business partners to grow and develop. It shows that you value them. Set challenging targets and assist your partners in achieving them.

Section IV: Continuously Solving Root Problems Drives

Organizational Learning

Principle12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).

■ Solve problems and improve processes by going to the source and personally observing and verifying data rather than theorizing on the basis of what other people or the computer screen tell you.

■ Think and speak based on personally verified data.

■ Even high-level managers and executives should go and see things for themselves, so they will have more than a superficial understanding of the situation.

Principle 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi) 

■ Do not pick a single direction and go down that one path until you have thoroughly considered alternatives. When you have picked, move quickly and continuously down the path.

■ Nemawashi is the process of discussing problems and potential solutions with all of those affected, to collect their ideas and get agreement on a path forward. This consensus process, though time-consuming, helps broaden the search for solutions, and once a decision is made, the stage is set for rapid implementation. 

Principle14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

■ Once you have established a stable process, use continuous improvement tools to determine the root cause of inefficiencies and apply effective countermeasures. 

■ Design processes that require almost no inventory. This will make wasted time and resources visible for all to see. Once waste is exposed, have employees use a continuous improvement process (kaizen) to eliminate it.

■ Protect the organizational knowledge base by developing stable personnel, slow promotion, and very careful succession systems.

So you set up your kanban system. (Kanban is the Japanese word for “card,” “ticket,” or “sign”  and is a tool for managing the flow and production of materials in a Toyota-style “pull” production system.) You plug in the andon, which is a visual control device in a production area that alerts workers to defects, equipment abnormalities, or other problems using signals such as lights, audible alarms, etc. Finally, with these devices your workplace looks like a Toyota plant. Yet, over time your workplace reverts to operating like it did before. You call in a Toyota Production System (TPS) expert who shakes her head disapprovingly.

What is wrong? The real work of implementing Lean has just begun. Your workers do not

understand the culture behind TPS. They are not contributing to the continuous improvement of the system or improving themselves. In the Toyota Way, it’s the people who bring the system to life: working, communicating, resolving issues, and growing together. From the first look at excellent companies in Japan practicing lean manufacturing, it was clear that the workers were active in making improvement suggestions. But the Toyota Way goes well beyond this; it encourages, supports, and in fact demands employee involvement.

The more we have studied TPS and the Toyota Way, the more we understand that it is a system designed to provide the tools for people to continually improve their work. The Toyota Way means more dependence on people, not less. It is a culture, even more than a set of efficiency and improvement techniques. You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose, and teamwork because if they don’t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialist, vendors, team leaders, and—most importantly—operators are all involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers.

One lean tool that facilitates this teamwork is called 5S (sort, stabilize, shine, standardize, sustain), which is a series of activities for eliminating wastes that contribute to errors, defects, and injuries. In this improvement method, the fifth S, sustain, is arguably the hardest. It’s the one that keeps the first four S’s going by emphasizing the necessary education, training, and rewards needed to encourage workers to properly maintain and continuously improve operating procedures and the workplace environment. This effort requires a combination of committed management, proper training, and a culture that makes sustaining improvement a habitual behavior from the shop floor to management.

This chapter provides a synopsis of the 14 principles that constitute the Toyota Way. The principles are organized in four broad categories: 1) Long-Term Philosophy, 2) The Right Process Will Produce the Right Results (this utilizes many of the TPS tools), 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning. Note that Part II of this book is also organized into these same four categories—  the four “P’s” of the Toyota Way model in Chapter 1. In the following two chapters, we will demonstrate some of these 14 principles at work in the development of Lexus and Prius. If you would like to jump ahead to begin the detailed discussion of these 14 principles, you can skip. It is quite possible to use a variety of TPS tools and still be following only a select few of the Toyota Way principles. The result will be short-term jumps on performance measures that are not sustainable. On the other hand, an organization that truly practices the full set of Toyota Way principles will be following TPS and on its way to a sustainable competitive advantage.

