Section 3. Promotion of Internal Reforms

Item 3. Expanding Reforms

Introducing the BR structure

In order to counter falling revenues resulting from the domestic recession and high yen that came with the collapse of Japan's bubble economy, various short-, medium- and long-term revenue-increasing projects were implemented in the early 1990s in every division and department of the company. However, there were many inter-departmental issues, and it became increasingly necessary to introduce an operational system common to the entire organization and revise existing business procedures. So in July 1993, Toyota introduced the so-called "business reform (BR) structure", whereby experienced personnel were strategically placed in administrative departments for a limited period of time to pave the way for future business reforms and more effective utilization of existing staff.

There were three categories of projects that fell under the BR structure: 1) measures to increase revenue in the immediate future and measures to counteract the high yen, 2) business and management system reforms, and 3) formulation of medium- to long-term policies and strategies. Topics put forward by each division were separated into three levels: company-wide, division-level, and topics applicable within a given division. The company-wide and division-level topics required approval from a meeting of senior managing directors and were positioned as "top down" topics. When the BR structure was first initiated, there were 12 company-wide topics and 61 division-level topics to be addressed.

Also, Toyota set a goal of reducing existing work processes by 30 percent, with the resulting surplus resources directed toward new or important tasks, and toward the promotion of reduced working hours. Approximately 20 percent of the personnel of entities targeted for work-process reduction were placed in BR positions, with the remaining 80 percent expected to carry out the existing work processes of their entity on their own. Another effort to improve efficiency in existing work processes was the "30 percent paperless" initiative, which was designed to show the work-processes reduction goal in terms of reductions in paper usage.

The BR structure was extended to the Engineering Group and Production Engineering Group in 1994, meaning that it covered all parts of the company except production itself. The initiative was extremely successful in improving the efficiency of existing work processes by first removing surplus personnel from existing entities. It also led to a clear awareness that it was possible to streamline supporting personnel, and to an understanding that the concept could be effectively applied to non-structure related areas as well, such as to the formulation of the long-term vision. The BR structure is a useful tool to dynamically improve business efficiency, and as such remains widely used within the company.

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