“As Rivals Catch Up,
Shirouzo, WSJ, December 9-10, 2006: pp. A1 & A6) presents how
the auto industry comes with some concerns and responsibilities for sustained
improvement of products and processes.
affiliates, putting it in the No. 2 spot behind GM. In the very near future it
is poised to become the industry leader in terms of sales.
CEO, Katsuaki Watanabe, considers that the leadership role that
automotive industry comes with loss in its traditional source of competitive
edge. Quality has been and still remains
Toyota’s
forte, but the company is observing that this foundation of its success is
slipping in recent years. The efficiency of its factories and engineering
practices needs an overhaul and the relentless focus on continuous improvement,
i.e. kaizen, need further emphasis.
car at Toyota’s
North American plant was 21.6 hours, more than 10 hours faster than GM.
However, by 2005 Toyota
has improved only marginally to 21.3 hours, while GM had almost caught up. The
rapid global growth of Toyota
is resulting in quality control problems. In 2005 Toyota recalled 2.38 million vehicles more
than the 2.26 million it sold, suggesting that the manufacturing problems are
in fact compounded by potential design flaws.
U.S. and
European companies are catching up on most of the traditional core strengths of Toyota. Mr.
Watanabe foresees kakushin, i.e.
revolutionary change in how Toyota
designs cars and factories, as an important element of future strategy. The
push is to reduce the number of components used in a typical vehicle by half
and to create fast and flexible plants to assemble these simplified cars. The
aim is to cut at least a trillion yen ($8.68 billion) in vehicle costs in the
next three to four years, translating to a reduction of approximately $1000 per
vehicle. During the period 2000-2004, Toyota
managed to reduce about one trillion yen out of its parts purchasing,
equivalent to 30% cut in the company’s procurement costs in the five years
through 2004. With the help of two colleagues, Mr. Watanabe, who headed Toyota’s purchasing
division worked with the suppliers to change the way 173 components and systems
were designed, in an effort to make them simpler and less expensive without
affecting quality. The effort was dubbed: “Construction of Cost Competitiveness
for the 21st Century,” or CCC21.
In 2002,
learned that there were several areas in which the lean production principle
was not applied. Most of its machines were too big, clunky and slow which as
limiting
ability to drive waste out of its factories. Smaller and simpler machines are
less expensive to install, take less energy to run, are less likely to break
down and are easier to fix if they do.
Toyota worked with its equipment suppliers to shrink the size (for example for its
aluminum caster the size was shrunken to third of its size) and banned the
supplier from selling the new technology to Toyota’s rivals for six years. The drive
termed as “simple and slim” resulted in several other changes as well. At the
Tsutsumi plant near Toyota City, where the Prius and the Scion tC are built for U.S. market,
workers relied on lifter on rails to hoist gasoline tanks into vehicles
suspended from production line. The size of the machine adversely affected the
chassis and cramped the workplace. In 2005, a minilifter was designed and
introduced that sits on a push-cart and uses air pressure to lift the tanks. The
plant now used 16 minilifters to handle same number of installations; these
minilifters take up a third of the space and helped
half. Furthermore, now two workers can work under the body of one car due to
the smaller size of the equipment, which helped Toyota to shorten the line and install more
quality assurance checkpoints.
further attention. The slow process of dragging a car through a 115 – foot long
bath of anticorrosion undercoating, Toyota engineers devised an approach in
which a car body is immersed in the paint pool to make the paint stick. The new
approach is implemented under strict secrecy and the aim is to reduce the paint
line length to half.
The use of new processes and new equipments has slashed the
cost of building a new plant by as much as 30%. The company aims to come up
with a new type of low-cost factory in which workers will churn out nearly a
dozen different cars on the same line at a speed of one every 50 seconds.
Currently,
fastest plant takes 56 seconds to produce a vehicle. The first of these
revolutionary plants are expected to open by the end of 2007, when
Takaoka plant near Toyota City. The plant will have
a new assembly line, where parts are delivered to workers in small containers
inside cars, eliminating the need to pick the parts off nearby shelves. It is
expected that this will reduce the assembly line’s length by half. In the
future the company is planning to give close attention to the number of
components used in a typical vehicle. The aim is to cut the number of
components to half. The drive that was initiated in 2005 is dubbed “value
innovation” with an ultimate aim that in the next decade or so a vehicle will
have just one antenna and one receiver that handles all the wireless
communication for a car.