In courses we have taught on lean manufacturing, a common question is “How does TPS apply to my business? We do not make high-volume cars; we make low volume, specialized products”  or “We are a professional service organization, so TPS does not apply to us.” This line of thinking tells me they are missing the point. Lean is not about imitating the tools used by Toyota in a particular manufacturing process. Lean is about developing principles that are right for your organization and diligently practicing them to achieve high performance that continues to add value to customers and society. This, of course, means being competitive and profitable. Toyota’s principles are a great starting point. And Toyota practices these principles far beyond its high-volume assembly lines. For example, we will see in the next chapter how some of these principles are applied in the professional service organizations that design Toyota’s products.

Theory and practice.

Success on international arena

 

Toyota will lead the way to the future of mobility.”  This reaffirms an item in the

Toyota Precepts, which calls for us to stay ahead of the times through research and creativity.

We will strive to lead our industry in tackling technological advance that will spawn next-generation mobility. That will include exploring possibilities in new modes of personal mobility. It will also include exploring possibilities in so-called smart grids, which employ information technology in optimizing energy usage and consumption. 

Creating “always better cars” is our chief focus as an automaker. And our success in earning smiles from our customers and from other people in our host communities contributes to community vitality. As I have noted, it enables us to generate steady employment and to engage in mutually beneficial business with partners.

As we work to fulfill the global vision, the regional operations will have a bigger say than ever in formulating policy. They will provide decisive input in determining how to provide their customers with the best possible cars and how to maximize our contribution in their regions. They will take the initiative in defining their mission and in preparing their own management plans. Our chief regional officers will spearhead that autonomy in cooperation with the executive vice president responsible for their regions. I will describe later in my presentation how that will work in our new management framework. But now, let me outline my expectations of the different regions

In North America, our operations will attain even more autonomy and local integration. For the Camry and other vehicle series, we plan for North America to become a global center responsible for R&D and production, as well as exports. I also want to reinforce our work on future mobility through collaboration with North American leaders in information technology, and other leading-edge fields. Our successful alliance with Tesla Motors is a good example of the potential benefits of collaboration.

Europe, meanwhile, is the scene of intense competition among several superior automakers backed by long and proud histories. Amid this, we hope that our operations in Europe will play the role of a global planning center for the A, B and C segments. This role is not one to be limited to only keeping an antenna up and benchmarking others, but one, I hope, will include competitive engagement, not only in business, but also in motor sports and other activities to hone our vehicles and people toward the making of better products.

China and other emerging markets are the subjects of great expectations in our industry. At Toyota, we hold especially high hopes for the Chinese market. We have set a target of securing 15% of our global unit sales in China, and we are working to achieve that target as soon as possible. We have established a development center in China to provide onsite support to our manufacturing and service operations there in regard to safety, environmental, and other automotive functions. We are also counting on that center to help enrich our Chinese model line with new product offerings, such as vehicles for disabled persons.

In other Asian nations and in Oceania, we will step up our work in cultivating human resources in support of greater localization. We will tap the growth potential in Asian emerging markets with a continuing stream of models tailored to local needs. Those will include models in our Innovative International Multipurpose Vehicle family and our newly developed small-cars. We hope our operations in these countries will grow into global bases of lean and efficient R&D and production ramp-ups.

 

Conclusion

 

Toyota has encountered numerous challenges in its 74 years as an automaker. Through all those challenges, the people at our company have derived encouragement from the smiles that they earned from customers. And they persevered through adversity by rededicating themselves to serving society through manufacturing quality automobiles. The Toyota Global Vision reflects our determination to persevere in the same spirit through whatever adversity the future might present. It affirms our determination to be a company that will earn smiles by exceeding the highest expectations of our customers, our business partners, our friends and neighbors in the community at large, our fellow team members, all of you here today and everyone who encounters Toyota in any way. And it reaffirms our awareness of sustainable growth as the result of becoming that kind of company.