Toyota 2006 Annual Report Download - page 26

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Moreover, the line had a trouble-free
start-up, reaching peak production in
a very short time.
Visualize Costs
To be successful, the new Camry had
to surpass its predecessor in every
respect, including quality and per-
formance. In these initiatives, cost
reduction activities made a major
contribution. But run-of-the-mill
efforts would not have taken us any-
where near the targets. Therefore, it
was critical to take a more com-
prehensive, global approach to cost
reduction activities. With that in
mind, the team launched the global
Cost Reduction Committee.
The committee’s work was not con-
fined to curbing the cost of pur-
chased components and in-house
components; rather, the committee
turned its attention to all elements of
cost, going as far as reviewing such
Cost Reduction Steps
items as logistics. Further, the com-
mittee tasked regional subcommittees
with tackling the main cost items of
particular functions in their region.
While production bases around the
world moved forward with simultane-
ous development, we set challenging
cost benchmarks based on the lowest
cost among the respective regions.
Needless to say, we also had to main-
tain high quality.
In response, we made costs “visi-
ble” through deep, painstaking analy-
sis of cost composition. For example,
we would examine an in-house com-
ponent in relation to line capacity
usage rates, production volume,
usage with other components, pro-
duction equipment depreciation, and
labor costs. The cumulative effect of
such unglamorous efforts was that
cost targets thought of as unreach-
able became feasible. One of the par-
ticipants in the cost reduction activi-
ties recalls, “When you set about
reducing cost beyond a certain mag-
nitude, minor adjustments are no
The Latest Camry Sets New Benchmarks in the Reduction of Global Development Costs
Mark Boire
General Manager, Production Engineering, Toyota Motor Engineering & Manufacturing North America, Inc.
In my role on the North American Cost Reduction Committee, I was responsible for overall cost reduction
activities for the new-model Camry. In the past, it was difficult for the design department at Toyota’s head
office in Japan to “see” the costs of the North American production side. To make those costs more visible,
we formed subcommittees tasked with tackling the main cost items of a particular function, such as
engine, power transmission, and chassis. My mission was not only to oversee those subcommittees but
also to convey the cost reduction ideas of the subcommittees to the design department at the head office
and to work with the design department to realize those ideas. Our achievements will likely become the
new benchmarks for cost reduction activities in our global development of vehicles.
Global Cost Reduction Initiative
Eleven subcommittees tasked with examining cost reductions for specific cost items
Vehicle body
design Engine design Drivetrain
design Chassis design Purchasing
Production Distribution
cost
Development
cost Free repair cost Sales
Electronics
engineering design