case study of toyota

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

What Really Makes Toyota’s Production System Resilient

• Willy C. Shih

“Just-in-time” only works as part of a comprehensive suite of strategies.

Toyota has fared better than many of its competitors in riding out the supply chain disruptions of recent years. But focusing on how Toyota had stockpiled semiconductors and the problems of other manufacturers, some observers jumped to the conclusion that the era of the vaunted Toyota Production System was over. Not the case, say Toyota executives. TPS is alive and well and is a key reason Toyota has outperformed rivals.

The supply chain disruptions triggered by the Covid-19 pandemic caused major headaches for manufacturers around the world. Nowhere was this felt more acutely than in the auto industry, which faced severe shortages of semiconductor chips and other components. This led many people to argue that just-in-time and lean production methods were dead and being superseded by “just-in-case” stocking of more inventory.

• Willy C. Shih is a Baker Foundation Professor of Management Practice at Harvard Business School.

Partner Center

ESG Case Study – Toyota Motor Corporation

February 24, 2021 — 02:59 pm EST

Written by [email protected] (ETF Trends) for ETF Trends  ->

By Sara Rodriguez, Sage ESG Research Analyst

About Toyota Motor Corporation

Toyota Motor Corporation is a Japanese multinational automotive company that designs, manufacturers, and sells passenger and commercial vehicles. The company also has a financial services branch that offers financing to vehicle dealers and customers. Toyota is the second-largest car manufacturer in the world and ranked the 11th largest company by Forbes — and produces vehicles under five brands: Toyota, Hino, Lexus, Ranz, and Daihatsu. Toyota also partners with Subaru, Isuzu, and Mazda.

Environmental

Motor vehicles are one of the largest contributors to greenhouse gas (GHG) emissions and, as a result, climate change, with the transportation sector accounting for a third of U.S. GHG emissions in 2018. Although most emissions come from vehicle usage rather than the process of manufacturing vehicles, government regulations place the burden on auto companies to improve fuel efficiency and reduce overall emissions. While climate change regulations present financial risk to automakers, they also offer opportunities; increased fuel efficiency requirements are likely to lead to more sales of electric vehicles and hybrid systems. Toyota pioneered the first popular hybrid vehicle with the 1997 release of the Prius, the world’s first mass-produced hybrid. Since then, Toyota has sold 15 million hybrids worldwide . In 2018, hybrids accounted for 58% of Toyota’s sales, contributing to Toyota reaching substantially better carbon dioxide (CO2) emissions from new vehicles than regulatory standards and the best levels in the industry (102.1g/km compared to U.S. regulation of 119g/km). In 2020, Toyota reduced global average CO2 emissions from new vehicles by 22% compared to 2010 levels by improving vehicle performance and expanding its lineup. Toyota’s goal is to increase that number to 30% by 2025, with the goal of 90% total reduction by 2050. The company aims to offer an electric version of all Toyota and Lexus models worldwide by 2025. (Toyota does not yet sell any all-electric vehicles to the U.S., but it does outside the U.S.)

In addition to greenhouse gases, cars emit smog-forming pollutants that contribute to poor air quality and trigger negative health effects. Recently, a London court ruled that air pollution significantly contributed to the death of a nine-year-old girl with asthma who had been exposed to excessive nitrogen dioxide (NO2) levels. NO2 is a toxic gas emitted by cars that use diesel fuel, and although European Union laws set regulatory levels for NO2 in the air, Britain has missed its targets for a decade due to a lack of enforcement. As Toyota expands into European markets, the smog rating of its cars will be financially material and an important aspect of risk management.

Compared to industry peers, Toyota excels in addressing emissions and fuel efficiency. In 2014 Toyota Motor Credit Corporation, the financial arm of Toyota Motor Corporation, introduced the auto industry’s first-ever asset-backed green bond and has since issued five total green bonds. The newest $750 million bond will go toward developing new Toyota and Lexus vehicles to possess a hybrid or alternative fuel powertrain, achieve a minimum of 40 highway and city miles per gallon, and receive an EPA Smog Rating of 7/10 or better. The bond program was reviewed by Sustainalytics, which found that Toyota leads its competitors in supporting its carbon transition through green bond investments.

In addition to curbing emissions caused by Toyota’s vehicles, the company seeks to reduce plant emissions to zero by 2050 by utilizing renewable energy and equipment optimization. In automaking, water is used in painting and other manufacturing processes. Toyota has implemented initiatives to reduce the amount of water used in manufacturing and has developed technology that allows the painting process to require no water. In 2019, Toyota reduced water usage by 5% per vehicle, with the goal of 3% further reduction by 2025, for an overall reduction of 34% from 2001 levels. To reduce the environmental impact of materials purchased from suppliers, Toyota has launched Green Purchasing Guidelines to prioritize the purchase of parts and equipment with a low environmental footprint. We would like to see Toyota continue to develop its supply chain environmental policies.

As the global population grows, so does number of cars on the road, which creates waste when they’ve reached the end of their useful lives. Toyota’s Global 100 Dismantlers Project was created to establish systems for appropriate treatment of end-of-life vehicles through battery collection and car recycling. Toyota aims to have 15 vehicle recycling facilities by 2025. Toyota is also working to minimize waste by prolonging the useful life of its vehicles. Toyota has a strong reputation for producing quality, reliable vehicles. Consumer Reports lists Toyota’s overall reliability as superb, and Toyota and Lexus often take the top spots in Consumer Reports Annual Auto Reliability Survey. An Iseecars.com study found that Toyota full-size SUV models are the longest-lasting vehicles and most likely to reach over 200,000 miles.

Driving is an activity with inherent risk. The World Health Organization estimates that 1.35 million people die in car accidents each year. Accidents are worse in emerging nations where transportation infrastructure has not kept up with the increase in the number of cars on the road; without countermeasures, traffic fatalities are predicted to become the seventh-leading cause of death worldwide by 2030. Demand for personal vehicles will continue to increase as developing countries experience higher standards of living, and product safety will be paramount to automaker’s reputations and brand values. Toyota has put forth a goal of Zero Casualties from Traffic Accidents and adopted an Integrated Safety Management Concept to work toward eliminating traffic fatalities by providing driver support at each stage of driving: from parking to normal operation, the accident itself, and the post-crash. Toyota and Lexus models regularly earn top safety ratings by the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety. In addition to traditional safety features, Toyota actively invests in the development of autonomous vehicles, including a $500 million investment in Uber and autonomous ridesharing. If fully developed, autonomous driving can offer increased safety to passengers, lower accident rates, and provide mobility for the elderly and physically disabled.

Accidents caused by defective vehicles can have significant financial repercussions for auto manufacturers. Toyota experienced significant damage to its reputation and brand value in 2009 when unintended acceleration caused a major accident that killed four people riding in a dealer-loaned Lexus in San Diego. Toyota subsequently began recalling millions of vehicles, citing problems of pedal entrapment from unsecured floor mats and “sticky gas pedals.” Toyota’s failure to quickly respond resulted in a $1.2 billion settlement with the Justice Department and $50 million in fines from the NHTSA. The scandal generated an extraordinary amount of news coverage, and the Toyota recall story ranked among the top 10 news stories across all media in January and February 2010. Litigation costs, warranty costs, and increased marketing to counter the negative publicity of the event were estimated to cost Toyota over $5 billion (annual sales are about $275 billion). As a result of bad press, Toyota’s 2010 sales fell 16% from the previous year and its stock price fell 10% overall, while competitors like Ford benefitted and experienced stock price growth of 80% over the same period. Future recalls and quality issues are certain to prove costly for Toyota and may continue to negatively impact its consumer reputation.

Another social issue that can be financially material for automakers is human rights. Automobiles consist of about 30,000 parts, making their supply chain extensive and at high risk for human rights abuses. Toyota addresses human rights concerns in its Corporate Sustainability Report (CSR) and cites Migrant Workers and Responsible Sourcing of Cobalt as its priorities for 2020; however, Toyota does not have a clean labor record. A 2008 report published by the Institute for Global Labour and Human Rights accused Toyota of a catalog of human rights abuses, including stripping foreign workers of their passports and forcing them to work grueling hours without days off for less than half of the legal minimum wage. Toyota was also accused of involvement in the suppression of freedom of association at its plant in the Philippines. Toyota’s CSR lists a host of external nongovernmental organizations the company partners with to promote fair working conditions, however; due to the high-risk present in its supply chain and its past offenses, we would like to see the company further develop its labor and human rights policies.

Lastly, we would mention that Toyota has been accused of discriminatory practices. In 2016, Toyota Motor Credit Corporation, the financial arm of Toyota Motor Corporation, agreed to pay 21.9 million in restitution to thousands of African American, Asian, and Pacific Islander customers for charging them higher interest rates on auto loans than their white counterparts with comparable creditworthiness. Toyota has since taken measures to change its pricing and compensation system to reduce incentives to mark up interest rates.

Toyota shows strength in its transparency, and its Corporate Sustainability Report (CSR) is prepared in accordance with multiple sustainability reporting agencies, including the Global Reporting Initiative, Sustainable Accounting Standards Board, and the Task Force on Climate-Related Financial Disclosures; the CSR data is also verified by a third party. Starting in 2021, Toyota’s CSR will be updated whenever necessary to ensure timely disclosure, rather than annually. In 2019 Toyota created a Sustainability Management Department and added the role of Chief Sustainability Officer to its executive management team in 2020. Toyota’s CSR offers thorough information on its executive compensation policies, however; the composition of Toyota’s board of directors is an area of weakness for the company. There is a lack of independence among board members, and the chair of the board is not independent. In general, when compared to the U.S., Japanese companies have a smaller percentage of outside directors due to a history of corporate governance emphasizing incumbency and promotion from within. However, since the release of the Japanese Corporate Governance Code in 2015, companies have felt pressure to make meaningful board composition changes. We hope to see Toyota strengthen its board composition and adopt executive renumeration policies that are tied to sustainability performance.

Like other automakers, Toyota has lobbied aggressively to weaken Obama-era fuel economy standards. In 2017, the Environmental Protection Agency announced plans to work with Toyota to overhaul internal management practices at the agency. Inviting a company regulated by the agency to alter internal practices has been previously unprecedented and raises concerns over how Toyota could wield influence over EPA functions. Toyota is a member of the Alliance of Automobile Manufacturers, the most powerful automotive industry lobbying association, which has strongly opposed climate change motivated regulation since 2016, contradicting the company’s public stance on emissions.

Risk & Outlook

Sage believes Toyota to be well adapted to manage sustainability challenges, despite the high environmental and social risks in the automotive industry. We expect the auto industry to see an increase in regulatory risk surrounding vehicle emissions and fuel efficiency; however, we believe Toyota will continue to innovate to meet and exceed emission standards and the company is well positioned to benefit from future fuel efficiency regulations. We hope to see Toyota continue to improve its social performance and expand on its recently introduced human capital policies. In addition to regulation, the auto industry faces disruption caused by new areas of technology such as automated driving, electrification, and shared mobility, and these areas will be important to monitor. Toyota’s strong management of ESG issues makes the company a leader amongst its peers; however, due to risk present in the automotive industry we rank Toyota a 3/5 for its Sage ESG Leaf Score.

Sage ESG Leaf Score Methodology

No two companies are alike. This is exceptionally apparent from an ESG perspective, where the challenge lies not only in as­sessing the differences between companies, but also in the differences across industries. Although a company may be a leader among its peer group, the industry in which it operates may expose it to risks that cannot be mitigated through company management. By combining an ESG macro industry risk analysis with a company-level sustainability evaluation, the Sage Leaf Score bridges this gap, enabling investors to quickly assess companies across industries. Our Sage Leaf Score, which is based on a 1 to 5 scale (with 5 leaves representing ESG leaders), makes it easy for investors to compare a company in, for example, the energy industry to a company in the technology industry, and to understand that all 5-leaf companies are leaders based on their individual company management and the level of industry risk that they face.

For more information on Sage’s Leaf Score, click here.

Originally published by Sage Advisory

• ISS ESG Corporate Rating Report on Toyota Motor Corporation.
• Environmental Report 2020 Toyota Motor Corporation.
• Sustainability Data Book 2020 Toyota Motor Corporation.
• Lambert, Lisa. “Toyota Motor Credit settles with U.S. over racial bias in auto loans” February 2, 2016.
• “Automobiles” Sustainability Accounting Standards Board. September, 2014.
• Kaufman, Alexander. “Scott Pruitt’s Plan to Outsource Part Of EPA Overhaul to Automaker Raises Concerns” December 12, 2017.
• “How the US auto industry accelerated lobbying under President Trump” November, 2017.
• Charles Kernaghan, Barbara Briggs, Xiaomin Zhang, et al. “The Toyota You Don’t Know” Institute for Global Labour and Human Rights. 2008.
• Road Safety World Health Organization.
• Toyota Motor Credit Corporation Green Bond Framework Second-Party Opinion January 21, 2020.
• Toshihiko Hiura and Junya Ishikawa. "Corporate Governance in Japan: Board Membership and Beyond" Bain & Company. February 23, 2016.
• Taylor, Lin. ”Landmark ruling links death of UK schoolgirl to pollution" December 16, 2020.

Disclosures

Sage Advisory Services, Ltd. Co. is a registered investment adviser that provides investment management services for a variety of institutions and high net worth individuals. The infor­mation included in this report constitute Sage’s opinions as of the date of this report and are subject to change without notice due to various factors, such as market conditions. This report is for informational purposes only and is not intended as investment advice or an offer or solicitation with respect to the purchase or sale of any security, strategy or investment product. Investors should make their own decisions on investment strategies based on their specific investment objectives and financial circumstances. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Sustainable investing limits the types and number of investment opportunities available, this may result in the Fund investing in securities or industry sectors that underperform the market as a whole or underperform other strategies screened for sustainable investing standards. No part of this Material may be produced in any form, or referred to in any other publication, without our express written permission. For additional information on Sage and its investment management services, please view our web site at www.sageadvisory.com, or refer to our Form ADV, which is available upon request by calling 512.327.5530.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.

To add symbols:

• Type a symbol or company name. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return.
• Copy and paste multiple symbols separated by spaces.

These symbols will be available throughout the site during your session.

Your symbols have been updated

Edit watchlist.

• Type a symbol or company name. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return.

Opt in to Smart Portfolio

Smart Portfolio is supported by our partner TipRanks. By connecting my portfolio to TipRanks Smart Portfolio I agree to their Terms of Use .

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Case Analysis, Toyota： "The Lean Mind" 70 Years of innovation

This case study aims to reveal the reasons for Toyota's success and make its experience guide the developing brands to success.

Related Papers

helen turner

Long Range Planning

Peter J. Buckley

Mossimo Sesom

Deborah Nightingale

This Transition-To-Lean Guide is intended to help your enterprise leadership navigate your enterprise’s challenging journey into the promising world of “lean.” You have opened this guide because, in some fashion, you have come to realize that your enterprise must undertake a fundamental transformation in how it sees the world, what it values, and the principles that will become its guiding lights if it is to prosper — or even survive — in this new era of “clock-speed” competition. However you may have been introduced to “lean,” you have undertaken to benefit from its implementation.

Ayesha Majid , Yahya Rehman

Toyota is a name almost everyone is familiar with. It has been the market leader in automobiles specially hybrid and electric automobiles. It has been operational in Pakistan since 1989. Toyota is a one of a kind Japanese multinational automotive manufacturer. As of September 2018, it was the sixth largest company in the world in terms of revenue. The economic conditions however have not been very favorable for the automotive industry. The economy of Pakistan and the consistent increase in dollar rates has taken a huge toll on the sales of the multinational manufacturer. Focus group analysis show that majority of the people preferred Honda over Toyota due to several reasons including near to none change in the designs of Toyota Corolla’s variants. Another factor was that Toyota was seen more as a car for the rural areas which was best suited for a rugged terrain. Although the general perception is that Toyota has better car suspension and fuel efficiency, people would still prefer Honda and other Japanese cars. Respondents said that advertisements played a crucial role but they do not compel the customer to buy a product like a car, there are other factors that are taken under consideration. Pakwheels and olx were the first two online platforms that they mentioned when asked about their go to online source. Family and friends advice played a major role in deciding which car to buy. According to the research conducted by our group through questionnaire, a regression was done and seen that the general perception that a reduction in prices will increase sales was not true because people usually associate low prices with low quality products. According to the regression, only advertisement and product have a significant result. All the variables are positively correlated with each other and less than one and positive indicating a formative relationship to the dependent variable. Branding has an insignificant positive relationship with purchase intention because consumers are only considering three competitors; Honda, Suzuki and Japanese cars.

Volume III of this guide may be used as an in-depth reference source for acquiring deep knowledge about many of the aspects of transitioning to lean. Lean change agents and lean implementation leaders should find this volume especially valuable in preparing their organizations for the lean transformation and in developing and implementing an enterprise level lean implementation plan. The richness and depth of the discussions in this volume should be helpful in charting a course, avoiding pitfalls, and making in-course corrections during implementation. We assume that the reader of Volume III is familiar with the history and general principles of the lean paradigm that are presented in Volume I, Executive Overview. A review of Volume II, Transition to Lean Roadmap may be helpful prior to launching into Volume III. For those readers most heavily involved in the lean transformation, all three volumes should be understood and referenced frequently.

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

Open Access is an initiative that aims to make scientific research freely available to all. To date our community has made over 100 million downloads. It’s based on principles of collaboration, unobstructed discovery, and, most importantly, scientific progression. As PhD students, we found it difficult to access the research we needed, so we decided to create a new Open Access publisher that levels the playing field for scientists across the world. How? By making research easy to access, and puts the academic needs of the researchers before the business interests of publishers.

We are a community of more than 103,000 authors and editors from 3,291 institutions spanning 160 countries, including Nobel Prize winners and some of the world’s most-cited researchers. Publishing on IntechOpen allows authors to earn citations and find new collaborators, meaning more people see your work not only from your own field of study, but from other related fields too.

Brief introduction to this section that descibes Open Access especially from an IntechOpen perspective

Want to get in touch? Contact our London head office or media team here

Our team is growing all the time, so we’re always on the lookout for smart people who want to help us reshape the world of scientific publishing.

