Tuesday, June 26, 2007

Toyota Way

Toyota's fast pacing growth towards the number 1 automobile manufacturer with just two car brands (toyota and Lexus) under its belt, as opposed to the several touted by other manufacturers.
maybe this is the reason why:

Fujio Cho has only been in the top job at Toyota for a year, and he is only the second chairman not to be a member of the founding family.

But he's been with the Japanese automotive giant since 1960. He is now 70, not particularly old by the standards of Japanese bosses.

Mr Cho got a law degree from the elite Tokyo University, and then joined Toyota as an apprentice.

He learnt the secrets of Toyota's revolutionary Lean Manufacturing System from the man who invented it, Taiichi Ohno, an unarguable genius.

In the six years from 1988, Mr Cho was the head of Toyota's United States operation in Kentucky at a time of relentless and brave expansion, a long way from home.

He must have picked up a lot of English, but he prefers to speak Japanese when answering reporters' questions.

I suppose it gives him time to think, and thinking is what he does, leaving quite long gaps between a question and its tentative answer.

Mr Cho does not wish to appear to have all the answers. His is extraordinary modesty, and so is his company, considering what they have just done.

Strong sales

Some time around the first quarter of this year, Toyota outpaced General Motors as the largest car-seller in the USA. It is likely that will continue for the rest of 2007.

This is probably one of the most significant business happenings of the past century.

Toyota Rav4
Toyota is trying to behave like an American company in the US

Answering my question about being number one during a visit to the St Gallen Symposium in Switzerland recently, the self effacing Mr Cho does not sound like a chairman of Toyota.

He ducks it.

"I think it is too early to talk about who is number one or not," he says.

"And we do not really consider ourselves number one, anyway. But yes, we've been doing very well in sales in the past six or seven years in particular."

American company

Fujio Cho thinks it is the fact that Toyota now manufactures for local tastes that has made the difference. It is what he pioneered in the USA.

Our way of thinking is very difficult to copy or even to understand
Fujio Cho
Chairman, Toyota

Talk to the people who have run the big three US car companies into almost bankruptcy and they seem to have little understanding of the sheer wholeness of the Toyota system; and part of that completeness is Toyota's refusal to take a victory role after decades of having GM as its global target.

Toyota recognises the dangers of being number one and luxuriating in the glory. Besides, Toyota has political problems to face if it comes out too strongly as the giant killer in the US.

The export of US jobs from rustbelt industries is already a big issue, and Toyota's (defensive) US stance is to become as American as it possibly can, hence Mr Cho's pride in local manufacture and local employment.

Living the success

But there's another wonder about Toyota I wanted to know about.

Toyota factory
Toyota makes cars like nobody else

There's nothing secret about the Toyota Lean Manufacturing System. Anyone from a US rival can walk along the elevated runway in Toyota City, above the production lines, and see how Just In Time, a Different Model Every Time, Lean Manufacturing works.

And yet, few others seem really to understand what's happening down below them on the factory floor, let alone take the lessons back to beleaguered car industries elsewhere in the world.


Mr Cho thinks long about this, and then answers at length.

"There are many factors, so I have to think a bit," he says.

"First, the philosophy needs to be fully grasped by top management. Groups of companies involved in car making have to become one, to move together.

"Avoiding overproduction has to be built into the system, a difficult task. And each problem will have to be made visible, and then tackled by every one of the workers.

"These are all things that companies do not normally do. It's difficult to live the Toyota way of production."

Global benefits?

Just introducing methods and ideas on their own are not going to bring about success, he insists.

"Visiting our factory, you will see that on one line we have eight different types of cars, not just variations. This is done to help our suppliers use up production every day.

"Our way of thinking is very difficult to copy or even to understand. It is even difficult for top managers to understand that this is worthwhile. And doing it this way causes inconvenience all over the place.

"At the start, the line keeps stopping, for example. Even when you see it, it is difficult to understand."

A last, cheeky question: would the company now echo the old GM motto and proclaim :"What's good for Toyota is good for the world?"

Mr Cho grins. "We wouldn't dare to think that," he replies.

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