According to a research survey conducted by the Morning Consult back in 2018, about sixty-seven percent of the two thousand American adults surveyed chose cars as their favorite transportation choice when it comes to travel (Olya This is America’s favorite way to travel). So it is no surprise that American consumers expect their vehicles to be as dependable as possible. In the United States, Japanese automakers have a stellar reputation among American consumers for consistently making reliable and practical vehicles. With that said, let’s take an in-depth analysis of one of the most iconic symbols of quality in the automotive industry, Toyota. And how they won over the American consumers to become one of the most popular imported brands in the U.S (Siu Top 10 Most Popular Import Cars in the US).

To better explain and understand the successes of modern-day Toyota, we will first have to understand its core principles of business. Toyota’s first principle is to maintain a happier workforce. As insignificant as it sounds, maintaining a more satisfied workforce is crucial to any successful company. Toyota is not an exemption to this rule. After all, it is highly unrealistic to expect a group of resentful employees to build the best quality cars. Toyota employees are always encouraged and often incentivized to raise concerns in their areas of interest. In addition to that, Toyota also provides a very comprehensive and robust benefits program. In the peer-reviewed Journal of Managerial Psychology, the authors stated that Toyota leadership teams are encouraged to try their best to commodate and extend all necessary assistance to its assembly plant workers, including providing them with free day-care support. The authors further noted that Japanese culture stresses the importance of treating employees as part of the family. The managers are also encouraged to be the employees’ listeners and comforters for work-related and personal problems (Thomas Li-Ping Tang; Kim, Jwa K; O’Donald, Debra Ann). However, this is a trait that most American automakers don’t exhibit. Although their corporate employees may receive competitive benefits, this usually does not extend or trickle down to their general labor workforce in the assembly plant. An excellent example of such an American automaker would be General Motors. It has been the target of numerous massive assembly plant worker strikes tracing back to the mid-1930s, with the most recent one only dating back two years ago (Fordham 5 major UAW strikes in GM history).

Toyota’s second business principle is its forward-thinking mentality. They often plan their growth strategies years or even decades ahead. As a result, they are less interested in short-term profits but focuses primarily on retaining its brand image of reliability and its existing customer base. Therefore, they strictly prioritize practicality over technological advancements (Donut Media Toyota’s Reliability Secrets REVEALED, 00:08:05 – 00:08:12). This type of mentality is often in stark contrast to those of the American motor companies. In one of his videos, Scotty Kilmer, a mechanic with fifty-four years of experience and a famous YouTube personality, stated that American companies are more inclined to focus on short-term profits to beautify their financial reports. On the other hand, Japanese companies tend to plan and act on issues that will benefit them in their long-term goals (Kilmer Why Toyota Makes the Most Reliable Cars, Japanese vs American Culture, 00:01:00 – 00:01:33). Unfortunately, to meet such a stringent short-term profit goal for American companies, they often use cost-saving measures such as cutting wages for their workers or using lower quality parts in their assembly line. Which ultimately results in substandard quality products.

Toyota’s last business principle is its customer-centric focus on problem-solving and their willingness to go the extra mile to learn each market area they serve. Toyota takes pride in their extensive testing to ensure that all of their vehicles appropriately adapt to each market’s unique driving conditions and driver behaviors. For example, in one of Scotty Kilmer’s YouTube videos, he claims that Toyota had once gone as far as measuring and comparing different types of potholes in Brazil and Thailand. In that experiment, Toyota concluded that the potholes in Brazil are about twenty percent larger than those found in Thailand. Hence, based on this finding, they adjusted their Toyota Hilux pickup truck’s inner rims to be five millimeters thicker than the Thailand-specific models for their Brazilian market. He also noted another unique experiment Toyota conducted for their Vietnam market. In Vietnam’s capital Hanoi, the majority of the drivers may not consider the curb or sidewalk as an obstacle to avoid when driving towards it. Therefore, for that market, Toyota made sure their vehicles are equipped with tires with a thicker wall to preserve the longevity of the tires (Kilmer Here’s Why Toyota Makes the Best Cars in the world, 00:01:50 – 00:03:11). As a result of Toyota’s unique and extensive market research and their high degree of attention to detail, they have successfully and meticulously designed their vehicles to outlast their competitions.

Now that we understand Toyota’s main business concepts, it is finally time to explore their incredible and revolutionary manufacturing processes. The first of which is called the Jidoka principle. Jidoka directly translates to Autonomation; putting it in layman’s terms, means automation with a human touch (Roser What exactly Is Jidoka?). It is a very similar manufacturing process to that of the American mass-production methods. However, what is different for Toyota is that they acknowledge that engineers are also humans. And they are just as prone to mistakes as the assembly line workers. Therefore, whenever Toyota develops a new car model, they will ask the engineers to be on the assembly line with the assemblers to build this new model. This process ensures that if there is a design flaw, they will be right there and right on the spot to catch it. After all, it is a way easier and cost-effective way to correct an issue rather than slapping on a temporary fix that may result in a massive recall in the future. The only drawback to this approach is the cost of time and the total number of units produced—however, Toyota emphasizes the idea of “Just in Time” production. Essentially means that Toyota is willing to sacrifice some production numbers in exchange for better quality craftsmanship. If you are finishing early, you are not taking the valuable time to perfect the process and make the product better (Roser What is “just in time”).