Home > Books > Strategic Management - a Dynamic View

Organizational Identity, Corporate Strategy, and Habits of Attention: A Case Study of Toyota

Submitted: 20 April 2018 Reviewed: 24 August 2018 Published: 31 December 2018

DOI: 10.5772/intechopen.81117

Cite this chapter

There are two ways to cite this chapter:

From the Edited Volume

Strategic Management - a Dynamic View

Edited by Okechukwu Lawrence Emeagwali

To purchase hard copies of this book, please contact the representative in India: CBS Publishers & Distributors Pvt. Ltd. www.cbspd.com | [email protected]

Chapter metrics overview

1,966 Chapter Downloads

Impact of this chapter

Total Chapter Downloads on intechopen.com

Total Chapter Views on intechopen.com

This chapter links organizational identity as a cohesive attribute to corporate strategy and a competitive advantage, using Toyota as a case study. The evolution of Toyota from a domestic producer, and exporter, and now a global firm using a novel form of lean production follows innovative tools of human resources, supply chain collaboration, a network identity to link domestic operations to overseas investments, and unparalleled commercial investments in technologies that make the firm moving from a sustainable competitive position to one of unassailable advantage in the global auto sector. The chapter traces the strategic moves to strength Toyota’s identity at all levels, including in its overseas operations, to build a global ecosystem model of collaboration.

• institutional identity
• lean management
• learning symmetries
• habits of attention

Author Information

Charles mcmillan *.

• Schulich School of Business, York University, Toronto, Canada

*Address all correspondence to: [email protected]

(Article for Lawrence Emeagwali (Ed.), Strategic Management . London, 2018)

October 18, 2018.

“There is no use trying” said Alice, “we cannot believe impossible things.”—Lewis Carroll

1. Introduction

Few organizations combine the institutional benefits of longevity and tradition with the disruptive startup advantages of novelty and suspension of path dependent behavior. This chapter provides a case study of Toyota Corporation, an organization with an explicit philosophy that embodies “…standardized work and kaizen (that) are two sides of the same coin. Standardized work provides a consistent basis for maintaining productivity, quality and safety at high levels. Kaizen furnishes the dynamics of continuing improvement and the very human motivation of encouraging individuals to take part in designing and managing their own jobs” ([ 1 ], p. 38). Toyota’s philosophy, combining a model that is “stable and paranoid, systematic experimental, formal and frank” [ 2 ], often called the Toyota Way, evolved from the founding of Toyoda Automatic Loom Works, founded in 1911, setting up an auto division in 1933, and Toyota Motor Company in 1937 [ 3 ].

What is unique about Toyota and its pioneering lean production, described colloquially as just-in-time (JIT), embraces a deliberative philosophy that establishes a corporate identity for safety, quality, and aspirational performance goals. Going forward, with plants and distribution centers around the world, Toyota cultivates a direct involvement of employees, suppliers, and other organizations, called the Toyota Group, as a network identity that extends boundary members of the firm’s eco-system that also embodies detailed performance measures to strengthen and reinforce identity enhancement. These identity attributes creating novel and seemingly contradictory configurations, both at home and now in global markets. Toyota provides a framework to link identity as a cohesive attribute for problem-solving with explicit, data-driven benchmarks, a DNA that encompasses observation, analysis, hypothesis testing from the shop floor to the executive suite [ 3 , 4 ].

The concept of identity has a long pedigree in the social sciences, dating from classical writers like Adam Smith, Karl Marx, Max Weber, and Emile Durkheim, focusing on individual identities separate and distinct from larger social systems arising from the division of labor. However, identity in organizations is a relatively new construct, based on claims that are “central, distinctive, and enduring” [ 5 ]. Despite the growing literature on organizational identity [ 6 , 7 ], there is less consensus given the multiple disciplinary focus, the levels of analysis, well as minimum empirical work linking organizational identity to corporate strategy. In some cases, identity linkages touch on outcomes like brand equity, reputation, visual media like social networking and the gap between defining what the organization is today and what it wants to become, despite the high failure rate of firms [ 8 ]. Indeed, there is little reason to doubt that “the concept of organizational identity is suffering an identity crisis” ([ 9 ], p. 206).

Despite the growing literature on organization identity, encompassing diverse constructs and methodologies [ 6 , 7 ], often at different organizational levels (individuals, groups and senior management), has limited empirical study linking individual and group identity both to corporate strategy and corporate performance. Various accounts of social experiences, concentrating on a sense of insider and outsider to frame a mutual identity mindset that shapes organizational identity, apply personal histories and narratives, but leave open the distinction between corporate identity and organizational identity [ 10 ]. Identity producing mechanisms flowing from purposeful actions vary by context, such as universities and faith-based organizations to technology and engineering organizations with complicated role activities grounded in socio-technical design [ 11 ]. Compelling cases of identity as a tool for organizational integration, or the impact of cleavage and conflict owing to human diversity policies, personality characteristics of key actors, and sub-unit identity images advance understanding of behavior within organizations, but often ignores how both strategic choice and external forces impact these internal mindsets. Many scholars associate internal identity issues to external stakeholders using sundry communication tools (e.g., [ 12 ]) but the literature has few studies that explain what organizational identity features are truly different and give a competitive advantage in contested markets over time. To advance hypothesis testing and to encourage conceptual development in both theory and practice, there must be a linkage to identity as a construct that provides insights to an organization’s competitive advantage.

This chapter addresses the issues linking strategic choices and capabilities to Toyota’s identity as a case study. Toyota’s strategic positioning and high-performance outcomes amplify identity tools at three levels, its employees (both in Japan and its factories overseas), its suppliers, and its customers. Depicted as a best practice company [ 13 ], Toyota is seen as a model to emulate in sectors as diverse as hospitals and retailing. This chapter has three objectives: first, by examining Toyota’s transformation as a leading domestic producer to a top global company, the firm’s core identity has changed little despite numerous internal and external changes; second, Toyota as a case study illustrates the capacity to have multiple images in different contexts, without sacrificing its core identity; and third, the chapter offers recommendations for empirical studies of organizational identity.

2. Organizational identification and identity

In their seminal article, Stuart and Whetten [ 5 ] put forward the concept of organizational identity constituting a set of “claims” and specified what was central, distinctive and enduring, but recognizing that organizations can have multiple identities and claims that can be contradictory, ambiguous, or even unrelated. While some authors have attempted to provide more clarity, Pratt addresses the construct of identity and its generality, stating it was “often overused and under specified” beyond general statements about “who are we?” and “who do we want to become?”

Historically, identity and identification are described in classical writings focusing on societies, social systems, and their constituent parts. Such examples as Adam Smith in economics on the division of labor, Babbage on the division of work tasks, Marx on division of social class, Max Weber on the division of status and occupation, and Durkheim on differentiated social structures, each contributed to current views of how individuals, groups, and teams become a cohesive collective in a complex organization. More specifically, Durkheim’s [ 14 ] analysis of the division of labor and differentiated social structures with distinct socio-psychological values and impacts required variations in role homogeneity in sub-systems. 1 His views influenced subsequent writers as diverse as Freud in psychiatry and Harold Laswell in political theory, whose study of world politics includes a chapter entitled “Nations and Classes: The Symbols of Identification.”

Simon [ 15 ] introduced identification to organization theory, describing it as follows: “the process of identification permits the broad organizational arrangements to govern the decisions of the persons who participate in the structure” (p. 102). More specifically, “a person identifies himself with a group when, in making a decision, he evaluates the several alternatives of choice in terms of their consequences for the specified group” in contrast to personal motivation, where “his evaluation is based upon an identification with himself or his family” ([ 16 ], p. 206). Both the fault lines of identity, based on status, perverse incentives, class or occupation, as well as group identification [ 17 ] impact organizational performance by variations in shared goals and preferences, as well as forms of interaction and feedback, often enhanced or lessoned by recruitment patterns and work rules and incentives.

Identity and identification as reference points in organizations also flow from the configuration of roles, role structures, and “clusters of activities” where “a person has an occupational self-identity and is motivated to behave in ways which affirm and enhance the value attributes of that identity” ([ 18 ], p. 179). Theories of social identity assume individual identity is partitioned into ingroups and outgroups is social situations and organizational life, often with an implicit cost–benefit calculation, but acts of altruistic behavior, where behavioral norms benefit the welfare of others, often seen in “collectivist societies,” strengthens organizational identity [ 19 ]. Other approaches take a social constructionist approach, emphasizing social and cultural perspectives [ 20 ], where sense-making comes from stories and narratives of everyday experience [ 21 ], thereby, “…in linking identity and narrative in an individual, we link an individual [career] story to a particular cultural and historical narrative of a group” [ 22 ]. Going further, Dutton et al. [ 23 ] speculate that organizational identification is a process of self-categorization cultivated by distinctive, central, and enduring attributes that get reflected in corporate image, reputation, or strategic vision. Alvesson [ 24 ] describes the need for identity alignment: “…by strengthening the organization’s identity—its experienced distinctiveness, consistency, and stability—it can be assumed that individual identities and identification will be strengthen with what they are supposed to be doing at their work place.”

While some studies [ 25 ] purport to focus on managerial strategies that project images as a tool to shape distinctive identities with stakeholders, the reality is that organizational identities without corresponding integration of individual, sub-unit, or group identification may lead to behavioral frictions, and detachment via lower compliance and cues of detachment. Conflict and cleavages affect group-binding identification, often persisting as conformity of opinion, forms of social interaction, and group loyalties, as well as enhancing internal legitimacy for desired outcomes. While both individuals and groups may have multiple and loosely connected identities, there remains lingering organizations dysfunctions that exacerbate cleavage and conflict, such as hypocrisy, selective amnesia, or disloyalty [ 18 ]. Psychological exit comes from unsatisfactory outcomes, a form of weakening organizational identity and strengthening group identity to give voice for remedial actions [ 26 ]. In the extreme, such sub-identities found in groups and sub-units compete with other forms of identification and may lead to organizational dysfunctions [ 17 ].

Akerlof and Kranton [ 27 ] view organizational identity, with emphasis on why firms must transform workers from outsiders to insiders, as a form of motivational capital. In short, a distinctive identity is a distinctive competence. To quote Likert [ 28 ]. “the favorable attitudes towards the organization and the work are not those of easy complacency but are the attitudes of identification with the organization and its objectives and a high sense of involvement in achieving them” (p. 98). Other theorists suggest variations in organizational identity impact sense-making and interpretative processes [ 29 ], internalization of learning [ 10 ] and processes linking shared values and modes of performance [ 30 ].

Identity and identification cues, viewed as the mental perceptions of individual self-awareness, social interactions and experiences, and self-esteem have many antecedents, such as social class [ 31 ], demographic factors like age, race, religion, or sex [ 32 ], and national culture and identity [ 33 ]. Studies emphasizing social construction perspectives stem from individual accounts, often defined in social narratives, histories, and biographies rooted in time and place [ 34 ]. As Hammack [ 22 ] emphasizes, “…in linking identity and narrative in an individual, we link an individual story to a particular cultural and historical narrative of a group” (p. 230). At a general level, organizational culture depicts the set of norms and values that are widely shared and strongly held throughout the organization [ 35 ], and refers to the “unspoken code of communication among members of an organization” [ 36 ] and aids and supplements task coordination and group identity. In this way, individual employees better understand the premises of decision choices in problem solving at the organizational level. In complex organizations, identity is linked to the strategic capacity of choice opportunities and implementation dynamics of priorities and preferences. As Thoenig and Paradieise [ 37 ] emphasize, “strategic capacity lies to a great extent in how much its internal subunits … shape its identity, define its priorities approve its positions, prepare the way for general agreement to be adopted on its roadmap and provide a framework for the decisions and acts of all its components” (p. 299).

Such diverse views leave open how organizational identity, or shared central vision, confers competitive advantage in contested spaces. As a starting hypothesis, a shared identity strengthens coordination across diverse groups applying common norms, codes and protocols, hence improving shared learning skills. In a similar vein, individual cleavages and loyalties are lessoned by shared interactions and information sharing that mobilize learning tools. Further, organizational identity strengthens individual identities via performance success that promotes a shared set of preferences, expectation, and habits of rule setting.

3. Organizational performance at Toyota

By any standards—shareholder value, product innovation, employee satisfaction measured by low turnover and lack of strike action, market capitalization—Toyota has been astonishingly successful, both against rival incumbents in the auto sector, but as a organizational pioneer in transportation with just-in-time thinking. Against existing rivals at home, or in an industry with firms pursuing growth by alliances and acquisition (Renault-Nissan-Mitsubishi, VW-Porsche), facing receivership and saved by public funding (GM and Chrysler), exiting as a going concern (British Leyland) or new startups (Tesla). Toyota’s performance is unrivaled. Toyota remains a firm committed to organic development, steady and consistent market share in all key international markets, and cultivating a shared identity within its eco-system around measurable outcomes of product safety, quality, and consumer value.

As shown in Figure 1 , despite many forms of competitive advantages, such as size, high domestic market share, being part of a larger group, or diversification, there are many times when the side expected to win actually is less profitable and may actually lose. Toyota’s growth and expansion, despite the turbulent 2009 recall and temporary retreats [ 38 , 39 ], comes with consistent profitability and market share growth. In this organizational transformation, Toyota has replicated its identity of “safety, quality, and value” outside its home market, often depicted by foreigners as “inscrutable,” closed, and Japan Inc. [ 40 ]. Strategically, this organizational identity framework is multipurpose, allowing shared alignment of identities with domestic employees, suppliers and supervisors, but also incorporating these identity attributes first to foreign operations in North America and subsequently to Europe and Asia. Toyota management considers the firm as a learning organization, where learning symmetries take place at all levels, vertically and horizontally.

Operating Profits versus Firm Revenues in the Auto Sector.

Unlike many corporate design models of multinationals, where foreign subsidiaries passively replicate the production systems of the home market (a miniature replica effect) or seek out decision-attention from head-quarters [ 41 ] Toyota is evolving as a global enterprise. In this model, Toyota’s foreign subsidies and trade blocks (e.g., NAFTA and Europe), solve key problems and translate the protocols for headquarters and its global network of factories, distribution outlets, and service and maintenance dealerships. In this way, Toyota’s training protocols, network learning systems, and using foreign subsidies to develop new technologies (e.g., Toyota Canada pioneering cold weather technologies for ignitions engineering), i.e., a learning chain that mobilizes employee identity to network identity, including its global supply chain collaboration [ 42 , 43 , 44 , 45 ].

To illustrate the complexity of contemporary auto production and the need to evolve both organizational design around supply chains, and the nature of complementarities in production, firms like Toyota must realign engineering and technological systems to novel role configurations for a diverse workforce. A car (or truck) has over 5000 parts, components, and sub-assemblies, where factories are linked to diverse supply chains with tightly-knit communications and transport linkages, often across national boundaries, to produce a factory production cycle of 1 minute per vehicle, or even less. Parts or components like steel, for instance, are not commodities, undifferentiated only by price, and Japanese steel producers produced the high carbon steel that was more resistant to water, hence rust. This production cycle demands very high quality and safety of each part and component, plus the precision engineering processes to assemble them. This alignment determines not only the standards of quality and safety of the finished vehicle but the image and reputation of the company, plus an indispensable need to retain price value of the brand in the aftermarket sales cycle.

To this contemporary production system, reshaped and refined since Toyota first introduced in 1956 what Womack et al. [ 46 ] termed “the machine that changed the world,” auto production now faces a steady, relentless, and inexorable technology disruption. This shift in engines and fuel consumption technologies, away from diesel and gasoline-powered vehicles, to new dominant technologies, such as electric vehicles, fuel-cells, battery, hydrogen, or hybrid, each requiring massive changes to traditional parts and components suppliers, and the layout of factory assembly. Successful firms thus require forward-looking strategic intent and novel organizational configurations both to exploit existing systems based on gasoline vehicles, or novel organizational systems to explore new technologies and processes. Strategies differ widely. Tesla as a new startup has dedicated factories and labs using lithium battery technology. To gain equivalent scale of Toyota, GM, and Volkswagen, i.e., over 10 million vehicles per year, Nissan and Renault joined with Mitsubishi as a new alliances and equity investment partner.

By contrast, both Ford and GM are retreating from large markets like Europe, Japan, or India with direct-foreign investment strategies. Even more intrusive to existing production programs and protocols are new demands for data analytics, artificial intelligence, robotic and associated Internet and social media technologies. Both incumbent firms, new startups, and suppliers are developing futuristic technologies in drivers’ facial recognition, driving habits, and consumer disabilities, from wheel chairs to hearing that impact cars of the future, and impose threats to existing distinctive competences and corporate identity. Not all firms can manage simultaneously the processes of exploitation of existing organizational programs, and the exploration of product innovation and assembly [ 47 ]. Toyota is an exception.

The Toyota production system is transformational, an organizational philosophy around two core ideas, kaizen or principles of continuous improvement, and nemawashi , or consensus decision-making that allow network effects across its global factories, research labs, its supplier organizations, and related parts of the global eco-system, from universities to global shipping firms. In the firm’s century-old evolution, starting as a leading textile firm that still exists but migrating to auto manufacturing as only the second largest by unit sales (behind Nissan), Toyota has emerged as the top producer both at home and globally, measured by market share, and a leading player in markets like North America, Europe, Latin America, India and China, where many rivals have a low market share presence (e.g., Europe firms in the US, American firms in Europe).

Strategies of corporate retreat in key markets (GM in Europe, GM and Ford in India, Ford in Japan), suggest home market advantages are the new testing ground for first-mover disadvantage [ 48 ] when firms face massive technology disruption. To cite an example, during the 1990s, four major automakers, Toyota, GM, Honda, and Ford, took the lead in the development of hybrid technologies, with GM the leader with 23 patents in hybrid vehicles (vs. 17 for Toyota, 16 for Ford, and 8 for Honda). By 2000, however, Honda and Toyota were the clear leaders, with Honda had filed 170 patents, and Toyota with 166 in hybrid drivetrain technology, far ahead pf Ford with 85 and GM at 56. Today, Fords’ hybrid is a license from Toyota.

4. Toyota identity as a social construct

The auto sector symbolizes the development of post-war multinationals largely based on firm-specific capabilities and proprietary advantages. This organizational evolution includes changing work mechanisms characterized as machine theory by management [ 49 ], a catch-all phrase to describe scientific management techniques espoused by Frederick Taylor from his 1911 book with that title. He first learned time management at Philips Executer Academy and became an early practitioner of what became known as kaizen, continuous improvement, working with Henry Gantt [ 50 ], studying all aspects of work, tools, machine speeds, workflow design, the conversion of raw materials into finished products, and payment systems. The Taylor studies, later dubbed Fordism [ 51 ], was an approach to eliminate waste and unnecessary movements, or “soldiering”—a deliberate restriction of worker output.

