Section 2. 50th Anniversary and Coping with the Strong Yen

Item 2. Comprehensive Cost Reduction Activities

Emergency Profit Improvement Committee against Yen Surge

In October 1986, approximately one year after the Plaza Accord, TMC established the Emergency Profit Improvement Committee, chaired by Vice Chairman Gentaro Tsuji. This committee, unusual in that all the company's executives were members, was established in order to tackle the issue of the highly appreciated yen head on. Individual divisions began to reassess all aspects of their operations, i.e., people, materials, and finances, from a fresh perspective.

In April 1986, TMC had already begun implementing its "Challenge 50" initiative, a company-wide renovation effort, and accelerated it through the establishment of the Emergency Profit Improvement Committee against Yen Surge. Challenge 50 was an initiative with the ambitious goal of reducing the number of office work process steps, lead-times, the volume of documents, and meeting time by 50 percent, and was intended as a bold challenge toward office work innovations. Goals were established and thoroughly promoted in each of the focal areas, such as "Paperless 50" for reducing the volume of documents and "meeting efficiency improvement of 50 percent" for reducing meeting time. In one sign of the steady progress being made, the total number of steps related to meetings, which included material preparation and travel time, was reduced by approximately 30 percent from June 1986 to June 1987.

In promoting Challenge 50, TMC actively utilized office automation through the introduction of word processors and personal computers, as well as advances in telecommunications technologies. For example, in 1987 TMC installed a video conferencing system, connecting the Head Office in Toyota City, the Tokyo Office, the Nagoya Office, and the Higashi-Fuji Technical Center, achieving dynamic meetings and improving meeting efficiency. The same year, TMC also installed ATMs on company premises and began direct bank deposit of salaries and bonuses to reduce the number of work steps involved in payroll processing.

In January 1987 when the dollar fell below 150 yen, Kyohokai (the Toyota Suppliers Association) and Eihokai (the Facility Manufacturer Association) held their annual conference in commemoration of Toyota's 50th anniversary. At this conference, TMC Chairman Eiji Toyoda made a speech based around the following essential ideas titled "Battles to Reduce Cost", in which he recalled the crises that TMC had overcome since its founding and asked the suppliers for their continued cooperation:

Following the founding of our company, we worked on reducing our costs, which were higher than those of imported cars, and overcame this hurdle. Then, during trade liberalization, we took on massive cost reduction to a degree that seemed impossible. Looking back on these battles to reduce cost since our company's founding, the struggle to reduce cost under the current strong yen can be considered another battle for survival. Although we are facing an extremely tough situation, it is not something we cannot overcome. I am renewing my determination and hope to keep moving forward with all of you.

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