A Company to Admire

By the end of 2007, Toyota was the dominant automobile company in the world. Far more profitable than its major American competitors, Toyota had been continuously profitable for almost 50 years, a record that rivaled that of any global 1000 firm and was unheard of in manufacturing industries.

Toyota's record for building quality products and achieving high levels of customer satisfaction drove its growth and profitability. Its customer loyalty was the best in the industry.

Toyota has changed the way a large portion of the world thinks about quality and how to continuously improve any process. Toyota set new standards for operational excellence by revolutionizing manufacturing, process engineering, and quality.

These standards have become the goal for companies in many industries, although few companies implement these concepts to the extent that Toyota has. Companies from various business sectors spend billions of dollars to understand, learn from, and replicate the Toyota model.

To fully understand what happened at Toyota from 2008-2010, it is critical to first study Toyota's history. Toyota was originally a Japanese manufacturer of looms, which started in the 1800s.

In the early 1930s, the company expanded into other sectors of manufacturing. By 1937, Toyota's automobile manufacturing division had already become the center of Toyota's business.

During the start-up of the automobile manufacturing business, company leaders laid out an operating philosophy and introduced new concepts about quality and inventory management, including processes to eliminate mistakes and implement just-in-time inventory. The company realized that, to maintain a commitment to catching and fixing problems and operating inventory with a just-in-time approach, it required a systematic process to solving problems throughout the company.

Through the years this problem-solving process evolved to today's version, called the Toyota Business Practices, which entails the following steps:

Plan
* The process begins with a statement of the problem, including the gap between the actual and ideal conditions.
* This gap is then broken down into the most important problems that can be acted upon.
* These specific sub-problems are then analyzed by asking "why?" until the root cause is found.
* Alternative solutions and countermeasures are then identified and evaluated.
* The best solution is chosen, based on what is currently known.

Do
* The chosen solution is implemented on a trial basis.

Check
* The results and impact of the trial implementation are monitored.

Act
* Adjustments are made based on the results, the new processes are standardized and disseminated throughout the organization with further adjustments being made until the gap is eliminated and the next challenge identified.


The Toyota Business Practices (TBP) broadly applies the problem-solving philosophy to the entire enterprise. Toyota believes that this problem-solving process is essential to leadership and requires all of its leaders to become masters of the process.

As demonstrated by its remarkably consistent growth and profitability, Toyota has built a culture that constantly renews its commitment to excellence and to its core principles, instilling those principles and passion into each new generation of employees and leaders. The combination of production processes, TBP, and its culture (collectively known as The Toyota Way) became the competitive advantage that allowed Toyota to become a successful manufacturer in Asia and eventually in the U.S.

This article is based on the book "Toyota Under Fire." The book summary is available online at Business Book Summaries.