Taylor’s disciples in the engineering profession spread his message beyond America, to Europe, as well as to Japan and Russia, where even Lenin and Trotsky developed an interest after the Revolution of 1917. In appearances before Congressional committees, and in other forums, Taylor’s theories faced withering criticisms and great resistance by American union movement a “dehumanizing of the worker” and a tool for profits at the expense of the worker. [ 50 , 52 ]. In Japan, however, Taylorism and scientific management had wide acceptance, starting with Yukinori Hoshino’s translation of Principles of Scientific Management with the title, The Secret of Saving Lost Motion, which sold 2 million copies. Several firms adopted scientific management practices, including standard motions, worker bonuses, and Japanese authors published best sellers on similar notions of work practices, including one entitled Secrets for Eliminating Futile Work and Increasing Production [ 3 ].

After 1945 in Japan, given the wartime devastation of Japan’s industrial capacity, resource scarcity—food, building supplies, raw materials of all sorts, electric power—had a profound and lasting impact on Japanese society, even more so when the American military supervised the Occupation and displayed abundance of everyday goods—big cars, no shortage of food, long leisure hours, and consumer spending using American dollars. As Japanese firms slowly rebuilt, the corporate ethos promoted efficient use of everything, and waste became a watchword for inefficiency. Japanese executives visited US factories, the Japanese media documented US success stories. American management practices were widely emulated, and US consultants—notably Peter Drucker, W. Juran, and W. Edwards Deming—had an immense following and their books, papers and personal appearances were publicized, translated and widely-read, even by high school students. While American firms emphasized a marketing philosophy where the customer is king, Japanese firms remained committed to production, helped in part by trading firms, led by the nine giant Soga Sosha , to distribute and sell both at home and abroad. US human resource practices also showed a stark contrast with Japanese practices. In the US, the rise of the trade union movement and national legislation from Roosevelt’s New Deal, meant that management-worker relations for firms and factories were contractual, setting out legal norms, and negotiated commitments for pay, seniority, promotion, job rotation and skills differentials, so that worker identity was less towards the firm, more to the trade union, and what incentives and compensation union leadership could deliver [ 53 ].

Japan industrial firms, by contrast, cultivated three features of management-worker relations. The first was life time employment—once hired, the employee stayed in the firm until retirement. Second, wages and compensation were determined by seniority—young workers received lower wages and bonus compensation, just as older workers were paid more relative to their actual productivity. And third, firms had enterprise unions, as distinct from industry unions in the US and Europe (e.g., unions autoworkers, coal workers or shipbuilders). All three characteristics greatly extended the psychological linkages between employee identity and the firm’s identity, and the employee’s career success was directly tied to the firm’s success. In Japan, with very low turnover, but high screening processes, firms hired the best graduates, and training was on-going and formed part of the job description, with little layoffs, firing, or absenteeism. Additionally, there was little employee fear of adopting new technologies. Abegglen and Stalk [ 54 ] describe the implication of technological diffusion as follows: “…it is the relatively close identification of the interests of kaisha and their employees that have made this rate of technological change possible and the patterns of union relations implicit in that degree of identification” (p. 133). Indeed, some writers go further, citing how the human resource system was imposed on a Confucian society, with an ethos to govern individual and group interactions for reciprocal benefits, in a market system of winners and losers. As Morishima [ 55 ] puts it, Korea and China chose Confucianism with the market, Japan chose the market with Confucianism, while North America and Europe were characterized by Protestant-driven market behavior of winners and losers. For Toyota, a family enterprise with links to many sectors like steel, textiles, aviation and machinery, the post-war environment brought inevitable contracts with American automotive practices.

Okika [ 56 ] describes the implications of the evolving Japanese model of labor-management relations in the firm:

Japanese enterprises made their decisions by gaining an overall consensus through repeated discussions starting from the bottom and working up … making it easier for workers to accept technical innovation flexibly. For a start, that sense of identity with the firm is strong and they are aware that the firm’s development is to their own advantage, so they tend to improve the efficiency of its production system and strengthens its competitiveness (p. 22).

Across Japan, industrial firms, from Sony to Canon, recruited workers from rural areas, executives read US textbooks, and many visited US factories to study management practices. The production focus of Japanese firms, in a competitive environment of limited slack, hence the need for managerial improvisation and what the French call bricolage , i.e., making do with what is available [ 57 ]. In operational terms, this meant long production runs, division of labor taken to the extreme is monotonous assembly work tasks, product output determined by managerial estimates of demand, and wide use of buffer stocks to absorb varying time cycles of different sub-assembly needs. Buffer stocks also allowed conflicting management department goals to get sorted out with little time constraints, and less need to focus on quality issues based on bad product design, resource waste (e.g., steel), or timing processes that lead to product defects. Organizational reforms widely adopted across US industry, such as product divisions for large enterprises, largely left the product system intact, allowing middle management to focus on coordination between operational benchmarks at the factory level and financial benchmarks imposed by top management [ 58 ]. GM was seen in Japan as the prototype models to emulate.

5. Challenges to orthodox industrial production

The advance of industrialization involved new methods of energy, raw materials, dominant technologies, and organizational configurations [ 58 ] but relatively little to consideration actual production systems, especially after Henry Ford introduced mass production using interchangeable parts. As foreign executives visited Ford’s assembly lines, there were dissenting opinions, such as Czech entrepreneur Thomas Bata and S. Toyoda who worked a year in Detroit. How could three core concepts be integrated—craft skills of custom-made products like a kimono or a house, the volume-cost advantages of mass production, and the nigh utilization capacity of process production in beer or chemicals?

Toyota’s introduction of the lean production system has been widely studied, 2 including its the origins in the 1950s by Ohno [ 62 ], when visiting America and adopting ideas from super market chains, and had strong views on scientific management’s focus on the total production system, and Japanese concepts of jishu kanri (voluntary work groups). Japanese managers had both knowledge and experience with traditional crafts sectors like woodblock prints and silk designs in textiles or the long training needed for Japan’s culinary arts. How could three core concepts be integrated—craft skills of custom-made products like a kimono or a house, the volume-cost advantages of mass production, and the nigh utilization capacity of process production in beer or chemicals?

Core concepts of lean production is the desire to maximize capacity utilization, by reducing production variability and minimize excess inventories with a view to eradicating waste [ 54 ]. But other factors are critical, such as supplying high quality workmanship of craft production, reducing per unit costs via mass production using interchangeable parts, and high capacity utilization of continuous flow production, typically seen as three distinct systems. The ingrained ethos of resource scarcity in Japanese society, demonstrating that low slack in organizations encourage search behavior [ 63 ], and these requirements required pooling of efforts as an organizational philosophy ( Figure 2 ).

Contrasts Between Traditional Technical Design and Toyota’s Model.

To perfect the system over time, starting in the 1960s, Toyota accelerated the adoption of high work commitment by organizing workers in teams, reducing the number of job classifications, seeking suggestions from employees, and investing in training of new workers, 47–48 days per worker, compared to less than 5–6 days for US plants, 21–22 days for European plants [ 3 ]. The focus on production as an integrated system, using hardware ideas like quick die change equipment, robots, and advanced computer-aided design, also meant removing traditional tasks that are noisy, hard on the eyes, or dangerous to allow employees to concentrate on tasks like quality assessment, and allowing a worker to stop the entire production line, known as andon, in the case of equipment problems, shortage of parts, and discovery of defects, i.e., transferring certain responsibilities from managers and supervisors to workers [ 60 ]. Paradoxically, Toyota and other Japanese auto plants were far less automated than their foreign-owned rivals, not just for assembly line work but other tasks like welding and painting.

Einstein once said, “Make everything as simple as possible, but no simpler.” Simplicity became a watchword in the evolution of Toyota’s lean production system, a contrast to the complicated vertical integration model adopted in Detroit. Toyota adopted a highly focused structural design, becoming a systems assembler and sourcing from dedicated suppliers, each with core competences in specialized domains and technologies. Production engineering—e.g., craft, mass assembly or process systems—became central features as organizational configuration, choosing from the strengths of each but discarding the perceived weaknesses. Stress was place on the worker, avoiding the monotonous routines of a moving assembly line, by including job rotation and special training to apply quality management circles within a group structure. The advantages of process manufacturing as high capacity utilization came from high initial overhead of equipment and overhead, including IT investments, but allowing flexibility in machine set up, such as quick die change that reduced the need to stop the line for product variability from 3 months, to 3 weeks, to 3 minutes, to less than 3 seconds. The internal factory layout, an S shape configuration, changed the sequencing of tasks, the forms of supervisor-employee interactions, and the speed and timing of interdependencies between the production operations and external suppliers of parts, delivering “just in time.”

In some cases, the interactions involve the core production system and independent suppliers serving as complementarities 3 where the competitive advantage of one is augmented by the presence of the other [ 45 ]. Early examples included Ford’s cooperation with Firestone to produce tires, or Renault’s links to Michelin to produce radial tires. Complementarities allow synergistic advantages, a contrast to additive, discrete features [ 64 ], and allow two immediate effects: knowledge spillovers at differing stages of production, including process learning impacts, and complimentary and coordinated changes in activities and programs across the value chain, such as process benchmarks for product design, scheduling, inspection, and time cycles of production. Toyota cultivates complementarity attributes but instituted a revised activity sequence, discarding production based on estimated demand forecasts, and turning finished production of cars and trucks to car lots for ultimate sale. The pull system starts with customer demands, allowing novel design using the advantages of the need for high capacity utilization of smaller actual output demands, to manufacture outputs with shorter time for product delivery.

6. JIT and Toyota’s deep supplier collaboration systems

Toyota’s lean production both reconfigures the boundaries of the firm by incorporating the supply chain as an integrated, cooperative network with collective competences and capabilities across the network value chain and incorporates decision processes for learning and knowledge sharing that shifts subunit identities to a collective identity. Lean production requires these system-wide processes to address inoperability issues like buffer stocks, time delays, peak demand, or product defects. Deep collaboration across sub-units needs robust methods to design, evaluate, and verify data gathering and data feedback. Unlike economic models of transaction costs, or contractual relations, lean production emphasizes symmetrical collaboration to optimize outcome effectiveness for the total eco-system organization, not sub-optimize for only certain members, sub-units, or component firms. Toyota’s collective identity is a notable corporate example that combines both superb operational performance but also long-term, forward looking innovation through its complex ecosystem of Tier I and Tier II supplier system. As depicted in Figure 3 , Toyota aligns its supply system both domestically and overseas with knowledge systems, including standards of precision and quality, including using internal staffing and consultants to assure optimum outcomes against agreed benchmarks.

Figure 3.

Toyota’s Knowledge Diffusion and Sharing Approaches.

By replacing asymmetric contractual relations based on cost, Toyota shifts the locus of corporate risk to the total eco-system, involving Toyota at the center, the Tier I and Tier II suppliers, and their Tier I and Tier II suppliers. The lean “pull” of production control is a connectivity to calibrate inventory at each stage, starting with the final assembly and preceding to each preceding stage without delay. Unlike the push model, where the early steps of sub-assembly is sequential to subsequent stages and require buffer inventory to lesson delays, Toyota’s lean system of ‘pulling’ requires training and upgrading skills employed at different work stations, and close communications across the total supply chain system. To make this system work, economic transaction costs are discarded, and replaced by a currency of cooperation using preventive tools and benchmarks to meet high standards of reliability where Tier II firms meet rigorous standards of price, quality, and delivery. Suppliers are battle-tested, i.e., they must conform to agreed specifications and their products are accepted only after years of testing. Tier I suppliers, on the other hand, meet the exacting standards of Tier II suppliers but they form part of the design, research, and testing of new products, markets, and technological innovations. Tier II suppliers can “graduate” to being Tier I suppliers if they meet benchmark performance over time, thus demanding intense deep collaboration at Level 4 ( Figure 4 ).

Levels of Value Chain Collaboration: Toyota as Level 4.

Less coordinated systems of structure, processes, and executive decision-making inhibit eco-system operability. Three integrating systems are vital: (1) technical systems, including IT, software, and data; (2) organizational tools of coordination, like dedication teams supported by specialists and intense data sharing; and (3) collaborative executive decision processes that champion novelty, innovation, and feedback [ 65 , 66 ]. Inoperability can come from seemingly mundane tasks, like loading supplies on a truck with different invoices, manifest requirements, and delivery times. Separate and differing organizational processes inhibit deep collaboration. Inoperability arises from silo information flows and compartmentalization. Even with aspirational targets of decision-making, organizations acting alone fail to develop and improve competencies and capabilities to manage this integrated system via experiential learning, feedback, and criticism [ 67 , 68 , 69 ].

Deep collaboration needs robust methods to design, evaluate, and verify data gathering and data feedback to optimize effectiveness for the total eco-system organization, not sub-optimize for only certain members, sub-parts, or component firms [ 70 ]. Toyota’s lean production now has both a language and a vocabulary to remove task ambiguities and increase identity among workers, sub-units, and factories in the global network, but requiring a learning process to perfect clear meanings and defined protocols. Words like kanban, andon, jioda, yo-i-dan, and kijosei have precise meanings and routines, and such terms as reverse engineering, early detection, and ringi seido or consensus decision-making, simplify and codify precise protocols for shared communication. Benchmark techniques are widely used but less to evaluate past performance against competitors, but more to evaluate current performance against higher targets and aspirational stretch goals [ 71 ]. Indeed, deep collaboration at each stage requires a judicious combination of sharing ideas, new targets, real time feedback, and potential revisions. Where ambiguous signals, informal targets and past measures become explicit, and shared across the system.

Training programs—internships, formal courses, apprenticeships—build organizational capabilities and mitigates risks from operating with incomplete knowledge, inexperience, understanding operating rules and procedures. Deep collaboration illustrates the need for similar training approaches to know, understand, and apply knowledge across the entire system. Toyota gains three network advantages: positional, where individual managers and subsidiaries access tools and protocols for high performance processes and benchmarks that create learning; structural, where communication connections strengthen the effectiveness and acuity of information flows to attend to emerging problems; agility, by strengthening interactions between individuals and teams, and embedding the new benchmarks across the entire network of factories, sales offices, and supplier organizations.

7. Split identities at Toyota

By the early 1980s, Toyota, like many leading Japanese corporations such as Sony, Komatsu, Canon, Matsushita, and Hitachi, were making deep inroads in the American market via exports. The auto sector was singled out, as 500,000 American autoworkers were laid off, a new President, Ronald Reagan faced pressure from Congress to take legislative action, and firms like Ford applied to the American International Trade Commission for temporary relief, following similar action by the powerful auto union, the UAW. Further, Japan’s emphasis on direct export sales stood in contrast to American strategies of direct investment in foreign markets, often by acquisition of local companies [ 8 , 45 , 72 ] . 4 For firms like Toyota, growing high dependence on exports meant that larger total volumes (domestic + exports) strengthened their product capacity and cost position at home, including that of their supplier base. Japan’s auto exports to the US reached 6.6 million vehicles in 1981, up from a million units 10 years earlier, 566,042, accounted for almost 20% of total Japanese auto exports.

The imposition of Japan’s export restraints, formalized in June 1981, coincided a $1.5b loan guarantee to Chrysler, indefinite layoffs of over 30,000 auto workers, and sectors like steel facing declining market share. Pressed by firms like Ford for Congressional actions, MITI imposed export quotas on each Japanese company, a form of “administrative guidance” designed to accommodate political goals in each country but was in fact a “cartel” solution aimed to appease the US government [ 3 , 74 ]. The percentage breakdown for each of the five biggest exporters, calculated mainly by US exports in the previous 2 years, was as follows: Toyota (30.75), Nissan (27.15), Honda (20.75), Mazda (9.48), and Mitsubishi (6.7). The impact for each company in the brutally competitive Japanese market varied: Honda was the first to begin direct investment, opening its first plant in Ohio and then Ontario; while Toyota kept to its quota by exports but strengthened domestic operations to build up a commanding market share lead, over 50%. For the Japanese auto sector, as Summerville notes [ 74 ], “investment in local production was also a crucial way to insulate oneself from further export cutbacks, and of course to get away from the thumb of the Japanese state” (p. 395). Toyota illustrates the complexity to manage very fast growth in foreign markets, while transferring its corporate identity to a network identity of safety, quality, and value [ 43 ], even though the knowledge sharing processes that are now taken for granted at home, including quality standards of suppliers, may not exist in foreign countries [ 75 , 76 , 77 , 78 ].

The massive recall in 1999, where Toyota accepted responsibility to service over 8.5 million vehicles, the President appearing before Congress, and sundry lawsuits launched in a litigious environment against a foreign-owned firm, have been analyzed and studied 5 in the media, the automotive press, and by academic studies, with mixed conclusions. The reality, despite paying fines, accepting responsibility, apologizing to the American public, and accepting the huge financial costs of the recall, Toyota refused to play the blame game, or take easy solutions, like importing more parts from Canada or Japan, or shifting American production to Canada or Mexico. Toyota took the difficult decision, true to its identity, of fixing the core problem, raising the quality standards of its American-own parts supplier, devoting more resources to training, and accepting short-term risks to financial performance, particularly when leading automakers from Europe, Korea, and Japan were investing in the US market. The Detroit Big 3 received temporary relief, a massive bailout after bankruptcy from the US and Canadian government, and a 25% tariff on imported trucks, one of the most profitable segments for American producers. Toyota quietly responded about building a truck factory in Texas.

8. Discussion and conclusions

In a world of disruptive corporate strategy and identity offer a refined tool for alignment of stakeholders to create competitive advantage. Corporate culture focuses on the behavioral assumptions to perceive, think, and feel in problem-solving [ 81 ] within the organization, while organizational identity is a projection of that culture to external stakeholders to align both cognitive and behavioral tools for growth and innovation. Individual and sub-unit identities can lead to cleavage and discord, especially where environmental forces make knowledge and information asymmetric, so special attention and sense-making requires an adaptive alignment to improve performance ( Figure 5 ).

Organizational Strategy and Identity Linkages.

Increasing, all organizations face four separate but related challenges that impact overall performance but also survival as independent entities. Clearly, technological change imposes new challenges for internal organizational competences and capabilities, as firms scramble for mergers, takeovers, and new alliances to meet the test of size and foreign market penetration, or a retreat approach or even drift. Decision uncertainty influences the nature of internal competencies, learning barriers, and the sustainable position of existing firms. The third challenge with disruption is the growing complexity of the firm’s ecosystem, and what is the optimal scale of a firm’s future business case, based on potential changes to customer markets across multiple countries?

The fourth challenge relates to the first three but is subtler. That challenge concerns what might be called the Galapagos trap, namely designing an ecosystem that is suitable for one market that is unsuitable for global markets and allows little transfer of knowledge or engineering knowhow to other markets with a separate eco-system, including the supplier system. Recent examples include Japan’s unique wireless standards that did not apply in foreign markets systems, or American big car gas guzzlers with limited fuel mileage that did not meet foreign market regulations. Toyota’s development of hydrogen fuel powered vehicles, based on new chemical technologies, is a case in point, where existing infrastructure lacks the necessary technical requirements for even limited mass appeal. In all four of these development challenges, the competitive race is to avoid the lessons of the computer industry, where new smart phone technologies displaced existing incumbents, lowered entry barriers for new startups, and shifted the main suppliers and their location.

