Section 3. Rapid Growth of the Japanese Market and Development of the Lexus
Item 4. Enhancing Efficiency and Organizational Structure of New-car Development
Introduction of the Development Center System
TMC's sales in Japan exceeded 2 million vehicles in 1988, achieving a 10-year goal, and reached a whopping 2.5 million in 1990. This was partly due to the expansion of the domestic market attributable to the bubble economy, but primarily due to TMC's active launch of attractive new models throughout the 1980s. The number of new passenger car models (including recreational vehicles) launched in the Japanese market in the 10 years beginning in 1980 reached 16, including derivative models.
With the rapid increase in vehicle series, the number of redesigns for the Japanese market reached about 10 models a year in the late 1980s to early 1990s. As a result, increasing the efficiency of product development and reducing development lead times became important issues. In response, TMC considered organizational reforms for its product development and technology development divisions, and carried out investigations through activities known as "Future Programs 21" ("FP21") launched in April 1990.
In FP21, in pursuit of the idea structure, TMC identified problems by interviewing 300 people inside and outside the groups involved. The interviews revealed that vehicle development, which was supposed to be carried out cross functionally, was being done inefficiently, due to a vehicle development structure that was strongly divided by design, body, powertrain, testing, and other special-technology functions. Therefore, TMC switched to a development center system in which the engineers in each functional group belonged to a product-centered development center that had a development structure that enabled full originality and agility.
In September 1992, TMC abolished its functionally centered development organizations, which had been in use for more than 30 years, and introduced the product-centered Development Center System. In the new organization, the product development and technology development groups were merged together to form the Engineering Group, under which three development centers were established according to product type: Toyota Development Center 1 for front-engine, rear-wheel drive passenger cars, Toyota Development Center 2 for front-engine, front-wheel drive passenger cars, and Toyota Development Center 3 for commercial vehicles and recreational vehicles. In addition, the Toyota Development Center 4 was also established, which was responsible for electronics and elemental powertrain technologies, resulting in a four-center structure. The R&D Management Division was also established to handle group-wide planning and coordination among the various centers. Note that, in September 1993, the Higashi-Fuji Technical Center, responsible for advance development, was integrated into the Toyota Development Center 4.
Around this time, TMC also began to enhance its simultaneous engineering development methodology, which utilizes advanced CAD and CAM systems and involves the Production Engineering Group, Production Group, and parts and materials suppliers from the development stage. These efforts, coupled with the introduction of the Development Center System, helped TMC achieve speedy development, maintain high quality, and reduce cost.