Knowledge Management Practices at Toyota Motors

Case Code: ITSY048
Case Length: 19 Pages
Period: 1943-2005
Pub Date: 2005
Teaching Note: Available
Price: Rs.500
Organization: Toyota
Industry: Automobiles
Countries: Japan
Themes: Information Technology
Knowledge Management Practices at Toyota Motors
Abstract Case Intro 1 Case Intro 2 Excerpts


Knowledge Management at Toyota

According to analysts, Toyota's success in both the local and global markets was based on its gaining a competitive advantage through implementation of innovative and path-breaking ideas on its production floors. TPS worked on the basic idea of maintaining a continuous flow of products in factories in order to adapt flexibly to changes in demand. TPS linked all production activities to real dealer demand through implementation of Kanban, JIT and other quality measures...

Enterprise Wide Knowledge Sharing & Collaboration

At Toyota, knowledge sharing was intertwined with its people-based enterprise culture, referred to as the Toyota Way. The five key principles that summed up the Toyota Way were: Challenge 10 , Kaizen (improvement), Genchi Genbutsu (go and see), Respect and Teamwork. The Toyota Way recognized employees as the company’s strength and attached great importance to developing human abilities through training, coaching and mentoring. The principles of "Respect for People" and "Continuous Improvement" were at the core of the Toyota Way. In 2001, the company released a document called "The Toyota Way 2001" to give its guiding principles a concrete shape so that they could be imbibed by its employees across the globe and carried further in the future. Toyota emphasized conversion of tacit knowledge into enterprise knowledge with due importance to human relationships. It encouraged employees to generate ideas and help in the company’s evolution....

A Learning Supply Chain

According to experts, Toyota’s ability to form alliances with its partners enabled it to add tremendous value to its knowledge generation efforts. Toyota followed the JIT System to make its supply chain effective and adaptive. In the opinion of some experts, the Aisin fire crisis demonstrated how the power of extended networks could be used to a company’s advantage.

Toyota successfully used its supplier network for creative knowledge generation and sharing which helped it to respond to changes quickly. Toyota’s supplier networks collaborated actively on joint training and building long-term relationships...

Organizational Learning

One of Toyota's major initiatives in the area of organizational learning was the establishment of the Toyota University. The university had an academic structure with designations like the Dean and Associate Dean. It ran programs to cater to two broad categories of personnel - dealers, and the company’s own employees — on areas ranging from repair information to brand positioning. The University conducted many one-week courses for Toyota and Lexus dealers 24 . The courses used role play videos to enable dealers to think from the customer’s viewpoint. It helped dealers generate higher penetration levels for Toyota products....

Impact of Culture on Organizational Learning

KM practitioners recognized that Japanese culture had always considered learning as an important endeavor. The Japanese were also known for their love of detail and perfection which further drove learning. The characteristics of a typical Japanese organization like lifelong employment, teamwork and trust also contributed to a favorable learning environment. Many Toyota practices like Hansei , Kaizen and Nemawashi 35 were in fact not specific to Toyota but were seen across most Japanese firms. Although practices like Kaizen encouraged learning on one hand, on the other they made it difficult for Toyota to implement explicit KM processes. The Kaizen concept ensured that processes underwent continuous change and the recording of these continuous changes became difficult. However, with increasing globalization and greater technological support, Toyota had increased its efforts toward explicit knowledge management.....

KM- Based Products and Processes

Toyota launched one of its most commendable new products, Prius, in December 1997. It was the world’s first hybrid vehicle that used the T Hybrid Synergy Drive System developed by Toyota. The system enabled the Prius to run on both the gasoline engine and an electric motor. Unlike other typical electric cars the Prius did not need to stop to recharge its battery. Its gasoline engine recharged its electric motor. Auto analysts accepted that it was remarkably better than the available conventional vehicles in terms of fuel economy, engine efficiency and emissions. Experts considered the launch of the Prius as a milestone for Toyota. Prius was an innovative product that launched a new product line and used completely new technology, demonstrating the benefits of knowledge creation....

Delivering Value to the Customer

In 2003, Toyota retained its position as the largest seller of a luxury car model (Lexus) in the US, for the fourth year in a row, beating BMW, Mercedes, Cadillac and Acura. Auto-analysts said it overturned the commonly-held assumption that a luxury brand would need decades to establish itself. Experts also acknowledged that Toyota consistently figured at or close to the top in terms of quality and productivity rankings in major independent surveys of the automobile industry. According to the J.D. Power and Associates 43 customer retention study of 2004, the Toyota brand emerged number one....

The Returns

In 2003, Toyota’s profits of around $8 billion were more than the combined profits of General Motors, Ford and Chrysler. Again in the year 2004, it was the most profitable automobile company in the world with profits of $11 billion on revenues of $163.6 billion. The largest automobile company, GM, generated a mere $3.7 billion in profits on revenues of $193.5 billion. Between July 2004 to January 2005, GM’s share price fell while Toyota’s rose...


Exhibit I: Key Knowledge Performance Dimensions - The Make Study
Exhibit II: Organization of Toyota Motor Corporation
Exhibit III A: Global Production Centre as a Hub for Learning
Exhibit III B: Visual Manuals Developed at Global Production Centre
Exhibit IV: Learning Within Toyota: The Lamda Way
Exhibit V: The Guiding Principles at Toyota
Exhibit VI: Global Top Ten Brands
Exhibit VII: Share Price Chart: Toyota and GM

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