Such fundamental changes pose difficult questions for firms’ missions, corporate identity, and framing long term employee loyalty. As Simon [ 76 ] warned decades ago, “organizational identification…implies absorption of strategic plans into the minds of organizational members where they can have direct effect upon the entire decision-process, starting with the identification of problems…” (p. 141).

• 1. Toyota Motor Corporation. The Toyota Production System. Tokyo: Japan; 1992
• 2. Takeuchi H, Osono E, Shimizu N. The contradictions that affect Toyota’s success. Harvard Business Review. 2008;(June):96-104
• 3. McMillan CJ. The Japanese Industrial System. Berlin: De Gruyter; 1985
• 4. Spear S, Bowen HH. Decoding the DNA of the Toyota production system. Harvard Business Review. 1999; 87 :97-106
• 5. Stuart A, Whetten DA. Organizational identity. Research in Organizational Behavior. 1985; 7 :263-295
• 6. Hatch MJ, Schultz M. Organizational Identity: A Reader. Oxford: Oxford University Press; 2004
• 7. He H, Brown AD. Organizational identity and organizational identification: A review of the literature and suggestions for research. Group and Organization Management. 2013; 38 (1):3-35
• 8. McMillan C, Overall J. Crossing the chasm and over the abyss: Perspectives on organizational failure. Academy of Management Perspectives. 2017; 31 (4):1-17
• 9. Whetton DA. Albert and Whetton revisited, strengthening the concept of organizational identity. Journal of Management Inquiry. 2006; 15 :119-134
• 10. Rodrigues S, Child J. The development of corporate identity: A political perspective. Journal of Management Studies. 2008; 45 :885-911
• 11. Schultz M, Maguire S, Langley A, Tsoukas H. Constructing Identity in and around Organizations. Oxford, UK: Oxford University Press; 2012
• 12. Balmer JMT, Greyser SA. Managing the multiple identities of the Corporation. California Management Review. 2002; 44 (3):72-86
• 13. Kogut B. Knowledge, Options, and Institutions. Oxford: Oxford University Press; 2008. https://www.amazon.com/s/ref=rdr_ext_aut?_encoding=UTF8&index=books&field-author=Bruce Kogut
• 14. Durkheim E. The Division of Labour in Society. New York: Free Press; 1933
• 15. Camuffo A, Wilhelm M. Complementarities and organizational (Mis)fit: A retrospective analysis of the Toyota recall crisis. Journal of Organizational Design. 2016; 5 :2-13
• 16. Simon HA. Administrative Behavior. New York: MacMillan; 1976
• 17. March JG, Simon HA. Organizations. New York: John Wiley; 1958
• 18. Katz D, Kahn RL. The Social Psychology of Organizations. New York: Wiley; 1966
• 19. Hofstede G. Culture’s Consequences. Beverley Hills, CA: Sage Publishing; 1980
• 20. Giddens A. Modernity and Self-identity: Self and Society in the Late Modern Age. Stanford, CA: Stanford University Press; 1988
• 21. Vough H, Caza BB. Identity work in organizations and occupations: Definitions, theories, and pathways forward. Journal of Organizational Behavior. 2018; 39 (7):889-910. https://scholar.google.ca/scholar?oi=bibs&cluster=17457274272124570525&btnI=1&hl=en
• 22. Hammack PL. Narrative and the cultural psychology of identity. Personnel and Social Psychology Review. 2008; 12 (3):222-247
• 23. Dutton JE, Dukerich JM, Harquail CV. Organizational images and member identification. Administrative Science Quarterly. 1994; 39 :239-263
• 24. Alvesson M, Ashcraft KL, Thomas R. Identity matters: Reflections on the construction of identity scholarship in organization studies. Organization. 2008; 15 :5-28
• 25. Lamertz K, Pursey PM, Heugens AR, Calmet L. The configuration of organizational images among firms in the Canadian Beer Brewing Industry. Journal of Management Studies. 2005; 42 (4):817-843. https://onlinelibrary.wiley.com/action/doSearch?ContribAuthorStored=Lamertz%2C+Kai , https://onlinelibrary.wiley.com/action/doSearch?ContribAuthorStored=Heugens%2C+Pursey+P+M+A+R , https://onlinelibrary.wiley.com/action/doSearch?ContribAuthorStored=Calmet%2C+Loïc
• 26. Hirschman AO. Exit, Voice and Loyalty: Responses to Decline in Firms Organizations, and States. Cambridge: Harvard University Press; 1970
• 27. Akerlof GA, Kranton RE. Identity and the economics of organizations. Journal of Economic Perspectives. 2005; 19 :9-32
• 28. Likert R. New Patterns of Management. New York: McGraw-Hill; 1961. p. 1961
• 29. Dutton JE, Dukerich JM. Keeping an eye on the mirror: The role of image andidentity in organizational adaptation. Academy of Management Journal.1991; 34 :517-554
• 30. Elsbach KD, Kramer RM. Members’ responses to organizational identity threats: Encountering and countering the Business Week rankings. Administrative Science Quarterly. 1996; 41 :442-476
• 31. Martin J, Frost PJ, O’neill OA. Organizational culture: Beyond struggles for intellectual dominance. In: The SAGE Handbook of Organization Studies. Newbury Park, CA: SAGE Publications; 2016. https://www.gsb.stanford.edu/faculty-research/faculty/joanne-martin
• 32. Prentice DA, Carranza E. What women and men should be, shouldn’t be, are allowed to be, and don’t have to be: The contents of prescriptive gender stereotypes. Psychology of Women Quarterly. 2002; 26 (4):269-281
• 33. House R, Iavidan M, Hanges P, Dorfman PW. Understanding cultures and implicit leadership theories across the Globe: An introduction to project GLOBE. Journal of World Business. 2002; 37 (1):3-10
• 34. Goldthorpe JH. The Affluent Worker: Industrial Attitudes and Behaviour. Cambridge: Cambridge University Press; 1968
• 35. O’Reilly C, Chatman JA. Culture as social control: Corporations, cults, and commitment. In: Staw BM, Cummings LL, editors. Research in Organizational Behavior. Vol. 18, Greenwich, CT: JAI Press, Inc.; 1996
• 36. Cremer J. Corporate culture and shared knowledge. Industrial and Corporate Change. 1993; 2 (3):351-386s
• 37. He H, Brown AD. Organizational identity and organizational identification: A review of the literature and suggestions for research. Group and Organization Managemen t . 2013; 38 (1):3-35
• 38. Cole R. What really happened to Toyota? MIT Sloan Management Review. 2011; 52 (4):29-35
• 39. Camuffo A, Wilhelm M. Complementarities and organizational (Mis)fit: A retrospective analysis of the Toyota recall crisis. Journal of Organizational Design. 2016; 5 :2-13
• 40. van Wolferen K. The Enigma of Japanese Power: People and Politics in a Stateless Nation. New York: Vintage Books; 1990
• 41. Bouquet C, Birkinshaw J. Managing power in the multinational Corporation. Journal of Management. 2008; 34 :477-508
• 42. Adler PS, Goldoftas B, Levine D. Flexibility versus efficiency? A case study of model changeovers in the Toyota, production system. Organizational Science. 1999; 10 (1):43-68
• 43. Dyer JH, Nobeoka K. Creating and managing a high performance knowledge-sharing network: The Toyota case. Strategic Management Journal. 2000; 21 :345-367
• 44. Fruin WM, Nishiguchi T. Supplying the Toyota production system: Intercorporate organizational evolution and supplier subsystems. In: Kogut B, editor. Country Competitiveness. Oxford: Oxford University Press; 1993. pp. 225-246
• 45. Paul M, Roberts J. The economics of modern manufacturing: Technology, strategy, and organization. American Economic Review. 1990; 89 (3):511-528
• 46. Liker J. The Toyota Way: 14 Management Principles from the world’s Greatest Manufacturer. New York: McGraw-Hill; 2004
• 47. March JG. Explorations in Organizations. Stanford: Stanford University Press; 2008
• 48. Saurez F, Lanzolla G. The role of environmental dynamics in building a first move advantage theory. Academy of Management Review. 2007; 32 (2):377-392
• 49. McGraw TK, O’Brien PA. Production and distribution: competition and industry structure. In: McGraw TK, editor. America versus Japan. Boston: Harvard Business School Press; 1986
• 50. Aitken HGJ. Taylorism at Waterton Arsenal: Scientific Management in Action 1908-1915. Cambridge: Harvard University Press; 1960
• 51. Amin A, editor. Post-Fordism—A Reader. Oxford: Blackwell Publishers; 2000
• 52. McMillan C. Five forces for effective leadership and innovation. Journal of Business Strategy. 2010; 31 :11-22
• 53. Bendix R. Work and Authority in Industry: Ideologies of Management in the Course of Industrialization. New York: Routledge; 1956
• 54. Abegglen J, Stalk G. Kaisha: The Japanese Corporation. Basic Books; 1985. http://www.amazon.com/Kaisha-Japanese-Corporation-James-Abegglen/dp/0465037119
• 55. Morishima M. Why Has Japan ‘Succeeded’? Cambridge: Cambridge University Press; 1982
• 56. Okika S. Japan in the World Economy. Tokyo: University of Tokyo Press; 1989
• 57. Lévi-Strauss C. The Savage Mind.Chicago: University of Chicago Press; 1962
• 58. Morishima M. Why Has Japan ‘Succeeded’? Cambridge: Cambridge University Press; 1982
• 59. Nonaka I, Toyama R, Hirata T. Managing Flow: A Process Theory of the Knowledge-Based Firm. New York: Palgrave MacMillan; 2008
• 60. Fujimoto T. The Evolution of a Manufacturing System at Toyota. New York: Oxford University Press; 1999
• 61. Liker J. The Toyota Way: 14 Management Principles from the world’s Greatest Manufacturer. New York: McGraw-Hill; 2004
• 62. Ohno T. Toyota Production System: Beyond Large-Scale Production. Cambridge: Productivity Press; 1988
• 63. Cyert R, March JG. A Behavioral Theory of the Firm. Englewood Cliffs: Prentice-Hall; 1963
• 64. Enman E, Richter A. The whole is more than the sum of its parts—Or is it? A review of the empirical literature on complementarities in organizations. Journal of Management. 2010; 36 (1):207-233
• 65. Asanuma B. Manufacturer-supplier relationships in Japan and the concept of relation-specific skill. Journal of the Japanese and International Economies. 1989; 3 (1):1-30
• 66. Nonaka I, Toyama R, Hirata T. Managing Flow: A Process Theory of the Knowledge-Based Firm. New York: Palgrave MacMillan; 2008
• 67. Kogut B, Zander U. What firms do? Coordination, identity and learning. Organization Science. 1996; 7 :502-518
• 68. Liker J, Hoseus M. Toyota Culture. The Heart and Soul of the Toyota Way. New York: McGraw Hill; 2008
• 69. McMillan C. Five forces for effective leadership and innovation. Journal of Business Strategy. 2010; 31 :11-22
• 70. Sako S. Supplier development at Honda, Nissan and Toyota: Comparative case studies of organizational capability enhancement. Industrial & Corporate Change. 2004; 13 (2):281-308
• 71. Iyer AV, Seshshodrig S, Roy V. Toyota Supply Chain Management. New York: McGraw-Hill; 2009
• 72. McMillan C. Old wine in new bottles: Docility, attention scarcity, and knowledge management. Journal of Knowledge Management. 2016; 20 :1-21
• 73. Sundelson JW. U.S. automotive investments abroad. In: Kindleberger C editor. The International Corporation. Cambridge: MIT Press; 1970
• 74. Simon HA. Strategy and organizational evolution. Strategic Management Journal. 1993; 14 (2):131-142
• 75. McMillan C. An integrated framework to orchestrate long term competitive advantage. International Journal of Strategic Management. 2017; 17 :75-92. DOI: 10.18374/IJSM-17-2.6
• 76. Stalk GJ, Hout TM. Competing Against Time: How Time-Based Competition is Reshaping Global Markets. New York: Free Press; 1990
• 77. Vernon R. International investment and international trade in the product cycle. Quarterly Journal of Economics. 1966; 80 :190-207
• 78. Taira K. Labour market segmentation, human resources utilization, and economic development: The case of Japan in historical perspective. In: Sato R, Negishi T, editors. Developments in Japanese Economics. Tokyo: Academic Press; 1989
• 79. Andrews AP, Simon J, Tian F, Zhao J. The Toyota crisis: An economic, operational and strategic analysis of the massive recall. Management Research Review. 2011; 34 (10):1064-1077
• 80. Toyota Motor Corporation. The Toyota Production System. Tokyo: Japan; 1992
• 81. Schein EH. Organizational Culture and Leadership. San Francisco: Jossey-Bass; 1998
• To quote Durkeim [14] directly, "…as we advance in the evolutionary scale, the ties which bind the individual to his family, to his native soil, to traditions which the past has given to him, to collective group images, become loose…’ (p. 259).
• For more detailed background on Toyota’s production system, see Cusumano [59], Dyer and Nobeoka [43], Fujimoto [60], Likert [61], McMillan [3], and Ohno [62].
• In mass assembly industries like autos, shipbuilding, and heavy construction equipment, where steel is a complementary component, scale, technology, and technical systems, including plant location, largely define cost advantages. By the early 1980s, the competitive gap between Japan and the US was increasing, just as Japanese firms were shifting from export strategies to direct foreign investment, i.e. establishing new plants in North America with the newest equipment, sourcing, and lean production. One analysis showed the contrast: "… the American steel industry had fallen from the largest and most technologically advanced in the world to the condition of a lagging competitor … companies retrofitted new technology unto often antiquated facilities" ([49], p. 91).
• In one of the great ironies of business history, in the 1930s, when Ford and General Motors provided two-thirds of the Japanese car market, mostly by assembling kits from their home market, the Japanese government, despite their desire to focus on auto production, wanted Ford to establish a joint-venture with Toyota. Various agreements were planned, including land purchase, but Ford, denied permission to expand local production on its own, retreated from Japan in 1939, followed by GM [73]. In 1980, China invited Toyota to establish a joint venture, but when Toyota decided not to accept, China turned to Volkswagen, not by far the most successful foreign carmaker, producing 4 million units, in a market of 2 million a month. Toyota produces only 1 million per year.
• For background, see Andrews et al. [79], Camuffo and Wilhelm [39], and Cole [80].

© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3.0 License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Continue reading from the same book

Strategic management.

Published: 13 November 2019

By Hafeth I. Naji, Rouwaida Hussein Ali and Ehsan Ali...

1292 downloads

By Okechukwu Lawrence Emeagwali and Hasan Yousef Alju...

1199 downloads

By Tsitsi Mufudza

3112 downloads

(Still) learning from Toyota

In the two years since I retired as president and CEO of Canadian Autoparts Toyota (CAPTIN), I’ve had the good fortune to work with many global manufacturers in different industries on challenges related to lean management. Through that exposure, I’ve been struck by how much the Toyota production system has already changed the face of operations and management, and by the energy that companies continue to expend in trying to apply it to their own operations.

Yet I’ve also found that even though companies are currently benefiting from lean, they have largely just scratched the surface, given the benefits they could achieve. What’s more, the goal line itself is moving—and will go on moving—as companies such as Toyota continue to define the cutting edge. Of course, this will come as no surprise for any student of the Toyota production system and should even serve as a challenge. After all, the goal is continuous improvement.

Room to improve

The two pillars of the Toyota way of doing things are kaizen (the philosophy of continuous improvement) and respect and empowerment for people, particularly line workers. Both are absolutely required in order for lean to work. One huge barrier to both goals is complacency. Through my exposure to different manufacturing environments, I’ve been surprised to find that senior managers often feel they’ve been very successful in their efforts to emulate Toyota’s production system—when in fact their progress has been limited.

The reality is that many senior executives—and by extension many organizations—aren’t nearly as self-reflective or objective about evaluating themselves as they should be. A lot of executives have a propensity to talk about the good things they’re doing rather than focus on applying resources to the things that aren’t what they want them to be.

When I recently visited a large manufacturer, for example, I compared notes with a company executive about an evaluation tool it had adapted from Toyota. The tool measures a host of categories (such as safety, quality, cost, and human development) and averages the scores on a scale of zero to five. The executive was describing how his unit scored a five—a perfect score. “Where?” I asked him, surprised. “On what dimension?”

“Overall,” he answered. “Five was the average.”

When he asked me about my experiences at Toyota over the years and the scores its units received, I answered candidly that the best score I’d ever seen was a 3.2—and that was only for a year, before the unit fell back. What happens in Toyota’s culture is that as soon as you start making a lot of progress toward a goal, the goal is changed and the carrot is moved. It’s a deep part of the culture to create new challenges constantly and not to rest when you meet old ones. Only through honest self-reflection can senior executives learn to focus on the things that need improvement, learn how to close the gaps, and get to where they need to be as leaders.

A self-reflective culture is also likely to contribute to what I call a “no excuse” organization, and this is valuable in times of crisis. When Toyota faced serious problems related to the unintended acceleration of some vehicles, for example, we took this as an opportunity to revisit everything we did to ensure quality in the design of vehicles—from engineering and production to the manufacture of parts and so on. Companies that can use crises to their advantage will always excel against self-satisfied organizations that already feel they’re the best at what they do.

A common characteristic of companies struggling to achieve continuous improvement is that they pick and choose the lean tools they want to use, without necessarily understanding how these tools operate as a system. (Whenever I hear executives say “we did kaizen ,” which in fact is an entire philosophy, I know they don’t get it.) For example, the manufacturer I mentioned earlier had recently put in an andon system, to alert management about problems on the line. 1 1. Many executives will have heard of the andon cord, a Toyota innovation now common in many automotive and assembly environments: line workers are empowered to address quality or other problems by stopping production. Featuring plasma-screen monitors at every workstation, the system had required a considerable development and programming effort to implement. To my mind, it represented a knee-buckling amount of investment compared with systems I’d seen at Toyota, where a new tool might rely on sticky notes and signature cards until its merits were proved.

An executive was explaining to me how successful the implementation had been and how well the company was doing with lean. I had been visiting the plant for a week or so. My back was to the monitor out on the shop floor, and the executive was looking toward it, facing me, when I surprised him by quoting a series of figures from the display. When he asked how I’d done so, I pointed out that the tool was broken; the numbers weren’t updating and hadn’t since Monday. This was no secret to the system’s operators and to the frontline workers. The executive probably hadn’t been visiting with them enough to know what was happening and why. Quite possibly, the new system receiving such praise was itself a monument to waste.

