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TOYOTA SOUTHAFRICA www.toyota.co.za

C O R P O R AT E B R O C H U R E


To y o t a S o u t h A f r i c a

Sustainable improvements By drawing on the tenets of automotive giant Toyota’s globally respected management philosophy, Toyota South Africa has been able to cut costs, improve operations and deliver sustainable benefits to the organisation

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ew companies can have influenced industry and business as deeply and fundamentally as Japanese car maker Toyota. Quietly and intelligently, during a period of national financial hardship, the company evolved a unique set of operational and business philosophies that have revolutionised thinking in the manufacturing sector worldwide, and are now performing the same miracle for organisations in sectors as widely divergent as health, banking and government services. Moreover, Toyota has been open about its philosophies in a way that may seem counterintuitive to some: it did not grasp these successful business advantages to its chest, but shared them, firstly with its suppliers and then with any company interested in learning. The basis for Toyota’s operational excellence is the Toyota Production System (TPS), which defines the company’s management philosophy and how this operates throughout the organisation and into its supply chain. It governs everything from interactions with suppliers through to the shop floor and management levels, and finally to distribution to the customer.


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Today, Toyota continues to be the exemplar of what has become generically known as lean manufacturing. Moreover, through operational excellence, quality of product and the ability to manufacture what the customer requires, it has become the world’s number one car maker, manufacturing in some 27 countries and regions around the globe. Its manufacturing presence in South Africa dates back to 1962, when a company called Motor Assemblies began to assemble cars for Toyota alongside vehicles for other OEMs such as Mazda, Fiat and Renault. By 1981 the plant had become exclusively dedicated to Toyota assembly and between 1997 and 2003, Toyota progressively acquired equity in the plant. Today it is 100 per cent owned by Toyota Motor Company and is run according to all its philosophies. Nigel Ward, Toyota South Africa’s current VP of Purchasing and Engineering, has also grown


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with the company. Beginning as a trainee in the purchasing department in 1982, he witnessed the plant’s migration to the Toyota Way, and now has a very wide remit encompassing purchasing, planning and engineering. The Toyota philosophy for supply chain management has always been collaborative and people oriented, and the company has spearheaded a remarkable change in global supply chain awareness over the past 20 years. “Historically, purchasing and supply chain relationships have always tended to be—and I use the word loosely— bloodied and confrontational,” says Ward. “However, through mutual trust and an open philosophy from both parties, we have ensured it is participative.” Unlike many OEMs who source parts from around the world, the Toyota way is to localise its suppliers in the area of the Toyota plant, reducing the need to transport parts over long distances and removing a considerable amount of waste from the system. Toyota South Africa has been actively working towards this for many years, attempting to attract some of the world’s top automotive suppliers to set up operations in South Africa. But it was not until over two years ago that the company took the step of doing this in collaboration with six other automotive OEMs operating in South Africa. The reasoning behind this move was, like most ground breaking ideas, surprisingly simple. Setting up a new manufacturing plant is both expensive and risky, particularly when it is supplying into a relatively small business sector—and the automotive industry in South Africa is small in comparison with, say, the coal industry. However, by acting together the car makers believed they would be able to leverage economies of scale, and make it financially attractive for top European and Japanese suppliers to relocate locally. “We therefore launched an initiative called the South Africa OEM Collaboration Group,” Ward says. Members include the likes of BMW and VW. “The purchasing heads of each of them have formed an executive committee. Underneath us we have five commodity groups with a total of 45 people from the OEMs working cross-functionally to identify initiatives to localise new parts in South Africa. If, say, three of us can support the initiative, it can become very lucrative for a global supplier to set up here.”


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Ongoing training is a fundamental element of Toyota’s global kaizen (continuous improvement) philosophy; and the South African operation provides a wide spectrum of training through its Toyota Academy for Learning, Africa (TALA), which is organised into three schools. The first school is aimed at internal employee development, and offers a series of courses ranging from the basics of the

TPS and the Toyota philosophies through to team member and senior management development. The second school provides training for the company’s external partners, and is attended by the technical and sales staff from the dealerships. The third school is for Toyota’s suppliers. “And here we’re trying to promote best practice within our supplier base in areas such as management,


HR development, kaizen and the elements of TPS,” Ward says. The downturn, of course, has significantly affected the automotive sector around the globe, and for Toyota South Africa and its suppliers the story was no different. “We saw a drop in production of between 30 per cent and 40 per cent,” Ward says. “In 2008 we produced 187,000 units and in 2009 we produced 104,000 units—so 2009 was what we think of as a year of survival.” It may have been a hard year, but the company used that very challenging time positively, to bring about some significant changes and improvements in its own operations. “To begin with we focused internally, examining our own operations and restructuring our business to perform better and to reduce costs. Then we also worked closely with our suppliers to help them restructure their businesses,” Ward explains. “It sounds simplistic, but one area we worked on was scrap management. We examined how we create scrap in every aspect of the business, not only on the shop floor but also in the offices. From that we were able to change our wasteful processes and behaviours. We then shared this with our suppliers by showing them physical examples in our plant. For example, we showed them how we cut down on the number of forklifts so that we could use less gas.


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“In our own plant we also initiated an energysaving project which we called ‘no work, no watt’,” Ward continues. “We encouraged everyone to turn the lights off and use natural light. In some places, we even took the roof off, replaced it with translucent sheeting and removed the lights. We also made a big investment in solar heating to heat

water for all our ablutions—showers and so on.” Ward is convinced that this type of kaizen activity is the only real route to sustainable business improvement. “You can certainly just slash costs,” he concludes, “but simple cost cutting doesn’t bring sustainable benefits in the way that this will.” www.toyota.co.za


TOYOTA SOUTHAFRICA www.toyota.co.za


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