3/1/2005 | 30 MINUTE READ

Oh, What A Company!

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Toyota & the Art of Continuous Improvement. How the best manufacturer in the industry just keeps getting better.


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Taichi Ohno came to the United States from Japan in 1956. Ohno was with Toyota Motor Corp. at the time. The company was facing post-war issues related to manufacturing. Specifically, there was a concern with inventory levels, with the cost associated with carrying inventory. They were essentially unaffordable. And so, as the story has it, Ohno, visiting an American supermarket, realized a vision of pull production. This became codified as an essential element of what was to become known as the Toyota Production System (TPS)1. This becoming was a lot of work. Relentless work. Work that was a radical change of the way things were done. Tremendous transformation (kaikaku). Production was to be based on demand. Pull, not pushing it out in the market. Processes were to be based on doing things just-in-time. If there is demand for a product, then it is made. Products aren't made in an anticipatory mode. That would be a form of waste. Of muda.2

Ohno was legendary for his zeal. His commitment. His dedication to process improvement. His asking of "why" five times. 


Try it: Take a situation. Ask someone who is responsible for it "Why?" Once they answer, "Why? again. And again. And again. Once more. The person whom you question either ought to like or respect you, because otherwise they're going to be annoyed.


When little children do this, it is cute. Initially. But imagine how it would be if there was a man in your company who was more relentless in pursuing this question than Javert was in getting his man in Les Miserables. Sometimes there isn't a whole lot of joy in improving. Having improved, however...

Another aspect of what Ohno brought to the way of work at Toyota is kaizen. Continuous improvement. In an ever-changing world, the status quo quickly becomes insufficient. In an environment where the competitors are always trying to beat you, there is no "best," only "better." So Ohno recognized that it is important to continue to make changes. Adjustments. To find a better way. Always. Sure, work is "standardized" in TPS. Which means that there is a set procedure. A recipe, in effect. It is step-by-step such that it is simple for someone to learn. When you work on a team—and, yes, teamwork is another aspect of what has become known as "lean manufacturing"—it is a good thing to be able to fill in for one of your team members. Or simply to switch tasks. Working on an assembly line can be a mind-numbing task as it is pure repetition for hour after hour. So changing from one job to another can be beneficial. It aids in not only being able to build better products (i.e., a fresher person at the task) but also to identify problems (i.e., once again, the fresher eyes). But standardized work notwithstanding, there can always be improvements. Kaizen. (The importance of people in the process is fundamental to another so-called pillar of TPS, jidoka.3)

All of this backstory on Ohno is to bring us up to date. To a Toyota Motor Corporation that has become perhaps the most significant auto manufacturer on the planet. . .which is a vast difference than the state of affairs when Ohno came to America in 19564. Today, in the U.S. there is Toyota Motor Manufacturing, Kentucky, or the original "Georgetown Plant," where the Avalon, Camry, Solara, and engines are built. There's Toyota Motor Manufacturing, Indiana, where the company produces its big trucks—the Tundra and Sequoia—as well as the Sienna minivan. There's Toyota Motor Manufacturing, West Virginia and one in Alabama, both engine plants. In 2006, there will be a new truck plant, building the Tundra, in Texas. There is Bodine Aluminum, which produces aluminum castings, and TABC, which produces truck beds, catalytic converters, stamped parts, and engines. There is the 50/50 joint venture with General Motors in California, New United Motor Manufacturing, where both cars and trucks are built. In North America (including its operations in Mexico and Canada), in FY 2004 it produced more than a million vehicles.5 On a global basis, it is a company that produces some 6.7-million vehicles a year. . .and rising.

Which brings us to Fujio Cho. The current president of Toyota Motor Corporation. A man who started at Toyota in 1960 after being graduated from the Faculty of Law at the University of Tokyo. Who, in 1974 became a manager in the production control division...and who learned the Toyota Production System from Taichi Ohno. In 1987, he was sent to the Georgetown Plant as executive vice president; he became president of Toyota Motor Manufacturing, U.S.A. in 1988. It was back to Japan in 1994. In 1999, he gained his present position.