Room to reflect

At the end of the day, stories like this underscore the fact that applying lean is a leadership challenge, not just an operational one. A company’s senior executives often become successful as leaders through years spent learning how to contribute inside a particular culture. Indeed, Toyota views this as a career-long process and encourages it by offering executives a diversity of assignments, significant amounts of training, and even additional college education to help prepare them as lean leaders. It’s no surprise, therefore, that should a company bring in an initiative like Toyota’s production system—or any lean initiative requiring the culture to change fundamentally—its leaders may well struggle and even view the change as a threat. This is particularly true of lean because, in many cases, rank-and-file workers know far more about the system from a “toolbox standpoint” than do executives, whose job is to understand how the whole system comes together. This fact can be intimidating to some executives.

Senior executives who are considering lean management (or are already well into a lean transformation and looking for ways to get more from the effort and make it stick) should start by recognizing that they will need to be comfortable giving up control. This is a lesson I’ve learned firsthand. I remember going to CAPTIN as president and CEO of the company and wanting to get off to a strong start. Hoping to figure out how to get everyone engaged and following my initiatives, I told my colleagues what I wanted. Yet after six or eight months, I wasn’t getting where I wanted to go quickly enough. Around that time, a Japanese colleague told me, “Deryl, if you say ‘do this’ everybody will do it because you’re president, whether you say ‘go this way,’ or ‘go that way.’ But you need to figure out how to manage these issues having absolutely no power at all.”

So with that advice in mind, I stepped back and got a core group of good people together from all over the company—a person from production control, a night-shift supervisor, a manager, a couple of engineers, and a person in finance—and challenged them to develop a system. I presented them with the direction but asked them to make it work.

And they did. By the end of the three-year period we’d set as a target, for example, we’d dramatically improved our participation rate in problem-solving activities—going from being one of the worst companies in Toyota Motor North America to being one of the best. The beauty of the effort was that the team went about constructing the program in ways I never would have thought of. For example, one team member (the production-control manager) wanted more participation in a survey to determine where we should spend additional time training. So he created a storyboard highlighting the steps of problem solving and put it on the shop floor with questionnaires that he’d developed. To get people to fill them out, his team offered the respondents a hamburger or a hot dog that was barbecued right there on the shop floor. This move was hugely successful.

Another tip whose value I’ve observed over the years is to find a mentor in the company, someone to whom you can speak candidly. When you’re the president or CEO, it can be kind of lonely, and you won’t have anyone to talk with. I was lucky because Toyota has a robust mentorship system, which pairs retired company executives with active ones. But executives anywhere can find a sounding board—someone who speaks the same corporate language you do and has a similar background. It’s worth the effort to find one.

Finally, if you’re going to lead lean, you need knowledge and passion. I’ve been around leaders who had plenty of one or the other, but you really need both. It’s one thing to create all the energy you need to start a lean initiative and way of working, but quite another to keep it going—and that’s the real trick.

Room to run

Even though I’m retired from Toyota, I’m still engaged with the company. My experiences have given me a unique vantage point to see what Toyota is doing to push the boundaries of lean further still.

For example, about four years ago Toyota began applying lean concepts from its factories beyond the factory floor—taking them into finance, financial services, the dealer networks, production control, logistics, and purchasing. This may seem ironic, given the push so many companies outside the auto industry have made in recent years to drive lean thinking into some of these areas. But that’s very consistent with the deliberate way Toyota always strives to perfect something before it’s expanded, looking to “add as you go” rather than “do it once and stop.”

Of course, Toyota still applies lean thinking to its manufacturing operations as well. Take major model changes, which happen about every four to eight years. They require a huge effort—changing all the stamping dies, all the welding points and locations, the painting process, the assembly process, and so on. Over the past six years or so, Toyota has nearly cut in half the time it takes to do a complete model change.

Similarly, Toyota is innovating on the old concept of a “single-minute exchange of dies” 2 2. Quite honestly, the single-minute exchange of dies aspiration is really just that—a goal. The fastest I ever saw anyone do it during my time at New United Motor Manufacturing (NUMMI) was about 10 to 15 minutes. and applying that thinking to new areas, such as high-pressure injection molding for bumpers or the manufacture of alloy wheels. For instance, if you were making an aluminum-alloy wheel five years ago and needed to change from one die to another, that would require about four or five hours because of the nature of the smelting process. Now, Toyota has adjusted the process so that the changeover time is down to less than an hour.

Finally, Toyota is doing some interesting things to go on pushing the quality of its vehicles. It now conducts surveys at ports, for example, so that its workers can do detailed audits of vehicles as they are funneled in from Canada, the United States, and Japan. This allows the company to get more consistency from plant to plant on everything from the torque applied to lug nuts to the gloss levels of multiple reds so that color standards for paint are met consistently.

The changes extend to dealer networks as well. When customers take delivery of a car, the salesperson is accompanied by a technician who goes through it with the new owner, in a panel-by-panel and option-by-option inspection. They’re looking for actionable information: is an interior surface smudged? Is there a fender or hood gap that doesn’t look quite right? All of this checklist data, fed back through Toyota’s engineering, design, and development group, can be sent on to the specific plant that produced the vehicle, so the plant can quickly compare it with other vehicles produced at the same time.

All of these moves to continue perfecting lean are consistent with the basic Toyota approach I described: try and perfect anything before you expand it. Yet at the same time, the philosophy of continuous improvement tells us that there’s ultimately no such thing as perfection. There’s always another goal to reach for and more lessons to learn.

Deryl Sturdevant, a senior adviser to McKinsey, was president and CEO of Canadian Autoparts Toyota (CAPTIN) from 2006 to 2011. Prior to that, he held numerous executive positions at Toyota, as well as at the New United Motor Manufacturing (NUMMI) plant (a joint venture between Toyota and General Motors), in Fremont, California.

Explore a career with us

THE ESSENCE OF JUST-IN-TIME: PRACTICE-IN-USE AT TOYOTA PRODUCTION SYSTEM MANAGED ORGANIZATIONS - How Toyota Turns Workers Into Problem Solvers

by Sarah Jane Johnston, HBS Working Knowledge

When HBS professor Steven Spear recently released an abstract on problem solving at Toyota, HBS Working Knowledge staffer Sarah Jane Johnston e-mailed off some questions. Spear not only answered the questions, but also asked some of his own—and answered those as well.

Sarah Jane Johnston: Why study Toyota? With all the books and articles on Toyota, lean manufacturing, just-in-time, kanban systems, quality systems, etc. that came out in the 1980s and 90s, hasn't the topic been exhausted?

Steven Spear: Well, this has been a much-researched area. When Kent Bowen and I first did a literature search, we found nearly 3,000 articles and books had been published on some of the topics you just mentioned.

However, there was an apparent discrepancy. There had been this wide, long-standing recognition of Toyota as the premier automobile manufacturer in terms of the unmatched combination of high quality, low cost, short lead-time and flexible production. And Toyota's operating system—the Toyota Production System—had been widely credited for Toyota's sustained leadership in manufacturing performance. Furthermore, Toyota had been remarkably open in letting outsiders study its operations. The American Big Three and many other auto companies had done major benchmarking studies, and they and other companies had tried to implement their own forms of the Toyota Production System. There is the Ford Production System, the Chrysler Operating System, and General Motors went so far as to establish a joint venture with Toyota called NUMMI, approximately fifteen years ago.

However, despite Toyota's openness and the genuinely honest efforts by other companies over many years to emulate Toyota, no one had yet matched Toyota in terms of having simultaneously high-quality, low-cost, short lead-time, flexible production over time and broadly based across the system.

It was from observations such as these that Kent and I started to form the impression that despite all the attention that had already been paid to Toyota, something critical was being missed. Therefore, we approached people at Toyota to ask what they did that others might have missed.

What did they say?

To paraphrase one of our contacts, he said, "It's not that we don't want to tell you what TPS is, it's that we can't. We don't have adequate words for it. But, we can show you what TPS is."

Over about a four-year period, they showed us how work was actually done in practice in dozens of plants. Kent and I went to Toyota plants and those of suppliers here in the U.S. and in Japan and directly watched literally hundreds of people in a wide variety of roles, functional specialties, and hierarchical levels. I personally was in the field for at least 180 working days during that time and even spent one week at a non-Toyota plant doing assembly work and spent another five months as part of a Toyota team that was trying to teach TPS at a first-tier supplier in Kentucky.

What did you discover?

We concluded that Toyota has come up with a powerful, broadly applicable answer to a fundamental managerial problem. The products we consume and the services we use are typically not the result of a single person's effort. Rather, they come to us through the collective effort of many people each doing a small part of the larger whole. To a certain extent, this is because of the advantages of specialization that Adam Smith identified in pin manufacturing as long ago as 1776 in The Wealth of Nations . However, it goes beyond the economies of scale that accrue to the specialist, such as skill and equipment focus, setup minimization, etc.

The products and services characteristic of our modern economy are far too complex for any one person to understand how they work. It is cognitively overwhelming. Therefore, organizations must have some mechanism for decomposing the whole system into sub-system and component parts, each "cognitively" small or simple enough for individual people to do meaningful work. However, decomposing the complex whole into simpler parts is only part of the challenge. The decomposition must occur in concert with complimentary mechanisms that reintegrate the parts into a meaningful, harmonious whole.

This common yet nevertheless challenging problem is obviously evident when we talk about the design of complex technical devices. Automobiles have tens of thousands of mechanical and electronic parts. Software has millions and millions of lines of code. Each system can require scores if not hundreds of person-work-years to be designed. No one person can be responsible for the design of a whole system. No one is either smart enough or long-lived enough to do the design work single handedly.

Furthermore, we observe that technical systems are tested repeatedly in prototype forms before being released. Why? Because designers know that no matter how good their initial efforts, they will miss the mark on the first try. There will be something about the design of the overall system structure or architecture, the interfaces that connect components, or the individual components themselves that need redesign. In other words, to some extent the first try will be wrong, and the organization designing a complex system needs to design, test, and improve the system in a way that allows iterative congruence to an acceptable outcome.

The same set of conditions that affect groups of people engaged in collaborative product design affect groups of people engaged in the collaborative production and delivery of goods and services. As with complex technical systems, there would be cognitive overload for one person to design, test-in-use, and improve the work systems of factories, hotels, hospitals, or agencies as reflected in (a) the structure of who gets what good, service, or information from whom, (b) the coordinative connections among people so that they can express reliably what they need to do their work and learn what others need from them, and (c) the individual work activities that create intermediate products, services, and information. In essence then, the people who work in an organization that produces something are simultaneously engaged in collaborative production and delivery and are also engaged in a collaborative process of self-reflective design, "prototype testing," and improvement of their own work systems amidst changes in market needs, products, technical processes, and so forth.

It is our conclusion that Toyota has developed a set of principles, Rules-in-Use we've called them, that allow organizations to engage in this (self-reflective) design, testing, and improvement so that (nearly) everyone can contribute at or near his or her potential, and when the parts come together the whole is much, much greater than the sum of the parts.

What are these rules?

We've seen that consistently—across functional roles, products, processes (assembly, equipment maintenance and repair, materials logistics, training, system redesign, administration, etc.), and hierarchical levels (from shop floor to plant manager and above) that in TPS managed organizations the design of nearly all work activities, connections among people, and pathways of connected activities over which products, services, and information take form are specified-in-their-design, tested-with-their-every-use, and improved close in time, place, and person to the occurrence of every problem.

That sounds pretty rigorous.

It is, but consider what the Toyota people are attempting to accomplish. They are saying before you (or you all) do work, make clear what you expect to happen (by specifying the design), each time you do work, see that what you expected has actually occurred (by testing with each use), and when there is a difference between what had actually happened and what was predicted, solve problems while the information is still fresh.

That reminds me of what my high school lab science teacher required.

Exactly! This is a system designed for broad based, frequent, rapid, low-cost learning. The "Rules" imply a belief that we may not get the right solution (to work system design) on the first try, but that if we design everything we do as a bona fide experiment, we can more rapidly converge, iteratively, and at lower cost, on the right answer, and, in the process, learn a heck of lot more about the system we are operating.

You say in your article that the Toyota system involves a rigorous and methodical problem-solving approach that is made part of everyone's work and is done under the guidance of a teacher. How difficult would it be for companies to develop their own program based on the Toyota model?

Your question cuts right to a critical issue. We discussed earlier the basic problem that for complex systems, responsibility for design, testing, and improvement must be distributed broadly. We've observed that Toyota, its best suppliers, and other companies that have learned well from Toyota can confidently distribute a tremendous amount of responsibility to the people who actually do the work, from the most senior, expeirenced member of the organization to the most junior. This is accomplished because of the tremendous emphasis on teaching everyone how to be a skillful problem solver.

How do they do this?

They do this by teaching people to solve problems by solving problems. For instance, in our paper we describe a team at a Toyota supplier, Aisin. The team members, when they were first hired, were inexperienced with at best an average high school education. In the first phase of their employment, the hurdle was merely learning how to do the routine work for which they were responsible. Soon thereafter though, they learned how to immediately identify problems that occurred as they did their work. Then they learned how to do sophisticated root-cause analysis to find the underlying conditions that created the symptoms that they had experienced. Then they regularly practiced developing counter-measures—changes in work, tool, product, or process design—that would remove the underlying root causes.

Sounds impressive.

Yes, but frustrating. They complained that when they started, they were "blissful in their ignorance." But after this sustained development, they could now see problems, root down to their probable cause, design solutions, but the team members couldn't actually implement these solutions. Therefore, as a final round, the team members received training in various technical crafts—one became a licensed electrician, another a machinist, another learned some carpentry skills.

Was this unique?

Absolutely not. We saw the similar approach repeated elsewhere. At Taiheiyo, another supplier, team members made sophisticated improvements in robotic welding equipment that reduced cost, increased quality, and won recognition with an award from the Ministry of Environment. At NHK (Nippon Spring) another team conducted a series of experiments that increased quality, productivity, and efficiency in a seat production line.

What is the role of the manager in this process?

Your question about the role of the manager gets right to the heart of the difficulty of managing this way. For many people, it requires a profound shift in mind-set in terms of how the manager envisions his or her role. For the team at Aisin to become so skilled as problem solvers, they had to be led through their training by a capable team leader and group leader. The team leader and group leader were capable of teaching these skills in a directed, learn-by-doing fashion, because they too were consistently trained in a similar fashion by their immediate senior. We found that in the best TPS-managed plants, there was a pathway of learning and teaching that cascaded from the most senior levels to the most junior. In effect, the needs of people directly touching the work determined the assistance, problem solving, and training activities of those more senior. This is a sharp contrast, in fact a near inversion, in terms of who works for whom when compared with the more traditional, centralized command and control system characterized by a downward diffusion of work orders and an upward reporting of work status.

And if you are hiring a manager to help run this system, what are the attributes of the ideal candidate?

We observed that the best managers in these TPS managed organizations, and the managers in organizations that seem to adopt the Rules-in-Use approach most rapidly are humble but also self-confident enough to be great learners and terrific teachers. Furthermore, they are willing to subscribe to a consistent set of values.

How do you mean?

Again, it is what is implied in the guideline of specifying every design, testing with every use, and improving close in time, place, and person to the occurrence of every problem. If we do this consistently, we are saying through our action that when people come to work, they are entitled to expect that they will succeed in doing something of value for another person. If they don't succeed, they are entitled to know immediately that they have not. And when they have not succeeded, they have the right to expect that they will be involved in creating a solution that makes success more likely on the next try. People who cannot subscribe to these ideas—neither in their words nor in their actions—are not likely to manage effectively in this system.

That sounds somewhat high-minded and esoteric.

I agree with you that it strikes the ear as sounding high principled but perhaps not practical. However, I'm fundamentally an empiricist, so I have to go back to what we have observed. In organizations in which managers really live by these Rules, either in the Toyota system or at sites that have successfully transformed themselves, there is a palpable, positive difference in the attitude of people that is coupled with exceptional performance along critical business measures such as quality, cost, safety, and cycle time.

Have any other research projects evolved from your findings?

We titled the results of our initial research "Decoding the DNA of the Toyota Production System." Kent and I are reasonably confident that the Rules-in-Use about which we have written are a successful decoding. Now, we are trying to "replicate the DNA" at a variety of sites. We want to know where and when these Rules create great value, and where they do, how they can be implemented most effectively.

Since we are empiricists, we are conducting experiments through our field research. We are part of a fairly ambitious effort at Alcoa to develop and deploy the Alcoa Business System, ABS. This is a fusion of Alcoa's long standing value system, which has helped make Alcoa the safest employer in the country, with the Rules in Use. That effort has been going on for a number of years, first with the enthusiastic support of Alcoa's former CEO, Paul O'Neill, now Secretary of the Treasury (not your typical retirement, eh?) and now with the backing of Alain Belda, the company's current head. There have been some really inspirational early results in places as disparate as Hernando, Mississippi and Poces de Caldas, Brazil and with processes as disparate as smelting, extrusion, die design, and finance.

We also started creating pilot sites in the health care industry. We started our work with a "learning unit" at Deaconess-Glover Hospital in Needham, not far from campus. We've got a series of case studies that captures some of the learnings from that effort. More recently, we've established pilot sites at Presbyterian and South Side Hospitals, both part of the University of Pittsburgh Medical Center. This work is part of a larger, comprehensive effort being made under the auspices of the Pittsburgh Regional Healthcare Initiative, with broad community support, with cooperation from the Centers for Disease Control, and with backing from the Robert Wood Johnson Foundation.

Also, we've been testing these ideas with our students: Kent in the first year Technology and Operations Management class for which he is course head, me in a second year elective called Running and Growing the Small Company, and both of us in an Executive Education course in which we participate called Building Competitive Advantage Through Operations.

· · · ·

Steven Spear is an Assistant Professor in the Technology and Operations Management Unit at the Harvard Business School.

Other HBS Working Knowledge stories featuring Steven J. Spear: Decoding the DNA of the Toyota Production System Why Your Organization Isn't Learning All It Should

Developing Skillful Problem Solvers: Introduction

Within TPS-managed organizations, people are trained to improve the work that they perform, they learn to do this with the guidance of a capable supplier of assistance and training, and training occurs by solving production and delivery-related problems as bona fide, hypothesis-testing experiments. Examples of this approach follow.