The second manufacturing principle that Toyota holds dear to is Kaizen. Kaizen directly translates to continuous improvement, or in Toyota’s definition, it means changes for the better. Kaizen emphasizes employee engagement while making incremental changes and slowly implementing the various good ideas from its workforce (Hargrave and Rasure What Is Kaizen?). This manufacturing principle goes hand in hand with Toyota’s workforce business principle. The employees are always encouraged to speak up and bring up ideas on ways to improve, often with no regard for the employees’ titles, and free from intimidation and retaliation. It encourages employees to be bold by taking on a proactive approach to finding the root cause of a problem. When Kaizen is executed right, it will boost the employee’s confidence in the company and make their job easier and more enjoyable.

The third manufacturing principle is Kanban. It directly translates to “dashboard.” The goal for Kanban is to coordinate and forecast supply levels more efficiently. It is very similar to our modern-day enterprise resource management systems, or ERPs for short. However, it is more sophisticated than ERP systems because it tracks the stock levels on all production lines within an assembly plant. And it will alert the suppliers when a particular part runs low, all in a seamless and real-time motion. An excellent example of a similar Kanban principle in action is how Chipotle or Subway restaurants make their sandwiches. Their ingredients are all laid out behind the glass barrier in their separate food trays. And when the customer orders a sandwich, the employees take the bread and run it down through the “assembly” line. If ingredients are running low, the employee will notify the supplier to send more before it completely depletes. The only difference is that, with Kanban, everything is automated, so the suppliers know precisely when to send the parts out to the assembly plant before they ran out. By utilizing Kanban, the assembly plants have significantly reduced excessive inventory and kept their overhead costs down.

Toyota’s last manufacturing principle that has contributed to its growth is the expansion of localized manufacturing plants. In the past, Toyota cars were all assembled in Japan and then imported to the U.S. However, this has become increasingly expensive and inefficient over the past couple of decades. Therefore, Toyota has established plants all over the world to manufacturer its cars for better delivery time. And as a result of this improvement, in the second quarter of 2021, Toyota has become America’s best-selling automaker surpassing General Motors at 688,813 vehicles sold (Wayland Toyota tops GM sales in the U.S., expected to be America’s bestselling automaker).

Now that we are aware of Toyota’s business and manufacturing principles that have led to its successes. It is essential to point out that Toyota has also made some mistakes in the past. However, unlike the American motor companies, Toyota actively tries to fix its issues and learn from its mistakes. One of the most prominent lessons that they’ve learned was from 2011’s infamous earthquake and tsunami that hit Fukushima and the subsequent nuclear disaster at the Fukushima Daiichi nuclear power plant. As a result of this incident, some of the semicondutors plants manufacturing car chips for Toyota had to close. It led to a disastrous chip shortage that nearly crippled Toyota’s supply chains. Toyota realized that semiconductors take time to make. And that they would need to plan ahead of time to deal with any potential shortage that may be coming their way. So after they recovered from this catastrophic event, Toyota developed a business continuity plan that mandated their chip suppliers to keep a healthy six-month stockpile for them in case of emergency.

Some people might argue that Toyota may have been overly edgy on demanding their suppliers to maintain a six-month supply of chips. After all, nuclear meltdowns are not your typical once-in-a-year type of disaster. However, history has proven that Toyota made the right choice back in 2011. Because nine years later, the COVID-19 pandemic started, and it completely crippled the global economy and the supply chain at large. With more people ordered to work from home and the rise in popularity of cryptocurrencies, there was a surge of need for chips. Most of the American motor companies were severely affected by this shortage. For example, Ford Motors had to significantly slash its output estimate due to this ongoing chip shortage (Wayland Chip shortage causes Ford to Slash vehicle production at several plants in July). However, in the case of Toyota, they were, for the most part, undaunted and unaffected by this whole situation because their suppliers had enough chips stocked for their emergency use (Shirouzu How Toyota thrives when the chips are down).

In conclusion, Toyota’s formula for success has undoubtedly reshaped the auto industry. They have taught the American motor manufacturers a great lesson and have led many of its competitors to rethink their manufacturing and business ideologies. In one of his videos, Scotty Kilmer stated, “I am a mechanic Monday through Friday. I spend all my time fixing other people’s cars. Do you really think that on Saturday and Sunday I want to have to fix my own cars? I want the most reliable cars so I don’t have to work on the things (Why Toyota Makes the Most Reliable Cars, Japanese vs American Culture, 00:00:36 – 00:00:50).” I couldn’t have said it better myself. As one famous saying goes, imitation is the most sincere form of flattery. Therefore, Toyota will continue to dominate the automotive industry in the foreseeable and the unforeseeable future.

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