As a man trained by Ohno, one who spent several years in manufacturing, Cho is an automotive executive who has a particularly clear understanding of the demands of the industry. . .and of the relentless demands of continuous improvement.

In an interview, Cho said that while some observers think that the auto industry is "an old, mature industry," so far as he is concerned, "Our industry still has great opportunities for many years to come." These opportunities, however, are predicated not on doing the same thing that has been done in the past. (A kaizen mindset would invalidate that notion.) Rather, Cho said that it is necessary to look for ways "to reinvent ourselves." He said that he believes that the industry is "at an important crossroads with our customers." The nub of the issue is this: while people love cars for the freedom, comfort and safety they provide when it comes to transportation, "Cars," Cho observed, "consume large amounts of energy and harm the environment." That sort of frankness is not the sort of thing ordinarily associated with the man running one of the biggest producers of vehicles. Yet it is undoubtedly the kind of forthright thinking characteristic of someone schooled in the ways of Ohno. "Our industry is viewed as part of the problem. We need to change that." While some people might think that the obvious answer to that question would be fewer vehicles, the obvious isn't always the appropriate. So far as Toyota is concerned, the plan is to "balance our growth with environmental responsibility," Cho stated. He described what must be done as "a daunting task." So was developing one-piece flow in the face of prevailing mass-manufacturing methods.

The most obvious thing that Toyota is doing is in the arena of hybrids. The amazingly successful Prius, for example, is having its U.S.-destined production doubled to 100,000 units per year in order to take care of the long waiting times that have been experienced by people interested in the technology. Moreover, rather than just providing a compact with the Hybrid Synergy Drive, Toyota is modifying and scaling the technology for other applications, including the Lexus 400h and Toyota Highlander HV SUVs. Now there are sizable SUVs with both performance and environmental efficiency. And the possibility of a Camry hybrid seems like a good bet. Toyota is licensing its technology to other vehicle manufacturers which (1) helps provide a return on its investment and (2) increases the number of applications, thereby helping make the technology more of a standard than it otherwise would be if it was a Toyota-only implementation.

Yet there is still the growth side of the equation along with the environmental responsibility. Even though the $800-million investment near San Antonio that will result in a plant capable of producing approximately 150,000 Tundra pickups won't be launched until late in 2006, Cho admitted that they are assessing the potential of building still another assembly plant in North America. He said that when it comes to creating strategy, the approach is not one wherein a numeric target is selected, that "not too much consideration [is given] to volume or sales as we consider strategy."

Here is the difference between the kind of thinking that is probably responsible for the growth of Toyota in the past several decades, one that goes straight back to Ohno: "When we grow volume, we listen to the voice of the customer," Cho said. The voice of the customer represents pull, a fundamental of the Toyota Production System.

  1. Although it began to take form after Ohno's return, it wasn't known as TPS until 1970.
  2. There are seven types of waste that Ohno identified: overproduction, which JIT takes care of; waiting, which means that value isn't being added; transporting, moving something doesn't add value, either; over processing, or doing something that the customer doesn't value; inventory, which is expensive waste that can hide defects; unnecessary motion, wherein workers travel within their work areas farther than is really necessary; defects, which are essentially, well, waste.
  3. Jidoka is sometimes termed "autonomation." Which looks like "automation" with a slight misspelling. Automation is part of it. The term "automation" is credited to Del Harder of the Ford Motor Co. circa 1947. Not only did Ohno visit American grocery stores, but he also visited American manufacturing facilities, including Ford. In fact, Ohno was a close reader of Today and Tomorrow by Henry Ford (1926). Anyway, jidoka means that there is a human element to the process, even if the process is automated. Who better to know whether something is going wrong than a person? Even though there are sensors that can shut things off or simply signal an adjustment is required, person involvement is undoubtedly essential for improvements. For quality. A phrase that's also used to define jidoka: "automation with a human touch."
  4. Toyota Motor Corp. was established in 1937. In the ‘50s it was under serious financial constraints.
  5. "Back when I was a student at Wisconsin in 1963, Toyota sold a total of 2,194 vehicles in North America—and all of those vehicles were imported from Japan. Today, it takes us about 6 hours to produce that number of vehicles in our North American plants."—Hideaki Otaka, president and CEO, Toyota Motor North America, in a speech at the San Antonio Chamber of Commerce Economic Outlook Conference, January 12, 2005.





