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Company Profile
Toyota Motor Corporation is Japans largest and the worlds number four carmaker by sales (after General Motors, Ford, and Daimler Chrysler) (http://www. ... The corporation experienced its shares of trials and tribulations when it first went public in Japan in 1937. ...
In 1957, Toyota Motor Sales, U. ... In 1996, Toyota consolidated its North American production units into Cincinnati-based Toyota Motor Manufacturing North America (http://www. ... ” TPS is based on the concept of Kaizen, the Japanese term for continuous improvement.
The Kaizen Philosophy
Kaizen, or continuous improvement, is a management philosophy developed in Japan in the 1930’s and put into practice at Toyota in the 1950’s and 1960’s, where it formed a key part of the now famous Toyota Production System and contributed to the Japanese export boom (Witzel, 2001). The central philosophy of Kaizen is probably best expressed by Toyota Sakichi (1867-1930), who said that no process could ever be declared perfect, and that therefore, there was always room for improvement (Witzel, 2001).
It is believed that two factors pushed the introduction of Kaizen along. ...
In Kaizen, people from every part of the organization analyze its processes and seek to eliminate obstacles to quality and productivity (Nucifora, 2002). Kaizen workers practice the “look-and-learn” approach by passing on technical know-how to other workers in Toyota’s plants (Anonymous, 2001). There are three types of Kaizen workers, each equally important and necessary:
1. White Collar – Managers who focus on culturally transferring the Kaizen philosophy into the plants. ...
The Kaizen philosophy also takes a different route to improvement. ...
Kaizen Factors
In the early years, Japan’s small market for trucks and Toyota’s lack of capital forced Toyota to produce trucks in small batches (Browning, 1998). ...
By implementing the Kaizen philosophy, Ohno’s goals were to:
1. ...
Basic Cost Concepts
The implementation of a Kaizen cost accounting system can have a profound effect on an entities accounting system. ... By adopting this approach, the cost management is shifted from feedback-oriented techniques such as target costing and value engineering.
Kaizen costing is the application of kaizen, or a “continuous improvement” specifically to reduce costs. ... Unlike target costing, Kaizen costing accepts the design of the product or service as given and focuses on finding ways to reduce the cost of the manufacturing and delivery processes. ...
Kaizen costing is achieved through “Management by Objectives”. ... The main targets of physical objectives are determined and evaluated during the production meetings, and the Kaizen cost targets are determined and evaluated in what are called “Kaizen cost meetings”. ... During these meetings, the amount of Kaizen cost, which is the amount of reduction targeted – is assigned through “management by objectives” at that organizational level. ... What the kaizen system does is it empowers the different departments by harnessing the entrepreneurial spirit. ...
The success of the kaizen system cannot be disputed. ... These methods are based on Frederick W Taylor’s “scientific management” approach, and have prevented most American firms from producing the highest quality products and services. ... Capital investment decisions are now being made by analyzing companies that have embraced a different set of management concepts and systems such as kaizen “process technologies”, if American companies are to achieve a strong competitive edge at home and abroad. ... To compliment and guide their efforts Toyota facilitated the changes utilizing the Kaizen process. ... Toyota initially approached Ford Motor Company with the idea of developing a joint venture company. ... GM and Toyota worked together to develop a new company known as the New United Motor Manufacturing Inc. ...
Quantitative Analysis
In analyzing Toyota’s financial statements, for the last three years, we will use a horizontal/vertical approach to dissect the Income Sheet. ...
In terms of Kaizen, it is apparent that Toyota has used this strength to maximize its profits. ... Another indicator of that Kaizen has made Toyota a very profitable corporation is that in 2001 to 2002 there was 28. ... This is truly representative of the essence of Kaizen that, “no process could ever be declared perfect, and that therefore, there was always room for improvement” (Witzel, 2001) as evidenced by the year over year increases seen in operating income as a percentage of gross revenue. ...
In the overall picture Toyota, by using Kaizen, has formed a corporate culture of “leanness”, that has allowed them to maximize their profits. ...
Financial Risks and Rewards
The implementation of Kaizen within the Toyota Company has very little significant financial risks but it benefits Toyota by increasing its overall quality. Toyota bases their production systems on zero defects, and meeting exact standards is key to being a kaizen worker (Anonymous, 2001). Exceptional quality is a reward within itself but Toyota and its kaizen workers demand quality. This type of commitment is an integral part of the rapidly growing company, and as a result of its expansion, Toyota will be locating some of its production capacity offshore in purpose-built factories which will have management focusing on the training and development of kaizen workers (Elsey, 2001).
Financially, the Toyota Company is benefiting from its kaizen workers by reducing defects and minimizing claims, which drastically decrease the company’s overall expenses.
Approximate Word count = 4202
Approximate Pages = 16.8
(250 words per page double spaced)
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