Submitted by: Submitted by najja
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Date Submitted: 04/22/2012 01:58 AM
Lower unit costs meant better productivity.
In 1958, Toyota’s productivity was 1.5 cars
per worker per year. In 1965, productivity
was up to 23 and in 1969 up to 39. GM’s
ratio in 1959 was 8.9 and 11.4 in 1969.
Sales impact on lower unit costs was
magnified by four production factors. First, a
high quality engineering staff led by Tyuichi
Nakagawa, who had designed the engine for
fighter planes in World War II.
Second, quality control circles were a
constant source of creative ideas for both
process and product improvements.
Third, a zero defect program was developed
with the objective of identifying rot causes of
less than satisfactory productions. As a
consequence, end-of-line defects fell to under
1%.
Finally, “kanban” – just in time supply –
kept inventory levels at a minimum. This
was achieved by locating suppliers in the
same industrial parks as the factories.
So holding the ground was facilitated by
moving rapidly along the experience curve.
There was also a second facilitator: having
strengths in key success factors. The
subcompact segment has four such factors:
fuel consumption; maneuverability; price;
and design.
Corona’s fuel consumption was less than the
Beetle’s and also lower than its indirect
competitors (Pinto, Vega, Falcon, Valiant,
Corvair). It decreased a further 30% in the
next ten years.
Maneuverability was high due to Corona’s
small size and the fact that it was the first
imported car to have automatic
transmission.
Price was another variable where Toyota
had advantage. As we have already seen, the
introductory price was lower than its nearer
competitors and decreased 20% over the next
decade until the Corolla was introduced at a
20% lower tag price. This gradual reduction
was enabled by experience effects and other
savings. The unit cost per car of marine
damage in 1966 was 18 dollars per car; by
1967 this had diminished to 6 dollars; and a
few years later it was 3 dollars.
Maintenance costs...