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Toyota’s IT Investment in Global Kaizen


Little has been published about Toyota’s IT investment. This may be one of the reasons why many consultants who practise Lean or TPS have mistaken that Toyota does not need IT. In fact Toyota has spent close to 10 billion USD in IT since the dawn of this century. Although Toyota tends to be secretive about its investment plan, more information can be found in Japanese.

According to magazine “Nikkei Information Strategy”[1], Toyota has spent 2 billion USD on IT by 2003 on what was called “Global Kaizen”. This investment was only the first step in the “10 billion dollar Kaikaku” effort that spanned across the global operation of 27 countries and more than 60 facilities. The following areas were identified by industrial expects as Toyota’s targets to leverage IT.

  1. Rolling out supplier Kanban for global purcruement
    At 2003, Toyota’s regional profit margins are Japan 9.2%, NA 4.6% and Europe 0.2%. Obviously, best-practices in Japan had not been able to rollout to other parts of the world. A key bottleneck was regional supplier relationship, which was especially important for high margin luxury vehicles that are made in small lots. Even with the same product, part numbers are created uniquely at each facility as a result of local Kaizen activities. Factory IT systems and CAD were largely in-house developed for each facility.  Therefore from a global enterprise perspective, there was no easy way to identify what parts are used at each facility or hence to substitute supply of parts from one facility to another. As a result, the rollout of Kanban system across regions was extremely difficult.
  2. Improving new product introduction
    During the product planning phase, it is important to be able to simulate weight, space occupied, cost and even level of safety based on combination of parts from the suppliers. For that purpose, Toyota has developed “V-Comm” (Virtual Communication) to simulate design and facilitate concurrent engineering for many years. Although the new product launch and prototyping lead time has been shortened, cost estimation has remained largely manual. During the course of 2004, Toyota has informed suppliers to submit CAD data of either CATIA or Pro/Engineer during parts delivery. Standardization on packaged instead of in-house built software was a drastic step for Toyota.
  3. Incorporating BTO (Dell model)
    Toyota has been trying to shorten order-to-deliver lead time to 1-2 weeks. This requires the capability to search in real time what are the work-in-progress vehicles in the assembly line and hence to assign customer specific options to be added in the down stream process. Toyota was trying to lay down the foundation for BTO capability especially at developing countries such as China where the sales network still have been under construction.
  4. Enhancing after-sales service
    After-sales service was identified to become a major growing revenue stream. A bottleneck to enhance after-sales service was the lack of traceability. For example, the capability to identify which lot of parts has gone to which vehicle and hence using that information for problem containment or recall had not been fully developed. Hence a huge amount of manual work was required to identify the affected vehicles in the event of recall. The plan was to extend traceability to after-sales running and maintenance record. As increasing weight being given to sustainability, there was also increasing need to extend traceability to the end of the vehicle’s service life.

Toyota’s 10 billion IT investment in operation

R&D Purchasing Production Logistics / Sales After-Sales
  • Packaged CAD
  • BOM standardization and PDM
  • Product planning DB
  • Production simulation /3D data

 

 

  • Electronic Kanban
  •  

  • Traceability
  • BTO production
  •  

  • Traceability
  • Order-taking system for BTO
  • Global purchasing for BTO
  •  

  • Embedded system
  • traceability
  • System built for 2 billion USD

    Other events that gave a glimpse of  Toyota’s IT activities include:

    1. Toyota was elected as the no. 2 in “IT power” by Nikkei BP Magazine in 2007. Toyota is the no.1 in “IT power” among all Japanese automaker. (way above second Honda and then Nissan).
    2. Toyota global CIO Amano-san was elected as CIO of the year by “Nikkei information strategy” at 2004. He mentioned that there was a time that Toyota believed IT is not of much value but that position has significantly changed due to globalization
    3. During an appearance at the CIO forum 2009, Toyota President Watanabe-san said that he firmly believes IT will save his company, the enterprise and the nation from the recent recession, which represents one in a hundred years opportunity to change and thrive.

    Some other useful source of information:

    http://www.shmula.com/205/information-technology-at-toyota

    http://www.gembapantarei.com/2006/10/lessons_from_toyotas_it_strategy.html

    http://www.gembapantarei.com/2006/06/how_toyota_uses_information_technology_it_for_kaizen.html

    http://www.gembapantarei.com/2006/07/how_toyota_used_it_to_cut_new_product_development_time_in_half.html
     


    [1] Nikkei Information Strategy, Oct issue 2003

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