Another Look at How Toyota Integrates Product Development Challenged by world-class competitors, manufacturing companies in the United States have undergone a renaissance in the last decade. The renaissance started on the shop floor with an emphasis on built-in quality, the elimination of waste, and faster throughputs. But attention quickly turned upstream to product development, where Japanese companies were outperforming U.S. competitors on nearly every measure: speed to market, design quality, product-design manufacturability, cost, and productivity. Observers concluded that the key to Japanese success, and U.S. industrys weakness, was integrationboth between product design and manufacturingprocess design, and with marketing, purchasing, finance, and other business functions. Toyota has maintained a functionally based organisation while achieving its impressive degree of integration, and many of its practices are actually similar to those that U.S. companies employed during their manufacturing prime earlier in this century. We can group Toyotas managerial practices into six organisational mechanisms. Three of them are primarily social processes: mutual adjustment, close supervision, and integrative leadership from product heads. The other three are forms of standardization: standard skills, standard work processes, and design standards. Alone, each mechanism would accomplish little, but every piece has its own role and at the same time reinforces the others, unlike many of the sophisticated tools and practices at companies in the United States, which tend to be implemented independently. Together, the mechanisms give Toyota a tightly linked product-development system that achieves cross-functional coordination while still building functional expertise. This balance allows the company to achieve integration across projects and over time, as well as within projects. U.S. companies have concentrated on bringing the functions together within projects, but a single-minded focus on that goal can actually undermine attempts to share information across projects. Crossfunctional teams, for example, work well within individual projects, but the temporary, personal nature of these teams makes it hard for them to transmit information to teams on other projects. One of the most powerful ways to coordinate ones efforts with those of people in other functions is to talk to them face to face. In this manner, each party gets the others point of view and can quickly make adjustments to find common ground. This mutual adjustment often takes the form of a meeting: a product designer and a manufacturing engineer, for example, get together to discuss the effects that a proposed design for a particular car body would have on the cost of production. Direct contact between the members of different functions is certainly importantsome say it is the essential ingredient in getting functional groups that have traditionally been at odds to work together. Indeed, many observers, managers, and engineers claim that face-to-face interaction is the richest, most appropriate form of communication for product development. Numerous companies now colocate functional experts so that interaction can occur with much greater ease and frequency. Often these companies have done away with written forms of communication because, as some claim, written reports and memos do not have the richness of information or interactive qualities needed for product development. Meetings, however, are costly in terms of time and efficiency, and meeting time increases with colocation. Meetings usually involve limited value-added work per person, and they easily lose focus and drag on longer than necessary. Engineers in companies weve visited often complain of not having enough time to get their engineering work done because of all the meetings in their schedule. Toyota, by contrast, does not co-locate engineers or assign them to dedicated project teams. Most people reside within functional areas and are simply assigned to work on projectsoften more than one at a timeled by project leaders. By rooting engineers in a function, the company ensures that the functions develop deep specialized knowledge and experience. In lieu of regularly scheduled meetings, the company emphasizes written communication. When an issue surfaces that requires cross-functional coordination, the protocol is first to write a report that presents the diagnosis of the problem, key information, and recommendations, and then to distribute this document to the concerned parties. Usually, the report is accompanied by either a phone call or a short meeting to highlight the key points and emphasise the importance of the information. The recipient is expected to read and study the document and to offer feedback, sometimes in the form of a separate written report. One or two iterations communicate a great deal of information, and participants typically arrive at an agreement on most, if not all, items. If there are outstanding disagreements, then its time to hold a meeting to hammer out a decision face to face. In such problem-solving meetings, participants already understand the key issues, are all working from a common set of data, and have thought about and prepared proposals and responses. The meeting can focus on solving the specific problem without wasting time bringing people up to speed. By contrast, at many U.S. companies, attendees often arrive at meetings having done little or no preparation. They can spend the first half of the meeting just defining the issue, and responses are shoot-from-the-hip reactions to a problem that people have had little time to think about. Toyota takes its focused style of meeting quite seriously. One engineer we talked to showed us his schedule for the day, which included two meetings at separate times with the same group of people. When asked why he would schedule separate meetings with this group, he explained that they needed two meetings to discuss two distinct problems. It was important not to confuse the issues by combining them into one meeting. Overall reporting process therefore has two benefits. First, it documents and summarizes analysis and decision making in a convenient form for the rest of the organisation. Second, and more important, it forces engineers in every function to gather opinions from other functions regarding the ramifications of the changes they are proposing. QUESTION ONE [30] With reference to the above case study, discuss the knowledge areas that project managers are required to have basic knowledge of.