Section 4. Responding to the Oil Crisis

Item 2. Resource-Saving and Energy-Saving Programs

The oil crisis resulted in a renewed awareness of the limited nature of resources and energy, and Toyota responded by actively implementing resource-saving and energy-saving programs. Supplies of gas essential for heat processing at plants were suddenly cut by 30 percent, and Toyota unavoidably moved to implement resource-saving and energy-saving measures.

Among the resource-saving measures was the establishment in November 1973 of the Waste Reduction Liaison Committee, which implemented a program for the effective use of materials by halving waste. Initial energy-saving measures included reducing lighting in the vicinity of windows and in corridors, addressing leaks of compressed air, and lowering heating temperatures. In January 1974, suggestions for reducing the use of paper, oil, and electricity were solicited, and more than 7,000 proposals were made.

Also in January 1974, energy and resource measures were adopted in company policy1 and were implemented company-wide. The Energy-Saving Countermeasures Committee was established in May of that year to carry out company-wide energy savings.

In addition, resource and energy saving countermeasures were added to business site inspection topics for that fiscal year, and resource-saving programs were implemented from a long-term perspective. Engineering departments worked to use common parts and reduce the number of components used and developed technologies relating to vehicle weight reductions through vehicle weight planning activities. Production engineering departments undertook the development of production technologies that achieved dramatic energy savings such as increasing the thermal efficiency of furnaces. The operational inspections conducted in September of that year confirmed the results of the efforts by manufacturing divisions as well as engineering, production engineering, and purchasing departments, and even greater effort was put into resource-saving programs.

Cost management activities too required the adoption of the new approaches and measures during a period when the prices of various materials were increasing rapidly and sales volumes were plunging. In October 1974, a project team for the Corolla-the highest volume selling vehicle-began cost improvement activities. The Corolla Cost Improvement Committee was established as an inter-divisional organization with members from design, manufacturing, production engineering, purchasing, planning and operations, and accounting divisions. The Committee's initial goal was to reduce costs by 10,000 yen per vehicle in six months.

The work of cutting costs involves numerous small improvements that may include bolts that cost only a fraction of a yen each. An automobile comprises approximately 30,000 parts, and the Corolla Cost Improvement Committee identified each part and all production processes and at times conducted repeated experiments.2 The cumulative savings resulted in cost improvements that exceeded the initial target. The Committee raised awareness concerning the need for changes in attitude as a new method of implementing cost improvement measures.

Additional cost improvement committees were established for the Corona, Crown, Hilux, and Liteace, and across-the-board streamlining was pursued including measures that could be implemented during future model redesigns.

In addition, the Cost Planning Committee was established in September 1974 to examine cost planning from a broad perspective. In February of the following year, the Cost Planning Section was created within the Technical Administration Department and the cost planning functions of the Production Engineering Planning Department, Accounting Department, and Purchasing Administration Department were expanded and reinforced so cost planning could be conducted in accordance with objectives.

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