Toyota’s cost reduction efforts have boosted its operating income by 80bn yen ($726m).
In the company’s financial results for the 12 months to 31 March 2019, Toyota said total operating income increased to almost 2.5tn yen ($23bn), up 2.8% compared to the same period the previous year.
Akio Toyoda, president of Toyota, said: “Under the banner of restrengthening TPS [Toyota Production System] and refining costs, we are working to thoroughly eliminate waste, unevenness, and overburden not only at our production plants, but also at our offices, at our technical workplaces, and elsewhere.”
Toyota cited prototype vehicles as one area where the company has been able to reduce its costs. By increasing its use of simulation, Toyota said it has been able to reduce prototype vehicle costs by 65% since March 2015.
Previously, the company would conduct repeated tests on prototype vehicles but by improving the accuracy of simulation technology, Toyota has been able to shift to development methods that do not rely on in-vehicle testing.
Under its TPS, Toyota aims to eliminate waste and achieve the best possible efficiency using a just-in-time or lean production system.
Toyota said it would be working with its suppliers and reviewing work conducted with each party to identify methods for cost reduction.
The company also aims to develop process reforms using its Toyota New Global Architecture, which involves using shared parts or components for multiple vehicles to make manufacturing plants more flexible and responsive to changes in the marketplace.
Last year, Toyoda confirmed the company had begun “steady cost-reduction efforts in which each and every cost, whether it relates to daily tasks or large events or projects, is being scrutinised” to reduce waste.
He said: “The reality is that the notion of high operational costs have emerged as an issue to tackle, and I believe that if we repeatedly ask, ‘Why, why?’, pursue the root cause, take the right actions and continuously improve, we will without a doubt be able to move forward.”
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