Toyota and Systems Costs

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Toyota sees hefty production-related cost cuts – MarketWatch

It will be interesting to learn more about this approach as more is announced in the press. Note the shift from reducing PART costs to reducing SYSTEM costs. Seems like an illustration of kaizen on many levels. 1) Management kaizening their approach to managing costs and 2) the actual kaizen of system design to drive cost reduction.

“Toyota Motor Corp. expects Y140 billion in production-related cost cuts in the fiscal year ended March 31 thanks to a new method that focuses on improving the design efficiency of its automobile systems, a company spokesman said Friday.

It was the first fiscal year for the cost reduction strategy in which Japan's largest car maker by volume tries to slash production costs by seeking more efficient designs for systems such as engines and brakes.

The strategy will likely produce better earnings results in this fiscal year and beyond as the efficient development method is being applied to upcoming models, the spokesman said.

Toyota's previous production method was more focused on reducing the cost of developing parts.”

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