Toyota

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ITSY/048
IBS Center for Management Research








Knowledge Management Practices at Toyota Motors
This case was written by N. Ruchi Chaturvedi, under the direction of Sanjib Dutta, IBS Center for Management Research. It
was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either
effective orineffective handling of a management situation.











2005, IBS Center for Management Research. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.orgITSY/048
Knowledge Management Practices at Toyota Motors
“Toyota does not have a separate Knowledge Management philosophy and strategy; managing
and sharing knowledge are a part of everyday life at Toyota.”
- Rory Chase (Chase), Managing Director, Teleos.1
“I believe Toyota has raised continuous improvement and employee involvement to a unique level,
creating one ofthe few examples of a genuine learning enterprise in human history - not a small
accomplishment.”
- Jeffrey K. Liker (Liker), Director, Japan Technology Management Program,
University of Michigan.2
KNOWLEDGE AS POWER
In 2004 Toyota Motor Corporation (Toyota) was Japan s largest company and the world s second
largest automobile company with worldwide unit sales of6.7 million.3 It was recognized as one of the
world s best knowledge enterprises, and was a three-time winner of the Global Most Admired
Knowledge Enterprises (MAKE) Survey4, and a five-time winner of the MAKE Japan Survey. This
award recognizes best practices in the area of Knowledge Management. The survey studied enterprises
on criteria like knowledge-basedculture and products; knowledge sharing and collaboration; as well as
organizational learning (Refer Exhibit I for details of the performance dimensions).
Most experts believed that successful Knowledge Management (KM) had given Toyota a keen
competitive edge. Toyota s Production System (TPS) manufactured a variety of high-quality
vehicles at very low cost. Toyota hadbeen extremely open about its TPS. Company sources were
quoted to have said, “Study us all you want” 5. Still no other company was able to match Toyota s
production system despite decades of effort. The world s largest automaker, General Motors
(GM), entered into an alliance with Toyota to see its production systems in action and learn the
intricacies, butcould not match Toyota standards. According to a study6, DaimlerChrysler, one of
the “Big Three 7” auto firms, acknowledged that its KM initiatives had been actually inspired by
Toyota s Yokoten8 system.

1 Teleos is an independent Knowledge Management research company based in the United Kingdom. It
conducts theMAKE Survey in association with the KNOW network since 1998. The Survey identifies
Top 20 enterprises in the area of Knowledge Management.
2 Jeffery K Liker, “The Toyota Way: 14 Management Principles from the World s Greatest Manufacturer,”
McGraw-Hill, 2003. The book is based on the author s research on Toyota spanning 20 years.
3 General Motors (GM) is the biggest automobilecompany in the world in terms of unit sales. GM s unit
sales for the year 2004 were 8.2 million.
4 The MAKE Survey is conducted by The KNOW Network which is a global community of knowledge-
driven organizations dedicated to sharing best Knowledge Management practices.
5 George Stalk Jr. and Rob Lachenauer, “The Hardball Manifesto: Play to Win,” HBS Working
Knowledge,...
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