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

Item 2. Comprehensive Cost Reduction Activities

Company-wide initiatives

The emergency measures in response to yen appreciation spread throughout the company. The Purchasing Group further strengthened its value analysis (VA) and value engineering (VE) activities by closely working with suppliers, and instituted comprehensive cost planning activities for each vehicle model beginning in the autumn of 1986. Furthermore, by the end of that year, TMC established the R&D Expense Reduction Committee and implemented various measures such as cooperating with suppliers to use the same equipment for both prototyping and mass production. Around the same time, TMC also placed into operation its new material system related to the procurement of spare parts for equipment, materials for equipment, and tools and computerized the work of issuing purchase orders and picking processes, thereby reducing manually created reports and achieving "Paperless 50".

The Production Group also strengthened its cost reduction activities related to materials. For example, spare parts, such as backup motors and pumps to be used in the event production equipment broke down, had previously been stored separately at individual plants. By switching these spare parts to centralized inventory at Honsha Plant beginning in 1987, the Production Group was able to significantly reduce the inventory of such items and the associated cost. Additionally, based on a suggestion by Vice President Kaneyoshi Kusunoki who was responsible for the Production Group, the Production Group tried to again ensure thorough implementation at each plant of the Toyota Production System (TPS), which was based on tackling cost reduction more stringently through the elimination of muda (wasteful practices). Specifically, TMC introduced the TPS Promoter System into all five vehicle assembly plants in 1987. As a result, a structural change was made putting each plant in charge of activities that used to be driven by the Operations Management Consulting Department, such as thorough TPS implementation and training. A TPS Promoter was positioned as the most important staff member reporting to the plant general manager. At the same time, a TPS Promoter liaison council was also established at each plant for promoting exchanges of improvement ideas among the plants, as well as the evolution and company-wide implementation of TPS.

The Production Engineering Group also worked on process improvement and cost reduction by developing and introducing new technologies and new processing methods. In the stamping process, the Production Engineering Group reduced the number of parts necessary through parts integration and shape modification, developed better die structures, and devised innovative stamping methods. For example, a process that used to require five steps was changed to a process that needed only four, reducing both the processing time and die expenses. In the welding process, a space-saving welding robot developed in 1989 made it possible to position twice the number of robots in each process than previously, thus halving the length of the added-spot-welds line. TMC also installed these space-saving welding robots in its flexible body lines, already in common use, achieving further evolution of the welding process and cost reduction.

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