Avalon Ten Years After: Introducing the '05

...Yes the picture changing Every moment And your destination You don't know it Avalon. . . .
—Brian Ferry, "Avalon" (‘82)

The Avalon was introduced as the Toyota flagship sedan for model year '95. The automotive scene is a whole lot different today. Changes are rife. And one of the biggest changes is what the Avalon has become.

OK. Maybe it is a bit reaching to open up a piece on the ‘05 Toyota Avalon with a lyric from Roxy Music, but in some ways, it is eminently suitable. The vehicle—introduced in model year 1995 as a replacement for the Cressida, which had been eliminated from the Toyota lineup in ‘91—has always been a smooth car, and a glamorous one. For a Toyota. It was always Brian Ferry in a coat and tie as other cars from mainstream manufacturers that were aimed at the top of their categories were something that seemed, well, out of time. Like singers from the ‘50s trying to continue to connect. The initial Avalon was touted as being Toyota's Buick—but an up-to-date version, one not slumping on its laurels. Consider: Here was a car that boasted an optional 50/50 split powered front bench seat. That's what I'm talking about: a car for the demographic for whom that mattered.

The Camry had been doing the heavy lifting between the end of the Cressida and the launch of the Avalon. But with Avalon, Camry was free to be that mass-market car with few pretensions. Avalon was about more. When someone wasn't in the Lexus league, Avalon was the destination. While other vehicles in the manufacturer's lineup were more global in scope, the Avalon was largely designed—inside and out—at Toyota facilities in Michigan, Arizona, and California. What's more, the Avalon was the first vehicle built exclusively in the U.S., at the Toyota facility in Georgetown, from whence the Camry hails.

A face lift was given to the car in model year ‘97. Chrome in the front and rear. A revised grille. New headlamps. The hint of a spoiler. New lights front and back. Think: minor plastic surgery.

The second generation rolled out of Georgetown for model year ‘00. The shape was much more taut, far less dowdy. The engine became more powerful—210 hp from the all-aluminum V6, compared with 192 hp of the previous generation. Inside there was an array of airbags and other improvements. In ‘03 there was another face lift, and an increase in the number of amenities that were either standard (e.g., electrochromic mirror) or optional (DVD-based navi).

Why New Cars Aren't Like Rock Bands When bands re-emerge for a fresh start, they tend to be, well, flabby. The 2005 Avalon is unlike its predecessors inasmuch as while it might bring another car to mind, it's BMW, not Buick. This car is still at the top of the Toyota lineup. If the re-touring bands are easily tired, the ‘05 Avalon is wired.

Why New Cars Are Like Rock Bands Randy Stephens, executive program manager for Development and Operations, Toyota Technical Center USA (TTC; Ann Arbor): "About a year after the launch of the current [second generation] Avalon, we began a series of meetings with the Toyota dealer council. The purpose was to find out what dealers in all 12 regions of the country"—and note well that the Avalon has become, in the words of Shigeki Terashi, executive chief engineer, TTC, "the ‘most American' of any Toyota vehicle on the market"—"liked and didn't like about the current Avalon and how they would change the next one. This process and its timing are standard procedure. What we heard was fairly predictable, and can be distilled down to a simple refrain of:

  • Bigger car
  • Bigger engine
  • And bigger differentiation with Camry."

