What is Toyota's competitive advantage

Toyota - pioneer in lean manufacturing

Although Toyota is considered a pioneer in lean manufacturing, the inventors of flexible production systems actually had something else in mind: They wanted to copy “Fordism”.

In the 1920s and 30s, Ford's production methods were considered absolutely worth emulating in the Japanese automotive industry, as US manufacturers were able to produce affordable vehicles for the masses. Since Japan did not have a significant automotive industry at that time, both Ford and General Motors had set up subsidiaries in Japan to meet the increasing demand for cars there and to be able to offer prices to more and more customers through the cost advantages of mass production could afford.

When a law was passed in Japan in 1936 to protect domestic manufacturers, according to which companies with an annual production of more than 3,000 vehicles were not allowed to increase production any further, American companies withdrew more and more from the Japanese market. The deterioration in American-Japanese relations and the rise in the cost of importing parts due to the devaluation of the yen also contributed to the fact that production in Japan was economically uninteresting for American companies. They eventually gave up the Japanese market.


The hour of birth of just-in-time production

Toyota now saw the opportunity to produce affordable cars, following the example of American manufacturers. However, there was a lack of capital and space for new, large systems and the provision of large stocks of materials and components. The expensive material had to move quickly through the value chain. The just-in-time idea was born: Toyota developed a system for synchronizing processes and continuously optimizing them with regard to quality, lead time and resources. This production system gave the Japanese automakers a clear competitive advantage over the US manufacturers in the late 1950s.

The fact that Toyota was doing something different than the other automobile manufacturers only became clear when the framework conditions changed, for example as a result of the development from a seller's to a buyer's market or when the oil crisis hit the rest of the automotive industry. Some researchers set out to discover the secret behind Toyota's success. It was primarily a study by the Massachusetts Institute of Technology (MIT) that identified the methods used at Toyota and assigned them the term “Lean Production”.

Since then, the application of the lean concept has not only proven itself in industry, but is also used in all other service creation processes. The focus of Lean is not the cost-oriented optimization of individual sub-areas, but the optimization of the entire process (value stream), especially with a view to the factors of time and quality. This automatically results in cost reductions, since less storage, transport and reworking have to be carried out across the entire value chain.

When it comes to lean thinking, the satisfaction and independent work of employees also play a major role. Lean production depends on the know-how of those who operate the machines and plan processes. They are the experts for further improvements. Flexible systems make it easier to identify and correct errors, you can work in a customer-oriented manner and react quickly to changed conditions. The idea of ​​flexible working is therefore advantageous for fluctuations of any kind. That is why it is important that skilled workers are highly qualified and that their full potential is used instead of being trained to be specialists in only one specific task.

We would be happy to support you in identifying and leveraging unused, process-related potential across the entire value chain of your company.