Toyota's JIT Revolution

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Background Note Contd...

By 1952, Toyota made a turnaround and in 1953, the company appointed distributors in El Salvador and Saudi Arabia and started exports. Meanwhile, Taiichi Ohno (Ohno) took charge of the company. In 1957, Toyota entered the US market through its subsidiary, Toyota Motor Sales, USA. In 1959, the company began its first overseas production in Brazil and over the next few years, developed a vast network of overseas plants. Besides manufacturing, Toyota started a global network of design and Research and Development facilities covering the three major car markets of Japan, North America and Europe. By the early 1970s, Toyota's sales exceeded that of Chrysler and Volkswagen and its production was behind that of only General Motors (GM) and Ford. Toyota continued its efforts to make its production system more efficient and also developed flexible manufacturing systems. It also began to tap the markets in the Middle East and by 1974 the Toyota Corolla, (launched in 1965) became the largest selling car in the world. In 1984, Toyota entered into a joint venture with GM and established the New United Motor Manufacturing Inc. (NUMMI).

By the early 1990s, as Toyota expanded its overseas operations, the excessive capital spending affected its profit margins. Tatsuro Toyoda (Tatsuro), who took over as the company President in 1992, began to control costs by eliminating all unnecessary expenditure. In 1995, after Tatsuro resigned due to health reasons, Hiroshi Okuda (Okuda) became Toyota president. In 1996, Toyota consolidated its production in North American production units into the Cincinnati based Toyota Motor Manufacturing (North America).

In 1999, Okuda replaced chairman Shoichiro Toyoda and Fujio Cho (Cho) became the president. In the same year, Toyota listed its shares on both the New York and London stock exchanges. By the end of 2001, the company's net income had reached $5,447 million and net revenue reached $106,030 million (Refer Exhibit I for the company's financial performance over the years).

According to analysts, Toyota's success in both the local and global markets was mainly because of its state-of-the-art and well-planned operational strategies. The company had continuously focused on gaining a competitive advantage through implementation of innovative and path-breaking ideas on its production floors. TPS worked on the basic idea of maintaining a continuous flow of products in factories in order to flexibly adapt to demand changes. The most important feature of TPS was the way it linked all production activities to real dealer demand through implementation of Kanban, JIT and other quality measures that enabled Toyota to manufacture in low quantities.

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