Yes, the vehicle is bigger. As in a wheelbase that's 111 in. long, up 3.9 in. from the previous generation. The overall length is upped 5.3 in., to 197.2 in. The overall width gains 1.2 in., to 72.8 in. The car is 58 in. high, about an inch higher than the previous model.

And it weighs more, too. The previous generation Avalon came in two trim levels: XL and XLS. Each was available with either bucket or bench seats. With the ‘05 they've said goodbye to the benches, but they've added two trim levels, Touring and Limited. So, to make a comparison, the ‘04 XL with buckets has a curb weight of 3,417 lb; the ‘05 XL has a curb weight of 3,490. The ‘04 XLS with buckets: 3,439; the ‘05: 3,560 lb. The ‘04 XLS with bucket seats is actually the heaviest version available. For ‘05, the heaviest is the Limited, which tips the scale at 3,600 lb.

But to be fair, there's a lot more to the ‘05. Take the Limited's front buckets. They are powered and have two memory settings. Heated. And there is an internal ventilation system, which has separate fans for the seat bottom and the backrest, ventilation channels in the foam, perforations in the leather, and inlet ducts under each seat.

And while in the seating vicinity, it should be noted that the Avalon has standard two-row side curtain airbags, larger side airbags, and for the driver, a standard knee airbag (this last being a U.S. first for Toyota).

But then there is the simple fact that no matter how you look at it, the ‘05 is a bigger car that offers more amenities. Not only is there more stuff, but the car performs well. A big reason is found under the hood. It's no repeat act.


Better Performance

That's something that you don't always get. But consider. The Avalon is fitted with an all-new high-output 3.5-liter 24-valve V6. "All new" means this is the first application in any Toyota (the engine is a variant of the one developed for the current generation 4Runner, Tacoma and Tundra trucks—which have a North American orientation, as well). It has an aluminum block and aluminum heads; there are cast-in-place iron cylinder liners. Although it is 100 lb. lighter (yes, now we're talking mass reduction) than the previous Avalon engine, it produces 280 hp @ 6,200 rpm; 260 lb-ft of torque @ 4,700 rpm. (The ‘04: 210 hp @ 5,800 rpm; 220 lb-ft of torque @ 4,400 rpm.) This is a vastly more sophisticated engine. All Toyota engines now have VVT-i, or variable valve timing with intelligence. The Avalon's engine is Toyota's first with dual VVT-i. Not only is the timing of intake cam varied, but the exhaust cam, as well. This permits the enhancement of duration, which is a contributor to horsepower.

There is a new cylinder head design. Says Paul Williamsen, Curriculum Development manager, University of Toyota (Torrance, CA): "In some ways, it's kind of a throw back for us." What!! A throwback!?! Ah, but Williamsen continues, "It's the first engine we've had in America in about 20 years that does not have direct bucket-actuated valves. Instead, the valves are actuated by roller-follower rocker arms." Why the retro approach? "It allows us to have a hydraulic lash adjuster," he says. They've never had one on any vehicles in North America. It reduces maintenance. "More importantly, there's the roller bearing assembly, the roller-follower between the cam and the rocker arm. A conventional cam in a bucket lifter cylinder head is going to press down on a large flat lifter to operate the valve. That affects the grind of the cam—you have to have a very smooth shape. It's also interesting to think that this is one of the few areas of an engine that's designed to have direct metal-to-metal contact under substantial pressure. We've obviously not had any issues with that metal-to-metal contact, we can handle that through lubrication." The roller rocker allows them to have a more-aggressive cam grind, which allows the valves to open further, faster and holds them open longer.

Active engine mounts are used on the Avalon to absorb engine vibrations, particularly at idle: there is a computer-controlled system that looks at the engine vibration at idle and moves the mount exactly to counteract the vibration. And a number of other things to help improve performance, from a solid-state fan control that is far more linear in performance than conventional two- or three-stage fans to an acoustically decoupled alternator pulley, that uses a one-way clutch and can slip to absorb spikes in alternator torque drag (there is lower serpentine belt tension that results in lower noise and substantially reduced side loads on all of the bearings for things like the water pump and air conditioning compressor, which means reduced maintenance).


