Toyota announces new manufacturing framework, part of cost reduction campaign

on Monday, April 9, 2012

Toyota announces new manufacturing framework, part of cost reduction campaignToyota officials said recently the company plans to shift its manufacturing in a cost reduction initiative.

The Japan-based automaker was significantly impacted by the natural disasters that struck the island nation in March 2011. Toyota officials were forced to overhaul supply chain management and strategic sourcing in the wake of the 9.0-magnitude earthquake and tsunami that devastated Japan, causing billions of dollars in damage to infrastructure and private firms.

Officials from the car giant said they plan to implement a new manufacturing framework that would make vehicle models more appealing and cut costs by more than 30 percent. Reuters reports the change in production techniques is indicative of the management style of Toyota chief executive Akio Toyoda. He said the carmaker produced unexciting cars in the past, but he asserted its new approach aims to produce new, innovative models.

"The feeling at the time was, 'If we build it, they will come,'" he said Monday. "Instead of developing what customers would want next, we were making cars that would rake in sales."

Under its new manufacturing framework, Toyota New Global Architecture (TNGA), Toyota plans to simultaneously develop multiple models. The shift in approach will help the carmaker increase the number of shared components among its vehicle models, a move that will increase efficiency. What's more, the decision will also help the automaker shift resources to other departments, according to Toyoda.

The automaker also added it would reduce the number of officials tasked with signing off on new car concepts. In the past, according to Toyota chief designer Tokuo Fukuichi, between 80 and 100 managers often had to approve the design of a new car.

"Toyota's problem was that it had too many filters," he said. "When you have that many people weighing in, you end up developing cars by eliminating the negatives, not by creating something positive, by taking risks."

Toyota faces increasing competition from domestic and foreign carmakers, but analysts said the new manufacturing framework could help fuel future sales and earnings growth. Global auto sales have risen at a torrid clip over the past year, and Toyota is striving to reclaim the market share it lost as it grappled with the effects of 2011's natural disasters.

Toyota noted it would begin TNGA with three front-wheel-drive vehicle platforms, according to the news provider.

http://www.nytimes.com/reuters/2012/04/09/business/09reuters-toyota.html

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