• A quality improvement team at a Toyota supplier, Taiheiyo, conducted a series of experiments to eliminate the spatter and fumes emitted by robotic welders. The quality circle members, all line workers, conducted a series of complex experiments that resulted in a cleaner, safer work environment, equipment that operated with less cost and higher reliability, and relief for more technically-skilled maintenance and engineering specialists from basic equipment maintenance and repair.
• A work team at NHK (Nippon Spring) Toyota, were taught to conduct a series of experiments over many months to improve the process by which arm rest inserts were "cold molded." The team reduced the cost, shortened the cycle time, and improved the quality while simultaneously developing the capability to take a similar experimental approach to process improvement in the future.
• At Aisin, a team of production line workers progressed from having the skills to do only routine production work to having the skills to identify problems, investigate root causes, develop counter-measures, and reconfigure equipment as skilled electricians and machinists. This transformation occurred primarily through the mechanism of problem solving-based training.
• Another example from Aisin illustrates how improvement efforts—in this case of the entire production system by senior managers—were conducted as a bona fide hypothesis-refuting experiment.
• The Acme and Ohba examples contrast the behavior of managers deeply acculturated in Toyota with that of their less experienced colleagues. The Acme example shows the relative emphasis one TPS acculturated manager placed on problem solving as a training opportunity in comparison to his colleagues who used the problem-solving opportunity as a chance to first make process improvements. An additional example from a Toyota supplier reinforces the notion of using problem solving as a vehicle to teach.
• The data section concludes with an example given by a former employee of two companies, both of which have been recognized for their efforts to be a "lean manufacturer" but neither of which has been trained in Toyota's own methods. The approach evident at Toyota and its suppliers was not evident in this person's narrative.

Defining conditions as problematic

We concluded that within Toyota Production System-managed organizations three sets of conditions are considered problematic and prompt problem-solving efforts. These are summarized here and are discussed more fully in a separate paper titled "Pursuing the IDEAL: Conditions that Prompt Problem Solving in Toyota Production System-Managed Organizations."

Failure to meet a customer need

It was typically recognized as a problem if someone was unable to provide the good, service, or information needed by an immediate or external customer.

Failure to do work as designed

Even if someone was able to meet the need of his or her customers without fail (agreed upon mix, volume, and timing of goods and services), it was typically recognized as a problem if a person was unable to do his or her own individual work or convey requests (i.e., "Please send me this good or service that I need to do my work.") and responses (i.e., "Here is the good or service that you requested, in the quantity you requested.").

Failure to do work in an IDEAL fashion

Even if someone could meet customer needs and do his or her work as designed, it was typically recognized as a problem if that person's work was not IDEAL. IDEAL production and delivery is that which is defect-free, done on demand, in batches of one, immediate, without waste, and in an environment that is physically, emotionally, and professionally safe. The improvement activities detailed in the cases that follow, the reader will see, were motivated not so much by a failure to meet customer needs or do work as designed. Rather, they were motivated by costs that were too high (i.e., Taiheiyo robotic welding operation), batch sizes that were too great (i.e., the TSSC improvement activity evaluated by Mr. Ohba), lead-times that were too long, processes that were defect-causing (i.e., NHK cold-forming process), and by compromises to safety (i.e., Taiheiyo).

Our field research suggests that Toyota and those of its suppliers that are especially adroit at the Toyota Production System make a deliberate effort to develop the problem-solving skills of workers—even those engaged in the most routine production and delivery. We saw evidence of this in the Taiheiyo, NHK, and Aisin quality circle examples.

Forums are created in which problem solving can be learned in a learn-by-doing fashion. This point was evident in the quality circle examples. It was also evident to us in the role played by Aisin's Operations Management Consulting Division (OMCD), Toyota's OMCD unit in Japan, and Toyota's Toyota Supplier Support Center (TSSC) in North America. All of these organizations support the improvement efforts of the companies' factories and those of the companies' suppliers. In doing so, these organizations give operating managers opportunities to hone their problem-solving and teaching skills, relieved temporarily of day to day responsibility for managing, production and delivery of goods and services to external customers.

Learning occurs with the guidance of a capable teacher. This was evident in that each of the quality circles had a specific group leader who acted as coach for the quality circle's team leader. We also saw how Mr. Seto at NHK defined his role as, in part, as developing the problem-solving and teaching skills of the team leader whom he supervised.

Problem solving occurs as bona fide experiments. We saw this evident in the experience of the quality circles who learned to organize their efforts as bona fide experiments rather than as ad hoc attempts to find a feasible, sufficient solution. The documentation prepared by the senior team at Aisin is organized precisely to capture improvement ideas as refutable hypotheses.

Broadly dispersed scientific problem solving as a dynamic capability

Problem solving, as illustrated in this paper, is a classic example of a dynamic capability highlighted in the "resource-based" view of the firm literature.

Scientific problem solving—as a broadly dispersed skill—is time consuming to develop and difficult to imitate. Emulation would require a similar investment in time, and, more importantly, in managerial resources available to teach, coach, assist, and direct. For organizations currently operating with a more traditional command and control approach, allocating such managerial resources would require more than a reallocation of time across a differing set of priorities. It would also require an adjustment of values and the processes through which those processes are expressed. Christensen would argue that existing organizations are particularly handicapped in making such adjustments.

Excerpted with permission from "Developing Skillful Problem Solvers in Toyota Production System-Managed Organizations: Learning to Problem Solve by Solving Problems," HBS Working Paper , 2001.

Case Study: Toyota's Response to the 2011 Earthquake and Tsunami

Toyota, a name synonymous with unparalleled excellence and innovation in the automobile industry, faced one of its most challenging adversities following the catastrophic earthquake and tsunami that struck Japan in March 2011. This natural disaster not only caused significant loss of life and property, but it also brought many industries, including automotive, to a standstill. However, Toyota’s response to this crisis serves as a lesson in resilience, adaptability, and strategic foresight.

1. Immediate Impact of the Disaster

The Great East Japan Earthquake and subsequent tsunami devastated the Tōhoku region, leading to disruptions in the supply chain. Toyota, like many Japanese automakers, heavily depended on suppliers from this region. As a result, many factories had to halt their operations due to the shortage of essential components.

Losses: Toyota reported that the disaster affected the production of over 150,000 vehicles. Apart from local consequences, this disruption resonated throughout the global market since Toyota is a major player in international car exports.

2. Crisis Management and Initial Response

In the face of adversity, Toyota's management showcased exceptional leadership. They prioritized the safety of their employees and immediately implemented disaster recovery plans.

Employee Safety: Toyota ensured that all its workers were safe, and the ones affected directly by the disaster received the necessary support.

Communication: Transparency with stakeholders was maintained. Toyota updated the public, investors, and its employees regularly about the factory shutdowns and the expected time frame of production resumption.

Supply Chain Evaluation: Given the intricate and interconnected nature of Toyota's supply chain, the company diligently assessed the extent of disruption, evaluating how many of their suppliers were affected.

3. Strategic Shift in Supply Chain Management

Toyota realized that to mitigate such vulnerabilities in the future, a revamp of their supply chain strategy was essential.

Multi-Sourcing: To avoid over-reliance on a single supplier, Toyota started the practice of multi-sourcing, ensuring that even if one supplier faced difficulties, an alternative source was available.

Increased Inventory: Though the "Just-In-Time" system is efficient, in the face of disasters, it can be a liability. Thus, Toyota started keeping slightly higher inventories of critical components.

Supplier Collaboration: Toyota worked closely with its suppliers, helping them in their recovery efforts and ensuring that even the smaller suppliers had robust contingency plans in place.

4. Emphasis on Technological Integration

Post-disaster, Toyota intensified its focus on technology to enhance resilience.

Digital Twin Technology: Toyota employed this to create virtual representations of its supply chain. This tech allowed them to simulate various scenarios and develop effective responses to potential disruptions.

AI & Data Analytics: By analyzing vast amounts of data, Toyota could predict potential supply chain vulnerabilities and take preemptive measures.

5. Long-Term Outcomes of the Strategic Shift

Toyota's strategic decisions post the 2011 disaster bore fruitful results.

Resilient Supply Chain: With the revamped supply chain system, Toyota was better equipped to handle subsequent challenges, including global economic shifts or other natural disasters.

Enhanced Stakeholder Confidence: The company's proactive and transparent approach post-disaster bolstered confidence among investors, customers, and employees.

Industry Benchmark: Toyota's response served as a case study for many corporations worldwide, highlighting the importance of adaptability and foresight in crisis management.

The 2011 earthquake and tsunami were unprecedented in their devastation, but they also served as a profound learning experience for global giants like Toyota. By prioritizing the safety of its people, maintaining open communication, and strategically overhauling its supply chain, Toyota transformed a crisis into an opportunity for long-term growth and stability.

In an ever-changing global landscape, Toyota's response to the 2011 disaster underscores the importance of resilience, adaptability, and continuous learning. It serves as a testament to the fact that even in the face of adversity, with the right approach, businesses can not only recover but thrive.

Related Posts

• Case Example: Building Aluminum Gutters on a Level Production Schedule - These days aluminum gutters for houses, at least in the U.S., are mostly built to order, on-site at the house. Rolls of materials are brought to the job site, where...
• Toyota’s Mentor/Mentee Case Example - Table of Contents Setup Chapter 1 Chapter 2 Chapter 6 Chapter 9 Chapter 10 The best way to explain Toyota’s mentor/mentee teaching approach is to show it in action. The...
• The Essence of Toyota Management System - Table of Contents The History and Evolution of TMS The Core Principles of TMS Practices & Techniques Modern Adaptations of TMS The Future of TMS In the world of management,...
• The Principle: Find Solid Partners and Grow Together to Mutual Benefit in the Long Term - Go to a conference on supply chain management and what are you likely to hear? You will learn a lot about “streamlining” the supply chain through advanced information technology. If...
• Toyota's Vision and Mission: A Deep Dive - In a world of ever-evolving industries and shifting corporate landscapes, Toyota Motor Corporation stands tall as a beacon of longevity, innovation, and excellence. Its commitment to customer satisfaction, environmental sustainability,...
• Toyota’s Mission Statement and Guiding Principles - We get a flavor of what distinguishes Toyota from excerpts of its mission statement for its North American operations compared with that of Ford . Ford’s mission statement seems reasonable....
• Summary Discussion of the Toyota Mentor/Mentee Case - Table of Contents 1. How Did You Feel as You Read Through the Case? 2. How Long Do You Think the Story in the Case Took? 3. What Would Have...
• The 14 Principles of the Toyota Way - The Toyota Way, a management philosophy that has propelled Toyota to its current position as a global leader in efficiency and quality, is underpinned by 14 key principles. These principles...
• Toyota Crisis Management - Why would Toyota need to be concerned about crisis management when it has implemented processes throughout the supply chain that are synchronized and integrated to function like a fine Swiss...
• Toyota Learning Principles and the v4L Framework - Toyota is well known for its approach to problem solving and continuous improvement. Articles by practitioners, researchers, and participants have made the tools and techniques of continuous improvement familiar to...
• Toyota's Global Expansion: Strategies and Challenges
• Toyota's Cross-cultural Communication Strategies in Global Operations
• Toyota Logistics Operation
• Toyota's Supplier Relationship Management: Building Long-Term Partnerships
• Toyota's Joint Ventures and Strategic Alliances
• Toyota's Approach to Quality Management: Tools and Techniques
• Toyota's Six Sigma Approach and Its Implementation
• Toyota's Digital Transformation in Manufacturing
• How Toyota's Just-In-Time (JIT) System Revolutionized Manufacturing
• Toyota Production Scheduling and Operations

• Bahasa Indonesia
• Sign out of AWS Builder ID
• AWS Management Console
• Account Settings
• Billing & Cost Management
• Security Credentials
• AWS Personal Health Dashboard
• Support Center
• Expert Help
• Knowledge Center
• AWS Support Overview
• AWS re:Post

Toyota on AWS

Toyota Motor Corporation (Toyota) is a global automotive industry leader committed to developing the safest and most responsible ways of moving people. It manufactures vehicles in 27 countries across regions, markets the company’s products in over 170 countries, and employs nearly 350,000 people globally. Building on Amazon Web Services (AWS), Toyota innovates across its business from keeping track of vehicle journeys from manufacturing to dealership, to leveraging the Toyota Connected data lake to detect vehicle defects and improve product quality for customers.

Toyota's Cloud Journey on AWS

• Data Solutions

Using data solutions built for AWS cloud infrastructure to enhance scale and reduce costs

• Business Applications

Building innovative applications on AWS to delight customers

• Enterprise Transformation

Cloud migration to accelerate digital transformation and realize greater business value

• Continuous Innovation

Ongoing improvements to support enterprise transformation

Toyota Connected Uses AWS to Respond in Seconds to Driver Emergencies

Toyota Connected is Toyota's data services division that uses AWS to process large amounts of vehicle data to help respond to drivers in emergencies. AWS services such as Amazon Bedrock help Toyota developers to access generative AI to create new driver experiences. As Toyota's Brian Kursar and Ashley Parks discuss, using AWS helps Toyota Connected solve data challenges creatively and increase safety and faster call center action for customers.

Watch the video »

Enhancing Customer Safety by Leveraging the Scalable, Secure, and Cost-Optimized Toyota Connected Data Lake

Toyota has made “connected cars” a core priority as part of its broader transformation from an auto company to a mobility company. In recent years, Toyota and its affiliate technology and big data company, Toyota Connected , have developed an array of new technologies to provide connected services that enhance customer safety and the vehicle ownership experience. To make this vision a reality, Toyota Connected’s Mobility Team embarked on building a near real-time “Toyota Connected Data Lake” on AWS. The serverless data lake uses Amazon Simple Storage Solution (Amazon S3) as its primary data store.

Read the blog »

Toyota Connected Optimizes EMR Costs and Improves Resiliency of Batch Jobs

At Toyota Connected, data ingested from millions of connected vehicles is stored in the petabyte-scale Toyota Connected data lake with Amazon S3, Amazon EMR , interactive SQL queries, and machine learning (ML) applications using open-source analytics frameworks, such as Apache Spark . Amazon EMR is used to curate datasets and make them available for analytics and ML. For these large datasets, Toyota Connected strives to find the right balance between cost, performance, and resiliency. Learn how it designed the architecture for batch jobs using AWS. 

Toyota Connected and AWS Design and Deliver Collision Assistance Application

Toyota Connected North America (TC) is a technology and big data company that partners with Toyota Motor Corporation and Toyota Motor North America to develop products that aim to improve the driving experience for Toyota and Lexus owners. Together, TC and AWS engineers designed, built, and delivered their new Collision Assistance product, which debuted in early August 2021. In the aftermath of an accident, Collision Assistance offers Toyota and Lexus drivers instructions to help them navigate a post-collision situation, including documenting the accident, filing an insurance claim, and transitioning to the repair process. The solution was built on a serverless architecture on AWS.

Read the blog post »

Toyota Builds Shared Mobility Platform on AWS

Imagine being tasked with collecting, analyzing, and securing data from hundreds of sources around the world, in multiple cloud and on-premises environments. In this re:Invent 2019 presentation, Brian Kursar, chief technology officer (CTO) of Toyota Motor North America and Toyota Connected North America , discusses how Toyota created a secure, cloud-native solution on AWS to analyze billions of messages per day, using AWS Key Management Service (AWS KMS) encryption to provide granular access and keep corporate assets secure with data segregation.

Building a Development Platform to Support Secure Application Deployment Using Backstage and AWS

As Toyota Motor North America (TMNA) matured its cloud development strategy, its manual application deployment process was creating bottlenecks. TMNA built a new internal development platform on AWS called Chofer using Backstage, an open-source framework for building developer portals open sourced by Spotify. Its team of developers has adopted over 40 different AWS services, helping the company modernize its applications and save money and developer time while facilitating faster, more secure application deployments at scale..

Read the Amazon ECS case study »

Reimagining Mobility with Toyota Connected

In 2018, Toyota began its transition from an automotive to a mobility services business, redefining value for the customer. Through its Toyota Mobility Services Platform, Toyota Connected can offer personalized, localized, and predictive data to enhance the driving experience. By using AWS solutions, Toyota Connected could handle the scale without a major cost increase. The company chose a serverless computing architecture, which increases agility, provides flexibility to scale, and lowers costs by 70–80 percent.

Read the case study »

The data is being collected to build data services for customers that really drive satisfaction and provide new capabilities around safety and convenience.”

Mahadevan Krishnan Principal Architect, Toyota Connected

How the AWS Cloud Helps Cars Along the Journey from Creation to Customer

A new car’s journey begins long before a driver takes it out on the open road for the first time. Within its vehicle data warehouse (VDW), global manufacturer  Toyota North America  can follow each vehicle’s origin story, from manufacturing plants to dealerships around the world. Using a next-generation data lake built on AWS using Amazon S3 , AWS Glue , and Amazon Redshift —and developed by  Infosys Cobalt —Toyota North America can collect and analyze data from different manufacturing plants. The cloud-based insights solution helps Toyota North America monitor the story of every vehicle’s creation, make supply chain decisions, and deliver better customer service.

About Toyota

Founded in 1937 and headquartered in Japan, Toyota Motor Corporation (Toyota) is one of the largest automobile manufacturers in the world, producing about 10 million vehicles per year.

Hear inspiring customer innovation stories from AWS re:Invent

Watch now »

Ending Support for Internet Explorer

Implementation of Total Quality Management (TQM): Toyota Case Study

Introduction, implementation of tqm in toyota, tqm practices in toyota, benefits of tqm in toyota, examples of tqm in toyota, toyota quality management, toyota tqm implementation challenges.

The Toyota Corporation case study report is based on the implementation of total quality management (TQM) meant to improve the overall performance and operations of this automobile company. TQM involves the application of quality management standards to all elements of the business.

It requires that quality management standards be applied in all branches and at all levels of the organization. The characteristic of Toyota Corporation going through the total quality process is unambiguous and clear.

Toyota has limited interdepartmental barriers, excellent customer and supplier relations, spares time to be spent on training, and the recognition that quality is realized through offering excellent products as well as the quality of the entire firm, including personnel, finance, sales, and other functions.

The top management at Toyota Corporation has the responsibility for quality rather than the employees, and it is their role to provide commitment, support, and leadership to the human and technical processes (Kanji & Asher, 1996).

Whereas the TQM initiative is to succeed, the management has to foster the participation of Toyota Corporation workers in quality improvement and create a quality culture by altering attitudes and perceptions towards quality.

This research report assesses the implementation of TQM and how Toyota manages quality in all organization management systems while focusing on manufacturing quality. The report evaluates the organization management elements required when implementing TQM, identifies, and investigates the challenges facing Quality Managers or Executives in implementing Quality Management Systems.

In order to implement TQM, Toyota corporations focused on the following phases:

• The company extended the management responsibility past the instantaneous services and products
• Toyota examined how consumers applied the products generated, and this enabled the company to develop and improve its commodities
• Toyota focused on the insubstantial impacts on the procedures as well as how such effects could be minimized through optimization
• Toyota focused on the kaizen (incessant process development) in order to ensure that all procedures are measurable, repeatable, and visible.