When Is a Platform Not A Platform?

The Avalon is based on the same platform as the Camry, right? Well, sort of. As Randy Stephens explains, if you consider the three boxes of the vehicle, things are significantly different. As in "all new." The engine bay needed to be increased in size to handle the new 3.5-liter engine and the five-speed automatic (first introduced in the current generation Sienna—see: http://www.autofieldguide.com/articles/030302.html). The passenger compartment was redesigned not only as a result of the increased wheelbase, but in order to engineer the floor so that it would be flat, no tunnel. Finally, the Avalon features dual exhausts, so the rear box had to be redesigned to accommodate them. What's more, they decided to improve the size of the rear crumple zone.

So essentially the platform has been made longer and wider, and with increased torsional rigidity. The same platform? Yes—but different.


How American Is It?

Stephens: "The all-new third generation Avalon was styled at our Calty design studio in Newport Beach, California, and will be built at our Georgetown, Kentucky, production facility. And for the first time ever, its engineering development was the responsibility for the U.S.-based Toyota Technical Center."


How Efficiency Translates Into Value

Even though it is a bigger car with more amenities and nice touches and a much bigger engine under the hood than the car it replaces, the base price for the Avalon is $26,350. That's just $205 more than the MSRP of the previous-generation model. Clearly, kaizen has benefits for consumers.


Why Feedback Matters

On recent Toyota vehicles, such as the Prius and the Sienna, the gearshift has been mounted on the dash. So, as Toyota is well known for commonality in its processes, it would seem almost inevitable that with the new Avalon the gearshift would be mounted on the dash, not in the center console (remember: there are bucket seats now; the age of the bench seats, 50/50 split powered or otherwise, are in the past). Stephens says, "With only a few weeks to go before final designs were confirmed we decided to go to the source and ask owners of both Avalons and competitive full-size sedans what they thought of the two designs." The TTC engineers built full interior seat bucks. "The results weren't even close. Not only did respondents overwhelmingly prefer the floor shifter, 37% said they would be deterred from buying a vehicle with a dash-mount shifter." That's not what you want to hear, that customers would be thoroughly off-put by something you might engineer into a new model. Even Toyota would have a tough time doing a fix of something like that after the fact.


How Many?

Toyota plans to produce and sell 85,000 Avalons per year. Some of these will be Camry owners that are moving up. Some will be owners of domestic vehicles. According to Don Esmond, senior vice president and senior manager, Toyota Div., "Avalon is Toyota's best domestic-conquest vehicle. More than half—51.6%—of all Avalon sales come from buyers replacing a domestic vehicle."

[Let the other shoe drop]

"Not surprisingly, Buicks make up three of the top five."





An Unusual Approach to Product Development

"ZERONIZE AND MAXIMIZE." That is, according to Akihiko Saito, executive vice president, Toyota Motor Corp., the fundamental approach that Toyota is taking to product development. Operating under the banner of "Today for Tomorrow," which Saito says is about anticipating the future, "zeronize and maximize" is simple to understand if difficult to execute.

The zero part refers to having no negative impact. That is, they are working toward not only no bad effects on the environment from their vehicles, but are also working on the technologies that can greatly reduce, if not essentially eliminate, injuries and fatalities associated with the vehicles.

As for the "maximize," Saito says, "Vehicles must be fun to drive, exciting, and offer convenience." So the seemingly contradictory approach is one that Toyota engineers are deploying in order to create products that have low impact and high enjoyment.





