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Toyota Production System – Toyota Emerges – Part 3

General Motors has come into play because they out innovated Ford. GM saw a weakness in Ford and that they did not produce cars in different colors. So GM took advantage of this weakness and started to produce cars in multiple colors thereby displacing Ford in many markets. Innovation helps businesses move past competitors.  This is a hallmark of the Toyota Production System.

The Toyota Motor Company was founded in 1937. Toyota started by using Craft Manufacturing techniques to build its earliest cars. Unfortunately for Toyota this was right before the war.  As the war was starting, Toyota was asked to build trucks to support the war effort. Toyota was getting off to a rocky start.

Toyota understood the advantages of innovation to gain a strong position for competing. Eight years before the company started Kiichiro Toyoda visited Ford’s Rouge plant in Detroit. In 1950 Kiichiro’s nephew, Eiji visited the same plant for three months.

WW II & The Toyota Production System Start

Toyota made little advancement during the war. After the war the Americans knew that it was important for Japan to move itself out of its defeated state. America did many things to promote this and one of those things was to promote unionism for Japanese workers. The Toyota union turned out to be one of the major factors in the development of the Toyota Production System.

In 1949, four years after the end of the war, Japan experienced an economic downturn which diminished Toyota’s production requirements. This led Toyota to lay off a significant portion of its workforce which resulted in significant strikes.  This was a seminal event for Toyota. Toyota negotiated with the union to end the strike, resulting in upper Toyota management, such as Kiichiro, to leave the company taking responsibility for failures at their level.  Toyota laid off a large portion of the workforce.

The union and Toyota then negotiated a contract that guaranteed lifetime employment for the remaining union employees. Unknown at the time, this significant event has led to an alignment between the employees and management. This leads to continually improving the Toyota Motor Company. The advantages gained here are a major underpinning of the Toyota Management System. Today employees and management are all driving together to the same goals.

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