Knowledge Management Practices at Toyota Motors
| Case Code: ITSY048
Case Length: 19 Pages
Pub Date: 2005
Teaching Note: Available
| Price: Rs.500
Themes: Information Technology
Abstract Case Intro 1 Case Intro 2 Excerpts
Toyota was set up in 1897, when Sakichi Toyoda (Sakichi) diversified into the handloom machinery business from his family’s traditional business of carpentry. He founded Toyoda Automatic Loom Works (TALW) in 1926 for manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any of the threads snapped. This concept of designing equipment to stop so that defects could be fixed immediately formed the basis of the Toyota
Production System (TPS) that went on to become a major factor in the company’s success.
In 1933, Sakichi established an automobile department within TALW and the first passenger car prototype was developed in 1935. After this the production of Model AA began and Toyota Motor Corporation was established in 1937. Kiichiro visited the Ford Motor Company in Detroit to study the US automotive industry. He saw that an average US worker’s production was nine times that of a Japanese worker. He realized that the productivity of the Japanese automobile industry had to be increased if it were to compete globally. Back in Japan, he customized the Ford production system to suit the Japanese market. He also devised a system wherein each process in the assembly line of production would produce only the number of parts needed at the next step on the production line, which made logistics management easier as material was procured as per the need. This system was referred to as Just-in-Time (JIT) within the Toyota Group.
JIT production was defined as ‘producing only necessary units in a necessary quantity at a necessary time resulting in decreased excess inventories and excess workforce, thereby increasing productivity.’ Kiichiro realized that relying solely on the central planning approach would not be feasible, and would make it very difficult to implement JIT in all the production processes for an automobile. Hence, TPS followed the production flow conversely. People working in one process went to the preceding one to withdraw the necessary units in the necessary quantities at the necessary time. This resulted in the preceding process producing only quantities of units to replace those that had been withdrawn......
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