The commitment from business executives is one of the key TQM implementation principles that make an organization successful. In fact, the organizational commitment present in the senior organizational staff ranges from top to lower administration. These occur through self-driven motives, motivation, and employee empowerment. Total Quality Management becomes achievable at Toyota by setting up the mission and vision statements, objectives, and organizational goals.

In addition, the TQM is achievable via the course of active participation in organizational follow-up actions. These actions denote the entire activities needed and involved during the implementation of the set-out ideologies of the organization. From Toyota Corporation’s report, TQM has been successful through the commitment of executive management and the organizational workforce (Toyota Motor Corporation, 2012).

Through inventory and half the bottlenecks at half cost and time, the adopters of TMS (Toyota Management System) are authorized to manufacture twice above the normal production. To manage the quality in all organizational management systems, the Toyota Production System incorporates different modernisms like strategy or Hoshin Kanri use, overall value supervision, and just-in-time assembly.

The amalgamation of these innovations enables Toyota to have a strong competitive advantage despite the fact that Toyota never originated from all of them. The 1914 Henry Ford invention relied on the just-in-time production model. The Ford system of production, from a grand perspective, warrants massive production, thus quality (Toyota Motor Corporation, 2012).

Kanji and Asher (1996) claim that to manage the minute set of production necessitated by the splintered and small post-war marketplaces, the JIT system focuses on the motion and elimination of waste materials. This reduces crave for work-in-process inventory by wrapping up the long production lines. Toyota Corp wraps the production lines into slashed change-over times, a multi-trained workforce that runs manifold machines, and new-fangled cells into a U shape.

When supplementing the just-in-cells, the system of kanban is employed by the Toyota Corporation to connect the cells that are unable to integrate physically. Equally, the system helps Toyota integrate with other external companies, consumers, and suppliers.

The TQM and the creativity of Toyota proprietors both support the quality at the source. The rectification and discovery of the production problems require the executives to be committed. At the forefront of Toyota operations, the managers integrate a number of forms of operational quality checks to ensure quality management at all levels.

The uninterrupted tests help the Toyota workforce engaging in the assembly course to scrutinize the value of apparatus, implements, and resources utilized in fabrication. The checks help in the scrutiny of the previously performed tasks by other workers. However, the corporation’s own test enables the workers to revise their personal advances in the assembly course.

The Toyota process owners set up the mistake-proofing (Poka-yoke) procedures and devices to capture the awareness of management and involuntarily correct and surface the augmenting problems. This is essential for the critical production circumstances and steps that prove impractical and tricky for Toyota employees to inspect.

Nevertheless, the policy deployment system decentralizes the process of decision-making at Toyota. This context of implementing Total Quality Management originates from Hoshin Kanri’s management by objective (MBO).

This aspect becomes more advantageous to Toyota when dealing with quality management. The system initially puts into practice the coordinated approach and provides a clear structure for the suppliers, producers, and consumers through inter-organizational cost administration. Moreover, Toyota executives can solve the concurrent delivery, cost, and quality bottlenecks, thus replacing and increasing the relatively slow accounting management mechanisms.

Customer focus that leads to the desired customer satisfaction at Toyota Company is one of the major success factors in TQM implementation. For every business to grow, it should have understanding, reliable, and trustworthy customers. The principle of customer satisfaction and focus has been the most presently well-thought-out aspect of Toyota’s manufacturing quality.

The TQM may characteristically involve total business focus towards meeting and exceeding customers’ expectations and requirements by considering their personal interests. The mission of improving and achieving customer satisfaction ought to stream from customer focus.

Thus, when focusing on manufacturing quality, this aspect enhances TQM implementation. The first priorities at Toyota are community satisfaction, employees, owners, consumers, and mission. The diverse consumer-related features from liberty. The concern to care is eminent in Toyota Corporation during manufacturing.

Toyota has three basic perspectives of TQM that are customer-oriented. These are based on its manufacturing process traced back to the 1950s. The strategies towards achieving quality manufacturing, planning, and having a culture towards quality accomplishment are paramount for TQM implementation to remain successful. To enhance and maintain quality through strategic planning schemes, all managers and employers must remain effectively driven.

This involves training workers on principles concerning quality culture and achievement. Scheduling and planning are analytical applications at Toyota Company that purposes in assessing customer demand, material availability, and plant capacity during manufacturing.

The Toyota Corporation has considerable approaches that rank it among the successful and renowned implementers of TQM. From the inherent and designed structure of Toyota, it becomes feasible to comprehend why quality manufacturing is gradually becoming effective. The inspection department is responsible for taking corrective measures, salvaging, and sorting the desired manufactured product or service quality.

The Toyota Corporation also has a quality control system that is involved in determining quality policies, reviewing statistics, and establishing quality manuals or presentation data. Furthermore, quality assurance is one of the integral principles in quality implementation that is practically present at Toyota. The quality assurance and quality inspectors throughout the Toyota Company structure also manage research and development concerning the quality of manufactured products and services.

The Toyota production and operations management system is similarly dubbed as the managerial system. In fact, in this corporation, operational management is also referred to as the production process, production management, or operations (Chary, 2009). These simply incorporate the actual production and delivery of products.

The managerial system involves product design and the associated product process, planning and implementing production, as well as acquiring and organizing resources. With this broad scope, the production and operation managers have a fundamental role to play in the company’s ability to reach the TQM implementation goals and objectives.

The Toyota Corporation operations managers are required to be conversant and familiar with the TQM implementation concepts and issues that surround this functional area. Toyota’s operation management system is focused on fulfilling the requirements of the customers.

The corporation realizes this by offering loyal and express commodities at logical fees and assisting dealers in progressing commodities proffered. As Slack et al. (2009) observed, the basic performance objectives, which pertain to all the Toyota’s operations, include quality, speed, flexibility, dependability, and cost. Toyota Company has been successful in meeting these objectives through its production and operation functions.

Over several decades, Toyota’s operational processes and management systems were streamlined, resulting in the popularly known Toyota Production System. Although the system had been extensively researched, many companies, such as Nissan, experienced difficulties in replicating TPS.

The TPS was conceived when the company realized that producing massive quantities from limited product lines and ensuring large components to achieve maximum economies of scale led to flaws. Its major objectives were to reduce cost, eliminate waste, and respond to the changing needs of the customers. The initial feature of this system was set-up time reduction, and this forms the basis of TQM implementation.

At Toyota Corporation, quality is considered as acting responsibly through the provision of blunder-gratis products that please the target clientele. Toyota vehicles are among the leading brands in customer satisfaction. Due to good quality, its success has kept growing, and in 2012, the company was the best worldwide. Moreover, Toyota has been keen on producing quality vehicles via the utilization of various technologies that improve the performance of the vehicles.

While implementing TQM, Toyota perceives speed as a key element. In this case, speed objective means doing things fast in order to reduce the time spent between ordering and availing the product to the customer.

The TPS method during processing concentrates on reducing intricacy via the use of minute and uncomplicated machinery that is elastic and full-bodied. The company’s human resources and managers are fond of reorganizing streams and designs to promote minimalism. This enhances the speed of production.

Another objective during TQM implementation is dependability. This means timely working to ensure that customers get their products within the promised time. Toyota has included a just-in-time production system comprised of multi-skilled employees who work in teams. The kanban control allows the workers to deliver goods and services as promised. Advancing value and effectiveness appears to be the distress for administrators, mechanical specialists, and other Toyota human resources.

During TQM implementation, Toyota responds to the demands by changing its products and the way of doing business. Chary (2009) argues that while implementing TQM, organizations must learn to like change and develop responsive and flexible organizations to deal with the changing business environment.

Within Toyota plants, this incorporates the ability to adopt the manufacturing resources to develop new models. The company is able to attain an elevated degree of suppleness, manufacturing fairly tiny bunches of products devoid of losses in excellence or output.

The organizational hierarchy and job descriptions also determine the successful implementation of the TQM. Toyota is amongst the few companies whose organizational structure and task allocation have proved viable in TQM implementation. The company has three levels of management. See the diagram below.

Management hierarchy

Despite the hierarchy and task specification, employees are able to make independent decisions and take corrective measures when necessary to ensure quality during production. Team working is highly encouraged at Toyota Corporation, and this plays a significant role during TQM implementation. All stakeholders are incorporated in quality control initiatives to ensure client demands are satisfied.

However, all employees are required to carry out their assigned tasks, and the management closely supervises the ways of interactions between workers. The management ensures that the manufacturing lines are well-built and all employees are motivated to learn how to improve the production processes.

Toyota is among the few manufacturers in the complete automobile industry that consistently profited during the oil crisis in 1974. The discovery was the unique team working of the Japanese that utilized scientific management rules (Huczynski & Buchanan, 2007).

The joint effort in Japan, usually dubbed Toyotaism, is a kind of job association emphasizing ‘lean-assembly.’ The technique merges just-in-time production, dilemma-answering groups, job equivalence, authoritative foremost-streak administration, and continued procedure perfection.

Just-in-time (JIT) assembly scheme attempts to accomplish all clients’ needs instantly, devoid of misuse but with ideal excellence. JIT appears to be dissimilar from the conventional functional performances in that it emphasizes speedy production and ravage purging that adds to stumpy supply.

Control and planning of many JIT approaches are concerned directly with pull scheduling, leveled scheduling, kanban control, synchronization of flow, and mixed-model scheduling (Slack et al., 2009).

Toyota appears to be amongst the principal participants in changing Japan to a kingpin in car production. Companies, which have adopted the company’s production system, have increased efficiency and productivity. The 2009 industrial survey of manufacturers indicates that many world-class firms have adopted continuous-flow or just-in-time production and many techniques Toyota has been developing many years ago.

In addition, the manufacturing examination of top plant victors illustrates that the mainstream them utilize lean production techniques widely. Thus, team-working TPS assists Toyota Corporation in the implementation of TQM.

Executives and Quality Managers face some challenges while implementing Quality Management Systems in organizations. In fact, with a lack of the implementation resources such as monetary and human resources in any organization, the implementation of TQM cannot be successful. Towards the implementation of programs and projects in organizations, financial and human resources have become the pillar stones.

The approach of TQM impels marketplace competence from all kinds of organizational proceeds to ensure profitability and productivity. To meet the desired results in TQM implementation, an organization ought to consider the availability of human and financial resources that are very important for the provision of an appropriate milieu for accomplishing organizational objectives.

In the case of Toyota, which originated and perfected the philosophy of TQM, the Executives, and Quality Managers met some intertwined problems during TQM implementation. The flaw in the new product development is increasingly becoming complicated for the managers to break and accelerate, thus creating reliability problems. Besides, secretive culture and dysfunctional organizational structure cause barriers in communication between the top management, thus, in turn, augmenting public outrage.

The top executives may fail to provide and scale up adequate training to the suppliers and new workforces. As a result, cracks are created in the rigorous TPS system. In addition, a lack of leadership at the top management might cause challenges in the implementation of TQM. Therefore, in designing the organizational structures and systems that impact quality, the senior executives and managers must be responsible, as elaborated in Figure 2 below.

Total Quality Management is a concept applied in the automobile industry, including the Toyota Corporation. It focuses on continuous improvement across all branches and levels of an organization. Being part of Toyota, the concept defines the way in which the organization can create value for its customers and other stakeholders. Through TQM, Toyota Corporation has been able to create value, which eventually leads to operation efficiencies.

These efficiencies have particularly been achieved by continuous correction of deficiencies identified in the process. A particular interest is the central role that information flow and management have played in enabling TQM initiatives to be implemented, especially through continuous learning and team working culture.

The Toyota way (kaizen), which aims at integrating the workforce suggestions while eliminating overproduction and manufacturing wastes, helps the company to respect all the stakeholders and give clients first priority. The objectives are realized through TPS.

Chary, D. 2009, Production and operations management , Tata McGraw-Hill Education Press, Mumbai.

Huczynski, A. & Buchanan, D. 2007, Organizational behavior; an introductory text, Prentice Hall, New York, NY.

Kanji, G. K. & Asher, M. 1996, 100 methods for total quality management , SAGE Thousands Oak, CA.

Slack, N. et al. 2009, Operations and process management: principles and practice for strategic management, Prentice Hall, New York, NY.

Toyota Motor Corporation 2012, Annual report 2012. Web.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, March 30). Implementation of Total Quality Management (TQM): Toyota Case Study. https://ivypanda.com/essays/total-quality-management-tqm-implementation-toyota/

"Implementation of Total Quality Management (TQM): Toyota Case Study." IvyPanda , 30 Mar. 2024, ivypanda.com/essays/total-quality-management-tqm-implementation-toyota/.

IvyPanda . (2024) 'Implementation of Total Quality Management (TQM): Toyota Case Study'. 30 March.

IvyPanda . 2024. "Implementation of Total Quality Management (TQM): Toyota Case Study." March 30, 2024. https://ivypanda.com/essays/total-quality-management-tqm-implementation-toyota/.

1. IvyPanda . "Implementation of Total Quality Management (TQM): Toyota Case Study." March 30, 2024. https://ivypanda.com/essays/total-quality-management-tqm-implementation-toyota/.

Bibliography

IvyPanda . "Implementation of Total Quality Management (TQM): Toyota Case Study." March 30, 2024. https://ivypanda.com/essays/total-quality-management-tqm-implementation-toyota/.

• Synchronous and Just-In-Time Manufacturing and Planning
• Just-in-Time Learning Approach
• The Just-In-Time Concept in Operations Management
• Provision of Just-In-Time Technology
• Major Global Corporation: Toyota
• Total “Just-In-Time” Management, Its Pros and Cons
• Just-In-Time Training Principles in the Workplace
• First World Hotel: Just-in-Time Manufacturing Model
• Motorola Company's Just-in-Time Implementation
• Toyota Motor Corporation's Sustainability
• Barriers and Facilitators of Workplace Learning
• The Science of Behavior in Business
• Standards, models, and quality: Management
• Managerial and Professional Development: Crowe Horwath CPA limited
• Managerial and Professional Development: Deloitte & Touché Company

• Search for:

Home       Resources       Case studies       Toyota

Few companies have as solid a reputation for supplier relationship management as Toyota does. The world’s biggest auto maker has developed longterm, collaborative and close partnerships with its key Japanese suppliers over a period of several decades. In its European operations, like those of North America, supplier relationship management (SRM) is also a major focus area, albeit one with a shorter history.

We asked Jean-Christophe Deville, general manager, purchasing, at Toyota Motor Europe about its approach.

How do you define srm at toyota and how do srm specific activities with strategic suppliers differ from the way you manage supplier relations in general, what impact, if any, has the economic downturn and toyota’s recent quality issues had on your srm activities, what challenges do you face internally from an srm perspective, what other roles does purchasing, and the supplier relationship managers within the function, play in srm, innovation is a key driver of srm at toyota. how do you manage the process of capturing, assessing and either progressing or rejecting supplier ideas and proposals, to date, the financial benefits you’ve achieved from srm activity are relatively small (0-2% of annual spend with each supplier), but you expect these to grow significantly in future. how will you achieve that, toyota generally shares savings with suppliers, typically on a 50:50 basis. why do you consider this important, what do you see as the most important ingredients for success in srm and what should you avoid doing, reports and publications, case studies, newsletter sign-up, stay connected on linkedin, lang: en_us, enjoy customer of choice benefits.

Find out what your key suppliers really think of you and how to become their customer of choice. 

Find out more

Stay in touch

2020 global srm research report - supplier management at speed..

Now in its 12th year, this year we have seen an increase of 29% in the number of companies responding compared to 2019. In addition, the proportion of respondents at CPO/EVP level or equivalent has increased to over 50%. Learn how now, more than ever before, procurement has the opportunity to make the case for SRM to ensure organisations don’t just survive but thrive.

Sign up below to get our insight emails direct to your inbox.

• Bendi Drexel
• Switch to Electric
• Batteries & Chargers
• Racking & Shelving
• Online Catalog
• Fleet Management
• Toyota Lean Management
• Agriculture Industry
• Beverage Industry
• Distribution Industry
• Manufacturing Industry
• Concrete Industry
• Problems We Solve
• MyToyota Parts Store
• Forklift Certification Training Course
• Safety Checklists
• Safety Products
• Safety Videos
• Why Work with Us
• Hiring Forklift Technicians
• Leadership Library

Toyota’s Lean Management Program Explained (with Real Life Examples)

by Frank Stuart , on Nov 1, 2023 3:45:00 AM

If you’ve ever searched for information online about the Toyota Production System, you've probably seen a variety of house-shaped graphics. But even though we all know what a house is, understanding what the TPS house graphic means can be a challenge — especially when some of the words are Japanese.

In this article, I’ll explain the house graphic and Toyota’s lean management principles. Because I worked for Toyota and have spent many years as a Toyota lean practitioner, I’ll share insights you won’t find anywhere else including:

• How the Toyota management system boosts employee retention
• Three common misinterpretations of Toyota’s lean methodology
• Several real-world examples and a customer case study

The Toyota Production System is What Makes Toyota #1

Toyota has made the best-selling forklift in North America since 2002. That’s a long time to be number one. How do they do it? By following the Toyota Production System (TPS). 

What is Toyota Lean Management vs. The Toyota Production System? Toyota Lean Management (TLM) is a system that takes the principles of the Toyota Production System and applies them to other industries such as construction, supply chain, healthcare and of course manufacturing. I’ve yet to find a business that doesn’t benefit from the Toyota production management system.

Toyota Principles Improve Retention and Your Bottom Line

Improving efficiency and customer satisfaction are the best-known reasons for following Toyota’s lean management practices. Most people don't know it can also improve employee retention.

Hiring and retaining qualified workers was the number one challenge reported in MHI’s 2024 Top Supply Chain Challenges survey . The responses come from more than 2000 manufacturing and supply chain industry leaders from a wide range of industries. 

This isn’t the first year hiring and retention created major heartburn for supply chain operations, and it likely won’t be the last. If finding and keeping good people is something your organization struggles with, TLM can help with that too .

Here’s my version of the TPS house.

Why is it a House?

Most people use a house-shaped graphic to explain TPS because the function of a house is to preserve what’s inside . All the parts of the house interact with each other to protect what’s the business and its people — from the groundwork to the pillars to the roof.

The Groundwork

Respect for People, Long-Term Thinking and Continually Improve

Respect for People, Long-Term Thinking and Continually Improve are fundamental management philosophies that drive all policy and decision-making under the Toyota way.

Respect for People is not about being nice (although that is important). This principle is about creating a home-like atmosphere where everyone is encouraged and supported to reach their full potential. 

