Teamwork Overcomes a Crisis
released on March 2009
Since its establishment and right up to the present day, Toyota has always overcome the numerous challenges it has encountered. Toyota compiled what it learned through these actual experiences, both in good times and difficult times, in "The Toyota Way 2001."
One of Toyota's most difficult challenges was the unprecedented worldwide recession set off by the 1973 oil crisis. Compared to the previous period, Toyota Motor Company Ltd. (TMC) accounts for the fiscal term ending in May 1974* showed that sales were down by 14% and operating profits by 83%. Facing this harsh reality, a project team began to focus on building a system that generates profits even when the production rate is 80%. In September 1974, committee members who gathered from various divisions set a six-month cost improvement objective of 10,000 yen per car, starting with Toyota's top mass-produced car — the Corolla.
"The Prius is Toyota's response to the challenge of change," former Toyota Motor Corporation President Hiroshi Okuda said at the vehicle's media unveiling. "With the launch of the Prius and its successors, Toyota is determined to extend the horizons of technological innovation, meet society's needs and take the lead in the race to realize the car that encapsulates the dreams and issues of the next century."
After implementing changes in processes in divisions beyond manufacturing and in parts — even down to individual bolts, a goal achievement rate of 128% was accomplished. This defied the conventional common sense of focusing only on manufacturing improvements and brought about the groundbreaking concept to incorporate all divisions, including design and engineering, in the kaizen (continuous improvement) process. Thorough cost reviews were then conducted model by model for both passenger and commercial cars, and, by the end of the June-November 1974 fiscal term, the cost improvement effect reached 5 billion yen.
The scope of the improvement activities soon expanded further. Parts manufacturers were encouraged by Toyota to establish an 80% production rate as their purchasing objective and to aim for Toyota's Quality Performance Award, which was established in September 1969. Improvement themes were specially tailored to each supplier, and the factories proceeded to carry out the necessary changes.
In September 1977, TMC's then-Executive Vice President Shoichiro Toyoda (current Honorary Chairman), spoke to the companies that won the Toyota Quality Performance Award. "Our efforts for the Quality Performance Award to improve Toyota were enabled by all the companies working together as a team," he said. "By doing so, tangible and intangible merits, such as consensus among top executives and employees, started to appear and contributed greatly to the strengthening of the entire Toyota Group.
Toyoda's words are just as relevant today as they were back then. Under difficult conditions, it is as important as ever for all associates to form one team through mutual collaboration and work towards a stronger business organization.
- * At the time, TMC had two fiscal terms per year: June-November and December-May.