Question

how is Toyota successful at lowering overhead cost

how is touota so succesful at low overhead cost

Answer 1

Toyota is successful at lowering overhead cost because of these factors :

• High machine uptime/ Low machine downtime. Downtime is the percentage of time that the plant/equipment/machine is idle. Conversely, uptime is the percentage of time that the plant/equipment/machine is up and running
• Low work-in-process inventory. The amount of time that the raw material is work-in-process is low compared to competition. This lowers the working capital requirement, storage costs, etc. and therefore lowers the overall overhead cost
• More decentralized and flatter organizational structure. This empowers factory workers to contribute actively towards process improvements
• Focusing on process improvements by hiring more process engineers/R&D engineers
• Focusing on process improvements by making multi-functional teams work on improving machine performance/machine uptime/process yield
• Using quality raw material so that time spend on fixing defects is reduced
• Each employee has exposure to all stages of the production process through a policy of rotation. This way, every employee is multi-skilled and has a good understanding of the overall production process.
• Production engineers, purchase managers, machine operators who are involved in active production are involved actively in design of the production line