EXAMPLE: A supervisor has monthly one-on-one meetings with each associate to:

• Review personal performance
• Discuss issues with work processes
• Uncover opportunities for improvement

This mentor-mentee program develops people from within. Associates move into higher and higher positions so eventually, the people leading the company not only know the product but understand the work.

Respect for people also includes being mindful of how decisions in one department affect another. Uncoordinated decisions can negatively impact the customer.

EXAMPLE: If sales and marketing decide to have a big sale the weekend before Thanksgiving, the extra orders could overwhelm an already understaffed shipping department — creating delays for the customer and/or increased overtime expenses.

Last but not least, respect for people means providing stable employment. This leads us to the next fundamental principle… 

Long-Term Thinking — During COVID and the supply chain challenges that followed, many companies made the hard decision to lay off workers. I was in the training department at Raymond during this time.

Instead of letting workers go, we chose to strengthen the company by training associates and improving processes. We developed online training programs on various topics for hundreds of associates in various roles. These actions and this type of thinking goes back to the 1950s when Toyota decided to focus on building a strong, stable company for the long term. The economy will cycle up and down, but because our people are our most important asset, we must take care of them and protect them, even during economic downturns.

Short-term decisions, like letting experienced and tenured employees go, can improve the bottom line in the short term, but long term it hurts the business. All too often, corporate culture lives and dies on a quarterly report. This is short-sighted. When times are good, you have to squirrel money away in your war chest to protect the company and its people when times are bad .

Continually Improve – It is said in business, as in life, we are either growing or dying. A structured focus on continual improvement ( kaizen ) and challenging the status quo ensures a company stays competitive and growing.

EXAMPLE: We challenged the team who reconditioned our forklifts this year. At the beginning of the year, our lead time was 12 weeks. By mapping the process, improving flow and using a kaizen philosophy, we are now at 6 weeks. We are not satisfied with this improvement and have further challenged the team to cut the lead time in half again by the end of this year.  

The Foundation

Organize, Standardize, Optimize

The next level of the TPS house is all about creating an efficient work environment. It starts with a clean, orderly workspace where the next tool (or whatever the worker needs) is right there and not hidden in a pile of clutter.

If we don’t give people an organized workspace and standards to follow, we’re not helping them be successful. Even worse, we’re wasting their time. It goes back to respect for people.

EXAMPLE: The litmus test I used in the factory was to have a workstation set up with all the necessary tools. If I could take a tool away from the workstation and the operator couldn’t tell me within five seconds what was missing, that meant we had more work to do to. 

To be clear, it isn’t about telling people: you must do it this way or to make changes for the sake of making changes. The goal is to:

• Find the best way of doing things for the people who are doing the work
• Develop standards and best practices
• If a better way is found, everyone starts using that new way instead

That last bullet point is the principle of kaizen showing up again. Toyota Lean Management is an ongoing process where small, incremental changes result in measurable improvements to quality or reduced cost, cycle or delivery times.

FYI, we haven’t gotten to the actual Toyota Production System yet. The groundwork and the foundation are the basis for TPS. The system doesn’t work without establishing the groundwork and creating a solid foundation. 

Creating optimized workspaces and processes are deceptively simple assignments. It’s really easy to make work hard and it’s hard to make work easy. When you’re stuck in chaos it can be hard to see the way out. 

The foundation of TPS helps make work easy. Once an orderly, efficient system has been established, we work on the two pillars.

TPS Pillars: The Toyota Production System

Just in Time & Continuous Flow

The first pillar is all about having what you need, when you need it. Waste, in the form of wasted time or excess inventory, should be avoided. 

Back in 2021, Bloomberg and other news organizations excitedly reported how Toyota had abandoned its “just in time” philosophy because it started stockpiling computer chips. This is just one example of how Toyota principles are misunderstood by the Western world.

Misunderstanding #1 Here’s what most news outlets got wrong: After the earthquake and tsunami in 2011, Toyota reevaluated the lead time required for semiconductors and other parts. Their assessment revealed they were unprepared for a major shock to the supply chain, such a natural disaster. 

To ensure a continuous flow of chips to their factories, Toyota required suppliers to carry a 2-6 month supply of semiconductors. When COVID hit, the news reported Toyota was “stockpiling” chips when, in fact, the company was simply following a plan it had created ten years earlier. 

Our business training in the Western world is all about the balance sheet. Reducing inventory becomes a goal unto itself and that’s when things start to go badly. “Just in time” doesn’t mean “last minute.” It means keeping enough supply to ensure a continuous flow.

For Toyota, "just in time" meant a supply that could weather supply chain ups and downs. In 2021, when the chip shortage forced other automakers to stop their production lines, Toyota kept churning out vehicles and raised its earnings forecast by 54% . 

Visual Management & Zero Defects

EXAMPLE: Zero defects is pretty self-explanatory, but here’s an example of zero defects through visual management. The first thing Mr. Toyoda built was an automated loom for the textile industry. Occasionally, a thread would break and the operator wouldn’t see it. When this happened, the final product had to be thrown away. 

To fix the problem, Mr. Toyoda put a washer in the thread. If the thread broke, the washer fell off into the machine and it stopped. The operator could fix the problem without any waste (defective product). This also allowed one operator to oversee multiple machines.

Misunderstanding #2 Some people say Toyota Lean Management is basically the same as Six Sigma. I disagree. There are major differences between the two systems , but here’s a big one related to TPS Pillar Two: Six Sigma says you can have 3.4 defects per million operations. An “operation” is defined as a single action, such as attaching a wire or screwing a bolt. Building a jumbo jet requires millions of operations. Knowing 3.4 defects are permitted per million operations, would you rather fly on an airplane built by a company that follows Six Sigma principles or Toyota?

Another comparison you may have heard is one about a GM versus a Toyota factory. At GM, workers can get in trouble for stopping the line. At Toyota, it’s the opposite. If workers aren’t periodically stopping the line, managers get concerned. It goes back to the fundamental principles we talked about in the very beginning: respect for people and a culture of continuous improvement.

Toyota Lean Management Case Study

I worked with a hard cider manufacturer in upstate NY. The company was approaching its busy season and trying to build up its inventory to supply its distributor. Their “we gotta get this done” mentality caused them to overrun their facility.

A Foundational Problem The company thought they were following the “just in time” lean methodology. What they had was a mess. 

• Product and supplies were all over the place
• Equipment was haphazardly maintained
• They didn't have good standards on how to clean the kegs

A bottleneck in their system meant a new batch would get stuck behind the previous batch and unfinished inventory would pile up. Disorganization and stress led to unnecessary handling, damage and waste (wasted time and wasted product). 

After speaking to everyone who helped produce the cider, we created a list of best practices. Next, we helped the company organize, standardize and optimize the workspaces and procedures throughout their facility. With groundwork laid and a firm foundation in place, we were ready to move on to Pillars One and Two.

Guess what? The company had more than enough capacity. They didn’t need to build up inventory for their distributor. All they had to do was tame their operational chaos.

• Standardized practices saved time and improved product quality
• Clear processes and optimized workspaces helped everyone work more efficiently
• The company reclaimed space previously used to store inventory

Cider Batches Now Flow Continuously Once the bottleneck was subdued and equipment was kept in good working order, the cider company could run continuously with minimal downtime between batches. By staggering five batches to start over six weeks the company could meet customer demands.

The Core of the House: Its People

Grow People: Skills, Competence, Leaders

I added this circle in the center of the house (you won’t find it in other TPS house graphics) because I was fortunate to learn about Toyota’s lean management system directly from Toyota executives. 

The addition was inspired by a story I heard that really stuck in my mind. Mr. Onishi, Toyota’s president, visited a plant in Canada. He asked one of the plant managers to explain TPS. The manager described the house and the elements of zero defects, continuous improvement, etc. Mr. Onishi politely said, “It’s actually a people development process. We want to improve people’s skills and competence and grow them into leaders. Our goal is to promote people from within because they know the products, the customers and understand the work.”

The TPS Circle

Everything starts and ends with respect. 

Teamwork is about supporting the person who does the thing the customer is paying for. 

EXAMPLE: At SST, that means the technician working on a customer’s forklift.

Go and See — when a problem arises, the best way to find a solution is to observe the problem. 

EXAMPLE #1: At the forklift factory, units occasionally came off the line with the wrong counterweight. We observed the employee do everything right until one time he read the build sheet but chose the wrong counterweight. He was always on the go which created an opportunity for this mistake. By adding a simple step, stopping to highlight the weight info, the problem disappeared.

EXAMPLE #2: A warehouse thought they needed to buy more pallet rack and even had a rack consultant on-site while I was there. Turns out the company had plenty of rack space. They just needed to throw out three years of inventory they couldn't sell. The executive team almost wasted thousands of dollars on rack they didn’t need rather than take a hit on their balance sheet.

Challenge does not mean I had a challenging day because two associates didn’t show up for work. It means aiming for the stars and making it to the moon.

To generate significant improvements, you need an aggressive challenge and a team that’s committed to reaching a common goal. It changes your approach. To keep the space analogy going, consider all the technological innovations we enjoy that came from putting a man on the moon .

Misunderstanding #3 Toyota’s Production System strives for 100% customer satisfaction by eliminating wasteful activities. Many business leaders incorrectly believe running lean means using cheaper materials or reducing staff. By now you know this isn't the Toyota way. Building a strong house requires leaders who respect their people and think long-term. 

Companies that refuse to think beyond the bottom line will always struggle to stay competitive. Their short-term savings on cheap materials create long-term losses as customers become dissatisfied. They will also waste money hiring and training people who leave when they aren’t treated with respect. 

Sometimes I have to have a conversation with new clients about helping team members overcome challenges. When something goes wrong, some companies look for someone to blame (reprimand or fire) but that’s not the Toyota way.

Toyota’s approach focuses on fixing broken systems, not pointing fingers. We encourage leaders to challenge their team members to improve processes, but if the team member fails and gets fired after one try, how is that person’s replacement going to feel about taking on the same challenge?

The Roof of the TPS House

The roof protects the house and the people inside. A safe workplace that produces quality products at the lowest cost with the shortest delivery time in a good environment generates high morale and protects the business. By protecting the business, you protect the people inside and help them to grow into successful leaders. 

Request a Free Toyota Lean Management Consultation

If you’d like to reduce costs and turnover while increasing customer satisfaction, why not schedule a free consultation ? Toyota Lean Management has a low cost of implementation and is designed to help you get more out of your existing resources. 

During the initial consultation, we’ll talk about where your company is now versus where you’d like to be. The next steps depend on the individual client, but typically we’ll Go and See your space and look for:

• Inventory build-ups
• Excessive transportation
• Cluttered workspaces
• Unnecessary motion
• Producing more than what’s needed for the near-term
• Piles of defects

To learn more, contact us online or by phone (800) 226-2345.

FLORIDA : Jacksonville South, Jacksonville North, Ocala, Orlando, Lakeland, Tampa, Winter Haven GEORGIA : Albany, Macon, Midland, Valdosta

The SST Blog

Want to increase your productivity, increase your safety, and increase your profits? Our blog can help. Fill out our form below to subscribe.

Subscribe to Updates

• Aerial Equipment (3)
• Electric (11)
• Finance and Leasing (4)
• Fleet Management (7)
• Forklift Batteries (5)
• Forklift Maintenance (24)
• Forklift Parts (6)
• Forklift Repair (15)
• Forklifts (46)
• Industrial Cleaning (5)
• Insider (2)
• Loading Dock (1)
• New Equipment (9)
• Pallet Jack (2)
• Pallet Rack (10)
• Problems We Solve (7)
• Recruitment (3)
• Safety (31)
• Scissor Lift (3)
• Special Offers (3)
• Stacker (2)
• Toyota Lean Management (3)
• Training (10)
• Used Equipment (3)
• Utility Vehicles (2)
• Warehouse Automation (4)
• Warehouse Solutions (24)
• May 2023 (4)
• May 2019 (3)
• December 2019 (3)
• February 2020 (3)
• May 2020 (3)
• October 2020 (3)
• May 2021 (3)
• September 2021 (3)
• March 2022 (3)
• July 2022 (3)
• September 2022 (3)
• April 2023 (3)
• July 2023 (3)
• August 2023 (3)
• October 2023 (3)
• August 2018 (2)
• June 2019 (2)
• July 2019 (2)
• September 2019 (2)
• July 2020 (2)
• August 2020 (2)
• November 2020 (2)
• December 2020 (2)
• January 2021 (2)
• March 2021 (2)
• April 2021 (2)
• June 2021 (2)
• July 2021 (2)
• August 2021 (2)
• October 2021 (2)
• November 2021 (2)
• December 2021 (2)
• January 2022 (2)
• February 2022 (2)
• April 2022 (2)
• June 2022 (2)
• November 2022 (2)
• February 2023 (2)
• June 2023 (2)
• September 2023 (2)
• November 2023 (2)
• December 2023 (2)
• January 2024 (2)
• February 2024 (2)
• March 2024 (2)
• February 2019 (1)
• April 2019 (1)
• August 2019 (1)
• October 2019 (1)
• January 2020 (1)
• April 2020 (1)
• June 2020 (1)
• February 2021 (1)
• May 2022 (1)
• August 2022 (1)
• October 2022 (1)
• December 2022 (1)
• January 2023 (1)
• April 2024 (1)

Southern States Toyotalift

Corporate office 115 s. 78th st,  tampa, fl 33619  call:  800.226.2345  •  813.734.7940 accounts receivable: (813) 549-3545 / [email protected], florida locations.

Winter Haven, FL 863.967.8551

Orlando, FL 407.859.3000

Ocala, FL 352.840.0030

Jacksonville, FL 904.764.7662

Lakeland, FL 863.577.5438

Georgia Locations

Valdosta, GA 229.247.8377

Macon, GA 478.788.0520  

Midland, GA 706.660.0067

Albany, GA 229.338.7277

• Spotter Trucks
• Personnel Carriers
• JLG Aerial Platforms
• Industrial Floor Cleaners

• Find a Dealer
• MyToyota Login
• Parts & Services
• Resource Library

About Toyota

Electric forklifts.

Electric Pallet Jacks

Electric Pallet Stackers

Reach Trucks

Order Pickers

Internal Combustion: Cushion Tires

Internal Combustion: Pneumatic Tires

Heavy Duty Forklifts

Tow Tractors & Tuggers

Hand Pallet Jacks

Automated Guided Vehicles

Aerial Work Platforms

• Toyota Assist
• Smart Environment Sensor
• Rental & Used
• Find a Forklift
• Compare Forklifts
• Industry Solutions
• Automation Solutions
• Energy Solutions
• Consulting Solutions
• Financial Solutions
• Fleet Solutions

Food Storage

General Warehouse

Cold Storage

General Manufacturing

Building Materials

Automate Receiving Processes

Automate Material Transportation

Automate Storage Systems

Automate Picking Solutions

Automate Shipping Systems

Become a Greener Business

Lithium-Ion Batteries

Convert from IC to Electric

Analyze Warehouse Space

Increase Employee Education

Improve Operation Safety

Improve a Process

Toyota Commercial Finance

Financing with Toyota

MyToyota Credit Card

Benefits of Buying Toyota

Highest Quality Parts

Toyota forklift dealers are a one-stop-shop, full service forklift solutions provider.

• Model & Serial Number
• Part Number

How to Find Your Equipment Model Number

Finding the right parts for your equipment is easy when you have your model and serial number which can be found on the data plate. Luckily, a forklift data plate is installed on every truck on the market to help you understand what your forklift can do and provide vital information.

Model Number:  The model number of your toyota forklift is extremely important for relaying information to your dealers about repair or technical assistance and for looking up replacements part!

Serial Number:  The serial number on your lift is the most important number.The model serial number combination will allow us to provide you with the parts that will fit your particular piece of equipment.

How to Find Your Equipment Serial Number

Model Number:  The model number of your toyota forklift is extremely important for relaying information to your dealers about repair or technical assistance and for looking up replacements part!

Serial Number:  The serial number on your lift is the most important number.The model serial number combination will allow us to provide you with the parts that will fit your particular piece of equipment.

Need some help? For further assistance or more information, contact your local Toyota Dealer .

• Request a Parts Quote
• Toyota Genuine Parts
• Toyota Starlift Parts

Industry Leading Service

Increase your productivity, overall up-time and lifespan of your forklift.

• Request Service Quote
• Maintenance Plans
• 360 Support
• All Resources
• Customer Stories
• Whitepapers
• Management Guides
• Video Library

Toyota Careers

Management Team

Toyota Dealers

Sustainability

Corporate Social Responsiblity

• National Accounts
• Toyota Production System
• Forklift Safety
• Toyota Powered Engines

Press Enter to Search

A Case Study with Toyota Lithium-Ion Batteries

In the world of material handling, it’s important to ensure your operation is running at peak performance. One way to confirm sustained productivity in your operation is by confirming that your equipment utilizes the correct energy solution. Toyota Energy Consultants  are your guide to understanding your energy consumption, helping eliminate waste, and determining the right solution for your electric or internal combustion equipment. Let’s dive into a case study that highlights how Toyota’s Energy Consultants helped a customer find the right solution for their operation. 

Case Study Overview

A customer runs two 10-hour shifts using a sit-down counterbalance forkliftwith an 18-85-23 lead-acid battery. The customer was using one lead-acid battery per truck with a 935AH battery, which the usable AH capacity is 748 (80%). The customer was concerned about the battery’s runtime and mentioned that the batteries were not lasting beyond three years.  

Toyota Energy Consultants performed a two-week power study  to determine the customers’ usage patterns. During that time, they found that the customer had a peak day usage of 1426 AH and an average usage day of 1380 AH. They also measured the EBU (equivalent battery usage), which was 1.9 on the peak day and averaged 1.84 EBUs.

The data above revealed that the customer would need either two lead-acid batteries per truck, or they would need to consider switching to a more sustainable solution such as a lithium-ion battery because their current solution was being pushed beyond limits to sustain operational efficiency. By completing the power study, Toyota Energy Consultants were able to propose a tailored, long-lasting solution to help meet the customer’s needs.

EBU is calculated by taking the number of Amp Hours used in 1 day divided by the usable capacity of the battery. Example, if a customer has a 1000 AH battery and the usable AH is 800AH (80%) but the customer used 1400AH in a day; the EBU would be 1400AH/800AH = 1.75EBU. 

Toyota’s dedicated team of consultants take the time to understand not only your energy consumption but also your business challenges so they can eliminate waste. They dive deep into your business so they can recommend customized solutions to maximize your operational efficiency. If you’re interested in learning more about power studies or meeting with a Toyota Energy Consultant directly, please reach out to your authorized Toyota Forklift Dealer.

Related Articles