The Difference

What is it that makes Toyota different from other vehicle manufacturers? Having worked for Ford Motor for 18 years before joining New United Motor Manufacturing, Inc., (NUMMI) in April 1984, the year the joint venture between General Motors and Toyota was established in Fremont, CA, Gary L. Convis has a pretty good perspective. Convis started at NUMMI as plant general manager responsible for manufacturing operations and personnel, became vice president of manufacturing in 1994, and became executive vice president in 1997. The nature of the joint venture is one wherein Toyota has the manufacturing lead.*

Convis recalls that at one point in his career, there was a problem with a conveyor in the plant. It would surge. Someone pulled the andon cord. Convis was eventually called to the floor to see the situation first-hand. He recognized that it presented a safety problem. So he shut it down. He shut the plant down. The plant was shut down, he recalls, for about two hours before the problem could be resolved.

He was called in to talk with his superior after the fact. Had this been a traditional domestic manufacturing operation, he would have probably had part of his anatomy handed to him, tout suite. But instead he was congratulated for his action.

A point is that andon cords are meant to be pulled in Toyota plants. When things go wrong—and they will—then there needs to be a root-cause analysis made and countermeasures taken so that the problem won't occur again. This is not a "fix" per se. It is a functional improvement.

Convis is now president of Toyota Motor Manufacturing, Kentucky (think: Georgetown Plant). He's also senior vice president of Toyota Motor North America and a managing officer of Toyota Motor Corp. For all that, he says that he still relishes the opportunity to visit Toyota plants in Japan so that he can learn new things. He describes it as being invigorating. Convis suggests that he's not the only person in Toyota who feels that way about manufacturing.

What is it that makes Toyota different from other vehicle manufacturers? Perhaps it has something to do with the fact that the people who run it recognize it as being a manufacturing company.

*Just over 20 years later, NUMMI is still running. There are approximately 5,700 people at the plant who are responsible for producing some 390,000 cars and trucks a year. The vehicles built there are the Pontiac Vibe, Toyota Voltz (like the Vibe), Toyota Corolla, and Toyota Tacoma pickup.





How It's Done

While there is an array of books available from Productivity Press (www.productivitypress.com) about the Toyota Production System (TPS), texts that include the writings and observations of people like Taiichi Ohno and Shigeo Shingo, the men who are fundamentally responsible for TPS, Jeff Liker's The Toyota Way is the most useful book yet written for those who are interested in a clear and comprehensive understanding of what Toyota does and how it does it. Liker, a respected academician, researcher, and consultant, is clear-eyed and frank in his understanding that while there are plenty of people at companies who think or believe that they are operating in a lean production environment, but a small fraction actually are. As he writes, "What percent of companies outside of Toyota and their close knit group of suppliers get an A or even a B+ on lean? I cannot say precisely but it is far less than 1%." TPS is not for those who are looking for the fast solution. While implementing any single element of TPS will undoubtedly bring some rather startling results in comparatively short order, it is only through the continuous, persistent application of the principles that fundamental change is realized.

To be sure, reading a book is not going to cause some sort of thoroughgoing lean transformation to occur in your organization. But what this book can do is provide a breakdown of what it takes to become lean such that it is possible for a comparison to be made between what Toyota does and what is happening (or not) within your organization.


  1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
  2. Base your management decisions on a long-term philosophy, even at the expensive of short-term financial goals.
  3. Create continuous process flow to bring problems to the surface.
  4. Use "pull" systems to avoid overproduction.
  5. Level out the workload (heijunka). (Work like the tortoise, not the hare.)
  6. Build a culture of stopping to fix problems, to get quality right the first time.
  7. Standardized tasks are the foundation for continuous improvement and employee empowerment.
  8. Use visual control so no problems are hidden.
  9. Use only reliable, thoroughly tested technology that serves your people and processes.
  10. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
  11. Develop exceptional people and teams who follow your company's philosophy.
  12. Respect your extended network of partners and suppliers by challenging them and helping them improve.
  13. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).
  14. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.
  15. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

I suspect that there aren't too many managers who can get past 1.



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